With online marketplaces being on a roll nowadays, more and more entrepreneurs want to test the viability and profitability of different types of online marketplace business models. If you’re also eager to dive into ecommerce business, you may find the tips and recommendations provided below particularly helpful.
What is an Online Marketplace?
An online marketplace is an ecommerce model that contrasts with the traditional offline business models. Such types of platforms are designed to match people in need of a specific product or service with people who have this product or render this service. In other words, two-sided marketplaces have buyers and sellers. Sellers bring with them the supply or inventory that sits within the middle of the marketplace, while buyers bring the demand. And what happens in the middle is transactions.
For example, eBay is one of the most valuable ecommerce platforms of our time where products site in the middle between sellers and buyers.
There are also other examples worth mentioning like Airbnb, where living spaces are transacted in between, or Eventbrite, where events are the transactions that happen in between. Still, notwithstanding the differences in verticals of their marketplaces, all of the aforementioned platforms epitomize successful online marketplace models.
Why Start an Online Marketplace?
Both seasoned and new entrepreneurs know that an online marketplace platform can be a lucrative venture due to commission sales, promotional tools, and affiliate programs. No wonder so many people invest time, effort, and energy into developing, launching, and promoting their own multi-vendor websites. Ecommerce business ventures are believed to be long-term since customers are always looking for convenient shopping methods. That way, it seems unlikely that in five or ten years, online marketplace platforms will sink into oblivion and become unprofitable. Therefore, if you adopt a well-thought-out strategy, the chances are high that your venture will quickly generate enough revenue to cover your startup costs.
Things to Consider to Create a Successful Online Marketplace
Every marketplace has the initial startup challenge of the classic “chicken or egg” question. Which side of the marketplace do you start on? Do you start by building demand? Do you start by building supply? How do you get one if you don’t have the other? Here are some tips for starting a successful online marketplace.
You want to begin with the supply side as most experts believe that driving demand before you have inventory is like driving the shoppers into the stores with empty shelves.
When building inventory, you actually want to seek out underserved or fragmented product segments. Fragmentation plus high friction for supply sign-up is actually positive as you may face less competition. There’s a saying that anything worth doing is hard, and in this case, it’s true. Take Zillow and Trulia, the US real estate databases. Before they became popular, real estate listings were very fragmented, scattered across local markets all around the country, and owned by different sources. Initially, the realtors were very skeptical of these new entrants into the space. But ultimately, they managed to force their way through and achieved liquidity.
Before publishing your website, make sure you’re fully satisfied with the features and design of your theme or platform. Depending on the niche you’re about to break into, your website should have a wide range of features to ensure the best user experience possible. Some of the most popular features worth considering include:
- Ability to sign up with a favorite social media account
- Ability to provide personal information on a profile page
- Verification procedure (especially for vendors)
- Ability to add, remove, and edit product listings, as well as provide detailed description for each item.
- Search and filters
- Payment functionality
- History of purchases
Of course, you may have difficulty deciding what features are the most important to implement into your specific website. That’s where experienced web developers come in. A team of professionals can help you select what functions your website or application can benefit from and implement them properly. What’s more, web developers can create your website from scratch. So, if you’re not sure if your marketplace is up to par or suspect that it can be improved in some specific way, don’t risk the future of your business with trial and error and instead seek professional assistance.
Launching Your Online Marketplace Website
Now that you’re ready to tell the world about your creation and attract users, it’s time you looked at the main steps to follow to launch your killer platform.
Selecting a domain
First things first, select and register the domain name for your web brand. Don’t attempt to pick a fancy name. Make it simple and memorable.
You also want to register more than one domain. It doesn’t necessarily mean you must register yourbrand.net, yourbrand.net, or yourbrand.com. There are a lot more TLDs to choose from. With this in mind, try to focus on more than one to increase your options.
Getting web hosting
Prior to choosing a web hosting provider, be sure to read the reviews and familiarize yourself with other clients’ feedback. You also want to make sure that your site runs smoothly with the selected hosting service. Pay close attention to the performance of their services and the quality of maintenance before making a purchasing decision.
Disk space and bandwidth are important considerations to have a satisfactory ecommerce platform. Determine the disk space and bandwidth required based on the size and number of your web pages, as well as your website traffic.
Last but not least, make sure your chosen hosting provider features professional customer support and ensures adequate security against cyberattacks.
Make your website easily navigable
It’s a rare user that will come back to a website that doesn’t have an intuitive interface and effective navigation design. So, it’s a good idea to organize your platform into specific sections and make them easily discoverable by visitors. You may provide links to the main section at the top of each web page or figure out other effective ways to do this.
Other aspects you need to consider when publishing your website are:
Using SEO-friendly code
You definitely want to take advantage of Meta and ALT tags to ensure your newly created ecommerce project appears in user searches through the use of appropriate keywords. By doing so, the keywords from your website will be recognized and displayed by Google and other search engines, which will drive traffic to your platform.
Installing website analytics
The statistics you’ll be able to monitor include the number of visits your website receives, average time on page, the average number of page views, bounce rate, etc. Keeping abreast of these metrics will help you measure the success of your brand and make necessary adjustments to increase its effectiveness.