How to Build Marketplace: 10 Simple Steps You Should Complete

6 min readApr 22, 2022


The eCommerce industry is growing in leaps and bounds.

In 2020, consumers spent over 4.28 trillion U.S. dollars worldwide and eRetail revenues will grow to $5.4 trillion in 2022.

eCommerce offers extremely lucrative business opportunities. If you want to join the gang but don’t want to deal with products, their shipping, storage, and so on, you can enter the business with your own marketplace — a platform that sells products offered by third-party merchants.

Interested? Let’s dive right in and learn how to create a marketplace website that could win over the market.

1. Define the potential to create a marketplace

Let’s start with some basics that will help you decide how to build a marketplace that will have a viable chance to grow into a successful eCommerce business.

Define your marketplace platform idea

So, what is a marketplace?

A marketplace is an independent online platform that connects merchants and buyers.

Unlike traditional online stores, marketplaces do not always offer their own product. Instead, they allow third-party sellers to list their products for a fee.

How Does a Marketplace Work?

There are thousands of marketplaces on the market. Below, you can see the projected growth of online marketplaces vs. eCommerce websites in the near future.

Amplified growth is one of the main reasons why businesses are now wondering how to create a marketplace website and join the game.

Statistics: Projected eCommerce Industry (Average Revenue Growth)

So, how do you start a successful marketplace?

Define a pain point

First of all, define a pain point that you are going to solve with the marketplace.

Take Airbnb for example. Its founders decided to solve their own problem — having an empty apartment that they wanted to rent out.

At the same time, they solved another pain point — they helped people who were looking for cheap short-term rent during a trip.

Define your target audience

When working on the buyer persona, try to describe it as precisely as you can:

  • Age
  • Location
  • Occupation
  • Family
  • Education level
  • Yearly income
  • Possible pain points
  • Media they use

2. Define the marketplace type

There are various types of marketplaces on the market with differences based on their business models and target audience.

Let’s dip our toes into an overview of all the possible options.

How to Build a Marketplace Website: Key Types
  • Peer-to-Peer (P2P)
  • Business-to-Customer (B2C)
  • Business-to-Business (B2B)
  • Vertical marketplace
  • Horizontal marketplace
Most Popular Categories for Online Shopping (Statista, 2018)

Research is the key-note stage of marketplace website development, which pays off in the long run.

The questions below will help you define the direction for your research:

  • What types of products do you plan to sell?
  • Who’ll be your target audience?
  • What countries do you want your marketplace to operate in?
  • What is the size of the target market?

2. Study and learn from the top-performing marketplaces

The Most Popular Marketplace Examples

1. Amazon

Amazon started in 1991 as an online book store and grew into the biggest marketplace in the USA, eventually going on to open offline stores and become one of the biggest technology companies in the world.

2. Etsy

When you look at eCommerce marketplaces, Etsy stands out because of its unique business model. Handmade products and vintage goods are the main focus for Etsy.

3. eBay

eBay holds the status of the biggest marketplace in the world that facilitates consume-to-consumer and business-to-consumer sales.

4. Alibaba

Alibaba is one of the biggest online marketplaces in the world with over 614 billion market cap and the biggest B2B platforms.

5. Bonanza

Bonanza is a direct competitor to eBay. At the start of its history, it was a marketplace of collectibles and rare products like coins, books, jewelry, etc.

3. Choose the right marketplace monetization model

Marketplaces offer great business opportunities, as there are a number of monetization strategies that you can use.

  • Commission
  • Subscription
  • Listing fee
  • Advertising
  • Freemium
How Marketplaces Make Money: Key Monetization Strategies

4. Finalize your unique value proposition & strategy

This part of the article provides an overview of all the possible models and steps for the best outcome.

  1. SWOT analysis
  2. Business model canvas
Business Model Canvas Example

Above is an example of Amazon’s business model canvas, which may give you a better idea of what you need to do.

3. Marketing strategy

Building a marketplace is one thing, but making it successful is an entirely different one.

Usually, a marketing strategy consists of the following parts:

  • Marketing campaign (paid ads)
  • Influencer marketing
  • SMM (Social Media Marketing)
  • SEO & content marketing
  • Partners (who’ll promote your marketplace)

5. Select a suitable option for creating a marketplace

Usually, six ways to create a marketplace are distinguished as follows:

  1. Create a marketplace website from scratch
  2. Use a marketplace website builder and open-source eCommerce platforms like WordPress, WooCommerce, Wix, etc.
  3. Create an online marketplace with no-code SaaS like Shopify or WooCommerce
  4. Marketplace website development on top of API-based SaaS
Choose Custom Marketplace Development Option

6. How to build a marketplace: chose a functionality-set

Below is an overview and description of some must-have functionality that you can use to create a marketplace.

User Roles of a Multi-Vendor Marketplace
  1. User accounts and profiles
  2. Search and filters

3. Payment & other integrations

4. Shopping cart

5. Security as a priority

6. Ratings and reviews

7. Real-time chats

8. Notifications

9. Other critical features

7. Define users and roles within a multi-vendor marketplace

If you want to know how to create a multi-vendor marketplace, i.e., a website where various sellers will place products, you will need to create panels for three types of users.

- Administration panel

This is the part that you and your team will use.

- Seller/Merchant panel

This part of the website is designed for vendors and should include the features for merchants such as account, product management, order management, notifications, reports, etc.

- Buyer panel

This is the customer-facing part of an eCommerce marketplace with all the features targeted toward selling products.

8. Follow the process to create a marketplace prototype

Let’s find out how to build a marketplace step by step if you decide to create it from scratch.

1. Business analysis

2. UX/UI design phase

3. Development phase of first marketplace version

4. Phase of marketplace testing and release

9. Promote your online marketplace & grow the base

Here are a few tactics for how you can grow your base of sellers:

  • Scan your competitors to identify sellers who might be interested in your marketplace.
Marketplace Examples Landscape
  • Look for merchants in the target region, get in touch with them, and offer them special offers for joining your marketplace.
  • Check industry-oriented social media groups to connect with your target audience and get inspiration for further marketplace improvements

10. Track the marketplace performance & improve

Operating a marketplace is a challenging task, especially when it comes to performance tracking. Concentrating your attention only on transactions is a doomed strategy that doesn’t provide a broad picture of performance.

How much does it cost to create a marketplace website?

Generally, marketplace development cost may range from $1,000 to $500,000 or even more. However, the minimum budget for marketplace creation is around $60,000 per platform.

The following table provides an overview of costs to create a marketplace based on the number of the required features and design.

Note: This is a summary of a guide.
Check out more details about DevOps services and recommendations on their utilization in the
complete article on the MLSDev blog.




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