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How To Start an Online Marketplace from Scratch - 2020

12/27/2019 7:02 PM

An online market place is an eCommerce website that connects multiple vendors, marketplace operators, and customers. With booming eCommerce and customers migrating to online shopping for its convenience and diversified buying experience, the online market place segment is seeing an influx of startups.

The online marketplace offers many advantages over traditional markets. It brings numerous vendors under one umbrella and provides transparent pricing and 24/7 shopping experience to the buyers. Young entrepreneurs are looking to cash in on the online shopping bandwagon inspired by the success of Amazon, eBay, Flipkart and the like. However many are new to eCommerce and absolutely clueless on what is involved in starting an eCommerce business.

How to start an eCommerce business in 2020? You can build a market place from scratch or you also have the option to use ready-made-solutions. Here we aim to guide you with the right information to start an online marketplace from scratch.

Pros and cons of building an online marketplace from scratch

Before learning how to set up an online store, let’s see the advantages and disadvantages of creating an online store from scratch.

Advantages
  • You can create your marketplace with the exact look and feel you want. It eliminates the need to stick to predefined templates.
  • There are no monthly or annual subscription costs. You have to incur only the one time set up expense.
  • This method also does not have any dependency on other software and also no licensing issues.
  • You have access to the source code and the ability to change it as required.
  • It can also give more security against online fraud. Hence it is a highly recommended way to set up an online store.
Disadvantages
  • This method requires huge investment which might be feasible only for big organizations.
  • It is time-consuming and requires several changes before you can get the final output.
  • You need to perform regular upgrade and maintenance which is complicated.

How to start an online market place?

Here we have simplified the doubts you might have on how to create an online store. Follow these steps to build a successful online marketplace.

1. Do the market research and choose an effective business model
  • Conduct in-depth market research and decide your user base and products. Identify the value you can offer the customers and the customer pain points you propose to address. Also, gain a clear understanding of the target market size. Are there any attractive niches to focus on? Finally, research on the competition and the current market trends.
  • Next, you need to decide the business model of your market place. Choosing a viable business model is important for long term success. Which model do you want to use? Sign up fees? Subscription fees? Listing fees? The business model you select should match with the operations of the market place.
2. Build your marketplace from scratch in either of the following ways
  • Using source codes You can create your marketplace from scratch with programming languages. If you are skilled at coding, you can try this by yourself. Otherwise, a third-party developer can help you out in this. Select a popular programming language like Java, Ruby, PHP, or Python.
  • Build using an eCommerce Platform Choose a suitable eCommerce platform. Analyze your business requirements since the eCommerce platform you choose should align with your business needs. Magento, PrestaShop, WooCommerce, OpenCart, and Magento 2 are some of the popular eCommerce platforms. Each has its own benefits and limitations. WooCommerce is easy-to-use without much coding knowledge while Magento requires coding knowledge. However, Magento allows multiple store functionality which WooCommerce doesn’t. Choose the platform that goes well with your needs.

3. Find the extensions to use - Whichever platform you choose you will need to include extensions to improve the functionalities of your marketplace. Each platform comes with a set of high utility extensions for introducing functions like inventory management, sales report, or payment tracking to start an ecommerce business.

4. Do a test run before you launch the store - Before you launch the store, test its functionality by executing a few in-store transactions. Fix any bugs you encounter and also ensure that your website is running at its maximum performance.

Once your online marketplace is launched, keep track of your marketplace statistics and monitor your website to exploit the hidden opportunities and grow your business.