The eCommerce landscape is expanding rapidly. According to Statista, retail sales will reach $8+ trillion by achieving a new height in 2028. However, a significant percentage of online sales comes from two-sided marketplaces contributing to the global economy in good numbers. Today, two-sided marketplaces are driving growth and revolution in the eCommerce space.
In addition, the prediction says that eCommerce platforms will be the largest and fastest-growing retail channels to conduct online sales in the upcoming years worldwide.
Undoubtedly, two-sided marketplaces have the potential to lead the retail industry. On the other hand, there are a few challenges that can be cobblestone. Therefore, if you are an entrepreneur or a business owner who wants to build a two-sided marketplace, you need to think of all the aspects.
Of course, launching a two-sided marketplace won’t be enough. You have to be informed about what problem you are solving for buyers and sellers that others are not tackling. In addition, you will require unique ideas, innovation, strategy technology and much more to transform a common two-sided marketplace into a successful eCommerce platform.
In this blog, you will get detailed information on building a two-sided eCommerce marketplace including: What is a two-sided marketplace, benefits, challenges, costs of building a two-sided eCommerce platform and more. Let’s begin with the understanding of the two-sided marketplace with examples.
As the name suggests, a two-sided marketplace is an online platform where sellers and buyers come together to sell or buy goods and services. It connects two individual groups by allowing them to find, interact and proceed to checkout.
Let’s make it more clear for you.
In other words, two-sided marketplaces are multi-vendor marketplaces, online eCommerce platforms or multi-vendor websites where people from diverse industries meet online to buy or sell solutions according to their requirements and demands.
However, these marketplaces can operate with B2C, B2B or C2C audiences in order to sell their products or services. In addition, one can also launch rental marketplaces as well.
In addition, technological advancements, innovation, unique business ideas and marketing strategies are the key factors of two-sided marketplace growth. Below are examples of popular two-sided marketplaces offering their users the best possible services.
Monetization is an important consideration of any business it helps businesses to sustain and make profits. In the same way, monetization of a two-way marketplace also helps the marketplace sustain, generate revenue, make profits and drive growth. However, there are ways to monetize a marketplace. Let’s explore the 5 popular revenue models through which two-sided marketplaces make money:
However, most of the marketplaces do not charge for a certain number of listings which is good to attract more listings. On the other hand, free listing may also reduce the number of quality listings.
However, there is a high chance of customer distraction in this revenue model. Marketplace may lose potential customers and can bypass marketplace products and redirect to the advertiser’s platform.
Building a marketplace is always advantageous to all its associated parties. Primarily, three types of users who benefit from two-side marketplaces include buyers, sellers and admin or marketplace owner.
Let’s explore the benefits of building a two-sided eCommerce marketplace platform below according to the user types:
Buyers are people or customers who visit the marketplace to buy goods or book services on the platform.
Sellers or service providers are the business owners who list their products or services in order to sell them on the online marketplace platform.
The marketplace owner is the person who holds the ownership of the marketplace platform.
Building an online two-sided marketplace is always an exciting adventure. But at the same time, you face a few challenges in building a marketplace. Here we will discuss the challenges and their solutions to help you overcome this situation.
Let’s explore a few challenges and solutions that you can face while launching, operating and growing your two-sided eCommerce marketplace platform:
Challenge: How to Validate the Marketplace Idea?
Suppose, if you ask the people to build a marketplace they will always encourage you. Because people love marketplaces. On the other hand, many people will disagree or will say your idea will not work.
But for you, their predictions should not be the deciding factor. Of course, you can take suggestions and think of it. But saying your idea is good or bad doesn’t determine whether it can be successful or fail.
Solution:
However, the best way to validate your marketplace idea is to build and launch your marketplace MVP (Minimum Viable Product). An MVP is the most preferred method to validate your marketplace idea. It lets you gather feedback from the early adopters and understand the market acceptance.
Challenge: The Marketplace Chicken-Egg-Problem: Whom to Attract First, Seller or Buyer?
It is not easy to onboard sellers until you have a wide pool of buyers. On the other hand, it is difficult to attract a good number of buyers until you have not a large number of listed products on the platform.
Solution:
Let’s understand the scenario through an example:
Suppose, you are opening an offline store.
Should you wait for the buyers before you open your store and fill your store’s shelf with goods? Or, you should open your store, fulfill the supply chain and wait for the customers to visit your store.
Result: Being a business owner, you have to wait for the customers. The customer will not wait for you. If they do not find what they are looking for, they will definitely visit your competitor’s stores to fulfill their demands immediately.
Conclusion: The conclusion of the chicken-egg problem means whom to attract first is to attract sellers and fill the supply chain. Sellers look for long-term relationships and can wait for the customers but customers don’t.
Challenge: How to Beat Marketplace Competition?
Solution:
Building a two-sided eCommerce marketplace involves several steps to execute such as defining your marketplace idea, deciding a business model, deciding features and functionalities, launching an MVP and at the final launching a full-fledged two-sided marketplace platform. Let’s go through the five essential steps to launch a two-sided marketplace below:
1. Define Marketplace Idea
2. Decide Business Model
3. Decide Features and Functionalities
4. Build an MVP
5. Launch and Grow Your Platform
1. Define Marketplace Idea:
The idea is the core concept of your marketplace. It is a kind of solution that you are going to provide the sellers and buyers on the platform. Therefore, it should be unique, because unique offerings and selling propositions will set you apart.
Conduct proper market research and do competitor analysis to identify gaps that you can fill and customer needs that are not in notice. This initial research and analysis will help you find the best idea for your marketplace.
2. Decide Business Model:
In the next and second steps, you need to work on your business and revenue model. This may include deciding your target audiences such as B2B (business to business), B2C (business to customer), or C2C (customer to customer) and revenue channels such as listing fees, transaction fees, commission on each sale, subscription charges, or a combination of these. Most importantly, don’t forget to consider competitors while selecting your revenue model.
3. Decide Features and Functionalities:
Features and functionalities are the basic needs of a marketplace. They profoundly influence your marketplace success. The goal of developing features and functionalities is to align the platform with the user’s needs and industry-specific requirements. In final words, user experience matters the most. So, always decide your marketplace features and functionalities to provide an enhanced user experience.
4. Build an MVP:
MVP (Minimum Viable Product) is a cost-effective way to test and validate your marketplace idea. It is a basic version of your marketplace that launched with essential features and functionalities to understand the user experience and validate their marketplace acceptance.
Launching an MVP is a chance to improve by getting user’s feedback before launching the final product. It saves time and money. There is always an option to come back and improve by launching a marketplace MVP.
5. Launch and Grow Your Marketplace:
Once you are happy and satisfied with your marketplace MVP results and market acceptance, the final step is to develop and launch your full-fledged two-sided eCommerce platform.
The cost of building a two-sided marketplace can vary significantly based on marketplace complexity, the number of features required, marketplace performance, the technology stack, development approaches you choose, the number of experts needed for the development and more. Moreover, developing a two-sided marketplace can cost you from $10,000 to $50,000 or even more depending on your requirements.
If you want to know how to build a two-sided eCommerce marketplace platform. There are three ways to launch your marketplace that can also determine your marketplace development cost:
This is an expansive and time-consuming development approach.
In this approach, marketplace owners pay monthly or yearly subscriptions which may vary depending on requirements.
It is a cost-saving way to launch your marketplace platform in the long run. Also, this type of readymade software is available at a one-time payment.
Yo!Kart is a readymade eCommerce marketplace solution that helps you launch your two-sided marketplace quickly and easily. By launching your marketplace with Yo!kart, you don’t just get access to the feature-rich marketplace software that helps you operate and manage your platform efficiently but it also offers complete control and flexibility.
However, there are a number of advantages of choosing Yo!Kart as your marketplace solution but the cost-effectiveness is one of the most significant advantages. It allows you to launch your two-sided marketplace starting at $499 which is a much lower amount compared to building a platform from scratch and choosing a SaaS-based solution in the long run. Let’s explore more such advantages of Yo!Kart:
1. Self-hosted Software: You can host your two-sided eCommerce marketplace on your preferred server.
2. White-label Solution: The solution allows you to establish your brand’s identity by launching your platform under your brand.
3. Lifetime License: Yo!Kart gives lifetime access to the solution by offering a lifetime license.
4. Source Code Ownership: The software allows you to own the marketplace source code providing you complete access to the software.
5. Customizable Solution: It lets you align your eCommerce marketplace website with your brand’s tone allowing you to offer personalized user experiences.
6. Fully Scalable: With Yo!Kart you get an option to scale your marketplace in order to meet your platform’s growing demands.
7. Technical Support: Yo!Kart provides one year of free technical support to help you deal with your queries and concerns.
Two-sided marketplaces are encouraging entrepreneurs and business owners to build their online eCommerce platforms. Especially, the success of popular marketplace platforms including Amazon, eBay, Etsy, Airbnb and Uber is becoming their inspiration.
If you are also one of the entrepreneurs or business owners who want to build the next Amazon, Etsy, or Uber, don’t wait for the right time. Because of the way the eCommerce industry has been growing and will grow in the upcoming years, every second is the right time to launch your eCommerce marketplace.
There is a huge opportunity, just what you need to have is an amazing idea and a feature-rich platform. With a combination of both you can become the leader of the market. Therefore, if you have that idea then you can easily launch your own feature-rich eCommerce platform with Yo!Kart.
Q 1. What are examples of two-sided marketplaces?
Ans. Two-sided marketplaces act as an intermediary between two groups (sellers and customers). There are a number of two-sided marketplaces:
There are a large number of two-sided marketplaces targeting different niches and industries.
Q 2. Is a two-sided marketplace different from a multi-vendor marketplace?
Ans. If we can simply put the answer, we can say that two-sided marketplaces are the same as multi-vendor marketplaces. In other words, two-sided marketplaces connect two groups of people and multi-vendors connect more than two groups. But the final conclusion is that both are the same.
Q 3. Is Amazon a two-sided marketplace?
Ans. Of course, Amazon is an ideal example of a two-sided marketplace. At the same time, it is also called a multi-vendor marketplace.
Q 4. Is Yo!Kart an ideal solution to launch a two-sided marketplace?
Ans. Yes, YoKart is one of the best solutions that can help you launch your two-sided eCommerce marketplace platform. Moreover, Yo!Kart has empowered thousands of worldwide businesses by launching their two-sided eCommerce platforms.
Q 5. Does Yo!kart Provide a mobile app for the marketplace?Ans. Yes, Yo!Kart helps you launch a buyer mobile app (Android and iOS) for your marketplace.