There is no need to prove the popularity of Marketplace Apps, as you certainly are a user, possibly permanent, of several of them. In any case, the names of companies such as Amazon, Etsy, eBay, Airbnb, or Uber are also known to you.
In 2020, the market saw a jump in user costs on marketplaces so that $ 2.67 trillion was spent globally on the top 100 online marketplaces per year.
In terms of forecasts, the compound annual growth rate (CAGR) of online sales in the B2C market will be 14% and 32% for the B2C market segment up to 2026. Simpler, after a sharp jump, the costs of buyers on the marketplaces continue to grow steadily. So, if you are thinking of developing your own application, now is exactly that time when you're able to catch success with your product. Therefore, it is obvious that Marketplace development services have also begun to gain popularity.
In this article, we will help you understand all the key points you need to be aware of before you start your own marketplace development.
Read below to explore the types of marketplaces, the features that will be needed for your product revenue models, and even more.
What is a Marketplace App and its global market position
The Marketplace App is an independent online-based platform that connects buyers and sellers for the exchange of goods and services.
In essence, Marketplace has the role of a mediator that brings two sides together, so its mission is to provide an equally convenient process for promoting its product, as well as making purchases and payments.
Marketplace benefits each side that is involved. Like a seller can sell their products without having to put lots of effort into marketing or retailing. Similarly, buyers can find, compare and purchase the goods/services they need in a few clicks without going further than the device screen.
And for marketplace owners, it is a platform for making a profit in the various ways that are described in this article below.
There are several key players in the Marketplace Apps market today, some of the platforms are rapidly gaining popularity, others - remain with a stable percentage increase for a long time.
However, the growing demand for the development of such Apps indicates the corresponding demand among internet users.
If you look at the infographic, it is noticeable that these Marketplaces differ in terms of offer, specification and their audience. To understand what the Marketplace App market looks like, let's look at the types that exist.
Types of marketplaces
The classification of platforms can be very diverse, depending on what exactly and to whom Marketplace offers. Belonging to categories will give an understanding of competitors and your market prospects as well.
From the technical side, determining the type of Marketplace is required, in particular, to decide with the structure, basic and additional functionality, and UI / UX component of the future project.
Let’s take a look at the classification of Marketplace Apps by key categories.
The audience that will interact with the marketplace identifies key points for development, such as platform structure, business model, and user flow and capabilities. And others, such as the user interface or communication strategy, offering and recommendation system. There are three models:
business-to-business (B2B), where the platform provides goods or services for a niche audience of business customers. Customer relations in such a market are mainly focused on long-term cooperation and mostly have a large check size.
business-to-client (B2C), the most common App model, which involves the division of Marketplace users into at least two roles (seller and buyer), that interact with each other. Buyers there tend to make emotional-driven decisions, especially when it comes to cheap purchases, therefore, well-designed systems such as filtering, offering and reviews will have a significant impact on sales on the platform.
peer-to-peer (P2P) model connects users with similar needs, interests to share products and services with each other. A personal profile and a well-tuned reviews system are important focuses for P2P-type Marketplaces.
Both your competitive environment, your target audience, and your earning strategy will depend on the products you offer. It can be products, services, or hybrid (offer both products and services), and projects (as crowdfunding platforms for startups or NGOs).
Moreover, some products can be used only online (like apps, music, information, education courses), and some work by an online-to-offline system and require consideration of delivery to the end-user.
This determines the width of the audience and the product range that will be offered on the Marketplace App.
Horizontal platforms work on the principle of shopping malls, as a one-stop place, where any user can find the goods they need in completely different product categories. Oppositely, vertical Marketplaces focus on a narrow user, are limited in the categories of goods offered, location, industry, and so on.
The management approach determines the scale of responsibility that the Marketplace owner assumes for the operations performed by users on the platform. In particular, it is a matter of control of transactions, reviews system, operations management, etc. The main three - fully managed, lightly managed and unmanaged Marketplace.
Unmanaged platforms allow users to control entire operations, also transactions, independently. The stakeholder is solely responsible for the quality of service provided. Otherwise, lightly managed platforms focus on user security and provide quality assurance, payment security, seller's identity and background verification. P2P models often use these two management approaches.
When it comes to fully managed Marketplaces, the product owner takes full responsibility for all actions carried out on the platform by both buyers and stakeholders. Such Apps provide the highest level of quality and protection for both users, as well, their taxes will be the highest among all previous types.
After you determine which category you can assign your web or mobile Marketplace App by each of the classification criteria, we may move to choosing the main features your platform needs.
Key Features of a Marketplace
There are three key users of the Marketplace App - a seller, a buyer, and an admin. Each of these users has a different list of mandatory features that must be provided for them. However, all three need a user-friendly UI that will make their experience stressless and enjoyable.
To recount all possible functions of Marketplaces we should make a separate long article, but to get the overall picture, we will look at the most necessary of them, which almost every Marketplace app has (also called MVP features).
This is the first page that a user will face, so it should give a full understanding of the Marketplace purpose and the opportunities it opens up for the user.
It will contain introductory information, the ability to register, and some additional features, depending on the App type (as a search bar, or recommendations of the most popular product categories).
Account creation is one of the first things your customers are gonna do when they decide to use your platform. For MVP products, email authentication will suffice. To simplify this step for the user, an additional feature can be authentication through a Google or social networks account.
If the type of your platform provides it, at the stage of registration there will be a section of user roles of the Marketplace - the buyer, or product seller.
The buyer's profile should contain personal information that can further simplify the purchase process, platform purchase history, reviews, or saved product pages - the content of the user's profile will depend on the Marketplace specification.
This is a detailed description, which should contain all the necessary information that the buyer may need to make a decision.
Depending on the type of Marketplace, the page includes:
reviews and ranking
Over time, you can expand the information, for example, add the ability to attach video reviews, or use AR technology.
When it comes to Marketplace - advanced search is not just a convenience, but a necessary feature. Allowing users to find exactly what they need among a large net of goods while spending a minimum of time - this is what your platform should provide.
Advanced search tools that can be used - filtering, sorting, date selection, location, etc.
As soon as a user decides what service provider to choose, they would want to book a service. Your booking features will be marketplace specific. For instance, for Clarity and Airbnb-like marketplaces, the booking function for user convenience, requires a built-in calendar.
In the first place, it is necessary to provide the user with all important information regarding the confirmation of the order, transactions, reviews of them left by other users.
And additional notifications that allow you to keep in touch with the user when they are not directly using the Application, such as recommendations, updates of products in the categories they were interested in, new features of the platform, special offers, greetings or more.
The Marketplace App can use one of the below-mentioned payment flows:
Escrow payment is a commonly used marketplace payment flow. With this model, a marketplace charges a user at the moment of booking.
For purchasing goods, customers usually pay with a credit card. To enable these payments, the marketplace has to be connected to one of the payment providers. It is important for the App to combine a high level of transaction security and provide a simple, clear payment process so that the user does not have to spend a lot of time.
Review & Ranking
Reviews and ranking are tools for building customer confidence in product suppliers. And for some Marketplace Apps, such as Clutch, ranking is a major feature of the business model.
Additional functions also can be geolocation integration, time zone adaptation (if the App focuses on the markets of several countries), messaging, the ability to compare several products of the same category, and so on.
All the above features are basic to the Marketplace and none can be omitted. Additional, "fancy", features will give you the benefits, no doubt. But the basic functionality is vital to make a product competitive and create a satisfactory user experience. When it comes to creating a product that takes a plenty of time and money - it makes sense to lay a quality solid foundation.
Now let's continue to discover the Marketplace App by defining monetization models, specifically how it benefits the product owner.
The answer to a question: how to make money from my Marketplace? - will to a large extent depend on the type the platform belongs to, the nature of interaction between users, and lots of other factors.
In this section, we`ll make an overview of the earning models used by virtually all Marketplace Apps today. Here they are:
Advertising and paid services
We made a detailed review of the monetization models of Mobile Apps. But in this article we’ll take a brief run through the main models of profit generation and for which platforms they are best suited.
This is a model that assumes that providers have to pay to get featured on the homepage or appear on the top in category search.
Due to the listing fee, the marketplace owner can provide a stable income, as it will not depend on the seller skills, but not for all types of sellers such a model is equally profitable.
This is the most common financial model of the marketplace, under which a fee is charged for each transaction on the platform. The advantage is that the revenue is well scalable - the more cash flow the platform will have, the more money you will earn.
Advertising and paid services
This is a great additional way to promote listings/accounts and to provide more visibility. Placing the seller's goods at the top of the list, or in recommendations is a profitable model for both B2B and B2C segments.
This is a monetization model that assumes that most basic features are available to users for free, and additional functionality or extensions must be purchased or subscribed to.
This model is especially relevant for B2B marketplaces. However, it's better to use it in combination with other models to ensure income stability.
A subscription fee implies that users pay money for membership that ensures access to the service. Fees can be charged monthly or annually. This monetization strategy can bring really significant profits if the Marketplace App offer is valuable to a large number of users.
The most important thing at this stage is to choose the monetization model that best suits the product you offer, the characteristics of sellers, and the target audience of future buyers. Some companies combine several models, for example, the advertising model is mostly in each marketplace.
Your earning model must first and foremost guarantee you a stable income, which will allow the App to grow in a highly competitive and unsteady market environment.
How to build a marketplace app?
Now, let's move on directly to the Marketplace app development and consider the whole process of working on the project in detail.
The development workflow will depend on the partner you choose, but there are main stages that always remain the same: Business Analysis, Design stage, Development and Launch of the product with next technical Support.
At the start of work here at LinkUp Studio we normally provide a Discovery phase, which combines a detailed Business Analysis and the Design part. This is performed with a purpose of forming a complete picture of the App at the end of the stage: with structure, functions and UI design prior to making a development cost calculation.
Now, let's look at each of the stages more closely.
Clients often ask development partners to give a preliminary, approximate estimate of the cost and duration of work. But do not be surprised if the plan and the fact of the estimated costs may vary. The value of a full-fledged Business Analysis lies in a comprehensive product analysis, where each aspect is considered in detail.
The Business Analysis team creates the structure and general logic of the App, determines the features that will be needed, creates a full project functionality specification document and budget calculation.
The duty of a Business Analyst is to determine the system models - the general logic of the platform, how business processes will work and how the product will benefit you as the owner.
On the Business Analysis stage, the team also includes a developer. The developer helps to choose technologies and solutions that will save time and give the desired result to the customer. They investigate customer wishes to give an expertise of whether they can do it and whether it will be relevant to their product.
In this team, even at the stage of evaluation, you can avoid many mistakes of further development, and still offer features and solutions that will significantly affect the project's quality..
Well, the Discovery phase (and Business Analysis as a part) is the first stage, and it is an important stage for all further work. As we may notice, the professionally provided stage of Discovery is around 25% of the end product.
Another process at the Discovery stage is creating UX, then UI design parts of your Marketplace Application. A team of designers is involved in the work and in a certain time they create:
Medium fidelity wireflow and prototype
Style guide and UI kit
This helps save a lot of time and money when you can literally test the design of your product with a prototype, even when not a single line of the code is written.
However, before taking up the Discovery phase, specify how carefully the company approaches the design at the Discovery stage. Some companies present only linked wireframes that give a basic idea of the appearance of the final product, whereas others (and LinkUp Studio as well), provide a full-featured clickable prototype, which, incidentally, can be used for crowdfunding or user testing.
As for the duration, the whole Discovery phase can take from two weeks to several months, depending on the complexity of the project. At the end of the Discovery phase you will receive a complete and detailed plan, ready to start development.
The next phase is direct development, which includes the frontend and backend parts. And you have two ways to develop a Marketplace App:
Development from scratch
Development based on one of the existing marketplace platforms
How the Marketplace is going to be developed will largely depend on the needs and capabilities of the client. It is appropriate to build your App on the basis of another platform, if you want to incorporate the platform into the business processes as soon as possible.
When you choose to develop from scratch, the amount of work will be much higher, but the functionality and design will fully meet what the client needs. And here the Business Analysis phase is mandatory as it essentially identifies all the functionalities of the project that are important for development, scope of the project, budget, and eliminates potential risks.
Once the way is selected, development starts.
Yet, based on our experience, it's better to start with building the MVP. Minimum valuable product is the same platform that looks like a clickable App with the most basic features needed to the Marketplace work.
What will you get in practice?
You can start to make user testing and get first feedback concerning app usability
User feedback during the MVP testing phase helps to understand how to further develop the product: what features to focus on, how to improve the user experience or optimize the App.
- In the same way, to attract early user base
In the process of MVP building, you test how the work with the team is going and whether it will be comfortable to work in synergy on the main development for a long period of time.
Note that the MVP product is a primary and simplified version of the Marketplace App, and its development does not take much time. Therefore, even after MVP testing in the evaluation (conducted in the Business Analysis phase), time is set for refactoring the code before the start of the main development.
At LinkUp Studio we follow an Agile approach in App, so the whole long process is divided into sprints. Take a look at what happens on each stage of the sprint:
For making a really good Marketplace, involvement of each team member (developers, designers, and QAs) in the development process is needed and necessary. To make it possible, each team member has to clearly understand the idea and essence of the product. That's why it is so valuable to have not just a great idea, but also high-quality compiled documentation of the project.
If we receive a project with poor or missing documentation for development, the Discovery phase is still carried out. Thus, going through the product development phases one by one, product owners can avoid misunderstandings and mistakes that will cost a lot.
If it comes to the front-end part of Marketplace App development, it is very time consuming. On the grounds that the design and its usability will be tested during App work and if it turns out that some element is not convenient for the user, then the platform layout will be refactored.
And sometimes this "rework and improvement" takes a lot of resources.
Moreover, the website layout of the main pages with major functionality is developed quite quickly. What really takes a lot of time is the landing page (which is tasked with creating the first wow-impression of the Marketplace App).
Where can you go down in flames?
Since the development of the Marketplace App is a complex affair, it is worth taking into account the specifics of the field in which the application will work.
For example, in real estate (we have several projects in this area) special attention is paid to legal aspects. The law in the countries where Marketplace plans to act can vary greatly, and if not enough attention will be paid to it can be a waste of time and money.
If we talk about the option when the platform is built on the basis of another Marketplace, the team must take into account rules and standards that Applications require. Apps built with Amazon, for example, cannot force users to leave reviews (by using a reward system or as a mandatory step in making a purchase, etc.)
Then, when everything is developed due to the plan and each element was tested by QAs, it comes to product launching.
Launching & Support
The fact is that due to the market and product specific, working on a Marketplace App does not end with a release. After launching, the team continues to work on the improvement, additional features, implementation of new ideas, etc.
Moreover, it is better not to run the perfect-end product and continue to work on it in the process. This is necessary so that the product does not lose its relevance or meet with the analogue of competitors.
Another salient point is to make sure that the platform is filled with users at the time of the first launch. For this, you need to start collecting users long before the end of the development process. How? The same user testing allows you to collect a user base, also marketing advertising campaigns and others. In any case, put this effort, so it will affect user loyalty and trust in your Marketplace.
Cooperation with your developers also continues with the technical support of the product. Often, development companies practice various support programs. For our clients, we practice providing 2-months of free support after the launch.
The development process was sorted out. Now when you understand the basic aspects of structuring and features, revenue models, and development workflow of a Marketplace App, it's time to talk about the first real step to project development - partner selection.
Where to start the Marketplace development
Once you have an idea for your own product, the next step you will do is look for a reliable partner who can professionally evaluate and turn the idea into a clear plan for your Marketplace development.
If this isn't your first article on software development, you already know the basic options for choosing a partner. In any case, you'll have a few basic alternants:
in-house development team, which will work in your company and under your complete control at every stage;
freelancer, or a team of freelancers who will allow you to choose the professionals that best suit your budget and requirements, not attaching to the location. However, the manager in such a model will be you;
outstaffing developers focused on separate tasks of the client;
or an outsourcing team that will take responsibility for the development process from A to Z.
If you are interested in discovering this topic in more detail, read about choosing a software development partner.
The choice of developers will depend on you, on the project size, budget, and special needs of the product.
But in this article, we would like to give some tips on choosing a partner for the Marketplace App development, which we have gained from 8-years of experience in this field.
Their experience and specialization
It seems obvious, but the experience working on marketplace projects will guarantee the successful implementation of your App.
It will also be an advantage for your application if your development partner has experience in different industries and with different types of platforms, as it will be able to implement many existing cross-industry solutions that you may not have even thought about.
Design and development in one package
Of course, some companies are stronger in design, other ones - in development. However, we recommend you look for a partner who knows how to keep the balance to provide quality code and unique user-centric design.
Designers who are used to working in a team with developers on digital products have an understanding of the technical part of the design and are able to supply a bugless UI for your app.
Long-term partnership orientation
Marketplace development is a process that does not end with the launch of a project. Many marketplaces, as we said before, start from only the most necessary functions and are held for a narrow market.
Since the Marketplace App is a complete software product, any growth will mean the implementation of additional features or technologies. So look for a partner who you can trust and work to improve your product in synergy.
Examples of marketplaces developed by LinkUp Studio
With 8 years of experience in digital product development, we have worked on the development of Marketplace Apps of various types and specializations: both marketplaces for the sale of goods or services, entertainment marketplaces, real estate marketplace platforms, or even storytelling platforms.
To better understand what the implemented marketplace app looks like, we have selected for you the most different by their functionality cases of such platforms developed by us. Let's take a look!
STQRY is a storytelling platform that aims to harness the power of technology to allow travelers to engage deeper, explore further, and discover more. It has become a platform where you can get or create a tour for every taste. Formats are also offered depending on the goals of the creator: the business can develop its own guide application, virtual tour, or even a game.
Target audience: starts as B2C, but while the platform grows, it has reached almost all possible audiences (B2B, B2C, and P2P as well)
Product: location-based tours, virtual tours, mobile, and web apps, audio guides, games, and online collections - online-based services and also products.
Market focus: Vertical
Management approach: Fully managed platform
Revenue models: Subscription model
STQRY has been actively growing as a storytelling Marketplace since June 2016 and continues expanding with new products and audiences significantly. Also, you may explore the full case study of the STQRY project.
Wisio is a Fan-to-Creator (according to the types above - P2P) marketplace where social media creators share their wisdom through personal video interactions.
The project aims to encourage direct contact between influencers and their followers when both are benefited. Fans are able to learn from the experiences of their idols, while influencers get the opportunity to monetize their content.
Target audience: P2P
Product: It is actually an information-seller platform, so the products are reviews, tips, and pieces of advice recorded by influencers personally to the fans
Market focus: Vertical
Management approach: Lightly managed platform
Revenue models: Commission and Advertising models
The Marketplace was launched in March 2019, and now the work on the project continues by developing new features and ameliorating the user experience.
To learn more about the features and development process of Wisio - you can visit our case study page.
Apartolino is an example of a real estate Marketplace App, that is focused on booking and advanced search features. The Marketplace targets the Switzerland market with the goal is to simplify the process of interaction between tenants and landlords with their guests, make it legal and stressless.
Target audience: B2B, B2B2C
Product: booking and rent of apartments, houses for long-term stay (for 30 days and more)
Market focus: Vertical
Management approach: Lightly managed platform
Revenue models: Commission and Listing models
Apartolino started its activities in May 2020 and now is in the phase of active growth. Details of the development and the list of features you can read in the project case stage.
And for the end
Yes, the Marketplace Apps market is booming today. To stand out from the crowd and win customer loyalty - a strong idea at the core of the product plays a key role.
However, having an idea of a cool and valuable platform for users - is good. But how it will be implemented and how you will get the most out of it - this will determine the success of the final product.
We hope that after reading this article you have formed a general picture of what Marketplace Apps are and what their place is on the global digital market today. And now you can look more realistically at the development of your product.
If you have any questions, need help in evaluation, or starting your project development by experts with 8-years of experience in Marketplace Apps development - contact us.