It is your dream to create a successful marketplace like Amazon or Airbnb? A simple marketplace can evolve into a huge platform. At least that is what the success of Etsy, Uber, Fiverr, and Amazon demonstrate. These marketplaces started out as simple ideas and evolved over the years to be roaring successes. They have been disrupting their industries and even after so many years, they are considered the best.
Setting up an online marketplace that is successful requires perseverance, analysis, and hard work. Here are a few ways to build a thriving online marketplace.
Choose the Industry with Care
One of the main reasons new businesses and marketplaces fail is because they enter an industry where is there no demand for their products and/or services. Hence, it is essential you select the right industry so that you can provide value to the sellers and buyers.
Some entrepreneurs opt for a niche market. You can do this but remember it will have limited sellers and buyers. Also, when it comes to smaller sectors, most buyers prefer to deal directly with the supplier rather than use a marketplace as an intermediary. Here, sellers may not be keen to pay fees to sell their products. Hence, entering such a market will evoke the interest you envisaged.
Choose Between a Vertical and Horizontal Marketplace
Selecting the right marketplace structure is important. To create the right development strategy for your marketplace, you should know the difference between a vertical and horizontal marketplace.
A vertical marketplace caters to a niche or specific demographic or industry. To make such a marketplace successful, you need the right expertise and careful and thorough analysis as you will be catering to a small customer base. Such a marketplace will have fewer transactions but you can charge a large transaction fee to increase significant review. You will find that such a marketplace is easy and cheap to promote and advertise. You will be advertising to a niche section and that will create value for prospective buyers. Focus on high-quality products and services to ensure appeal.
A horizontal marketplace, on the other hand, caters to multiple categories. Amazon is a good example of a horizontal marketplace where the platform sells to a diverse client base. The idea behind such a marketplace is to generate revenue through multiple transactions to a wider audience. However, building such a marketplace means competition as there are already several similar platforms. So, you will need a well-thought-out marketing strategy that attracts customers. You can do this by offering value to users and that will help build trust.
Create Your Unique Value Proposition
You need to create a unique value proposition when you are building a marketplace. This will help to differentiate your marketplace from others. For instance, an online marketplace should be available 24/7. Also, since most online marketplaces do not have the same overheads as a brick-and-mortar store, buyers will expect lower prices without compromising the quality of the products or services.
Before you build your marketplace, it is important to analyze and study the market, check out the top competitors, and also the market trends. That will allow you to figure out what is missing and offer that to your users. This will give you a competitive edge. Your unique value proposition can be lower prices, easy market access, or convenience. Remember, your value proposition has to be strong so that you offer more value to your users when compared to other similar marketplaces.
Choose the Correct Business Model
There are several business models to choose from and your aim should be to quickly launch your marketplace with the right model. Some of the models to choose from include commission, subscription, listing fee, featured listing, and lead generation. It is essential to weigh the pros and cons of each model and then select one that is right for your marketplace and the industry you are entering.
Remember, every model will not work for your marketplace. For instance, if you are creating a rental marketplace, you can opt for a commission or listing-based business model. Or, you can have both types if you think they are more viable. At the same time, offer quality but free services as it creates more value for your users. That will make stay and use your marketplace.
Look for Ways to Quickly Create Trust and Loyalty
When customers trust a marketplace, they will continue buying. Otherwise, they will leave and go to your competition. Trust takes time to build but with the right products, impeccable customer service, and competitive prices, you can generate trust very quickly among your buyers.
You can also use reviews and ratings as a way to build trust. A marketplace that comes across as trustworthy and offers value to customers will be able to transform its customer base into a loyal one. Make sure that you have the right security measures in place as your customers will be entering sensitive information. That too builds trust. Let customers promote your marketplace on social media. This is a wonderful way to build your customer base and also trust. Allow your customers to share and tag your marketplace on social media platforms.
Use the Right Marketplace Software
When you are building a marketplace, the software that you choose can make or break the marketplace. If you are building a marketplace for rentals, choose a dedicated rental marketplace software that has the necessary features that you require.
The software should have an intuitive backend and frontend so that your buyers and sellers can easily interact with it. Also, the software should allow you to launch a minimum viable product as quickly as possible. Such a marketplace will have the most important features in place and you can tweak and develop the platform on the go. That will save you time and money that can be put to better use.
The Bottom Line
These are some of the things that you need to keep in mind when you want to build an online marketplace that will be successful. Remember, your marketplace should keep evolving and never stagnate. When that happens, it will disrupt and become a game-changer – the perfect recipe for a successful digital marketplace.