How To Build a Marketplace
Many first-time marketplace startup Founders are asking “How do I build an online marketplace?”, I am afraid the answer is not simple, rather very complex and certainly up for debate.
That question comes with a series of follow-up questions to dig a little deeper into what you’re trying to accomplish.
What kind of marketplace do you want to build?
Do you have what you need to even consider starting to build the platform?
When do you want to start building the platform?
How long do you have to build the marketplace?
What is your budget to build what you need?
We will explore each of these questions down below and hopefully give you some direction on what you need to have in place in order to build an online marketplace platform.
What kind of marketplace do you want to build?
This question should be one of the easier ones to answer from the above list. What is the problem your marketplace is going to solve? Do you want to build an MLM (Minimum Lovable Marketplace), MVM (Minimum Viable Marketplace), or a complete marketplace platform? This has to be answered first in order to find the correct answers to the rest of these questions.
We discuss the differences between an MLM & MVM in this blog post if you’d like a deeper explanation.
Minimum Lovable Marketplace (Product):
Essentially this will be the bare minimum you need to build in order to create the User Culture you need to be successful, lovability. This will be more than the MVM, but less than the whole completed vision of your marketplace. It will consist of a list of features & workflows that you will need to develop for your early adopters to rave about their experiences with their network to generate some K-Factor. This will be key to drive more traffic to your marketplace and therefore generate more Supply & Demand for your platform. A great question to ask yourself to help resolve this matter is, Do you want to be the Harley-Davidson of marketplaces?
Minimum Viable Marketplace (Product):
This will be the bare minimum combination of features & workflows for you to get up and running to prove you can achieve PMF (Product Market Fit) and then be ready to scale your marketplace. Likely it would consist of the following workflows; signup, listing, and checkout with these features; ID verification, Stripe integration, Member chat, and invoicing. You are trying to build your marketplace platform as quickly as possible and as cost-effective as possible. You are not trying to “WOW” your early adopters, only give them enough to build Supply & Demand.
By answering that question, you will now be able to answer this question, Do you build a custom marketplace (Code or No/Low-Code) or use an out-of-the-box marketplace? There are benefits to both options and many solutions to both options for building your marketplace.
How to build a custom marketplace?
This is why Marketplace Studio was created, to help first-time Founders bring their ideas to life through Design & Technology. Marketplace Studio specializes in researching, designing, and coding marketplace platforms leveraging their real-world experience founding Ruckify. This will give you the largest competitive advantage but also takes more time to build your online marketplace platform and also more expensive.
Do I use an out-of-the-box marketplace solution?
Our friends at Sharetribe can certainly help you with this option. They specialize in offering marketplace platforms for Non-Technical First-Time Marketplace Founders. They give you pre-built templates to customize to your liking and even offer Flex which you can build off of like lego blocks (Usually requires coding)! This will be your quickest option to get to an MVM.
Do you have what you need to even consider starting to build the platform?
We get it, we’ve been there ourselves! You’re beyond excited and want to get up and running ASAP! We can not stress this enough, the importance of prepping to make sure everything is researched, designed, and spec’d before starting anything. There are 12 steps to do before you even think about writing any code or hiring a developer. We guarantee that following these steps will actually save you a ton of time, money, and headaches down the road. Preparation is everything.
Competitive Marketplace Research
Competitive marketplace research helps you keep up with the other marketplaces in your vertical by analyzing their business strategies, market share, and most importantly what makes your business different. Competitive research looks into what the competition does well, and how we can do better. Marketplace Studio hosts a team of specialists that know how to look and find all of this data for you. This takes SEO rankings, feature comparison, SWOT analysis, target market research, and social media analysis into consideration.
Target User Research & Persona Development
We will develop User Personas for your Marketplace to clearly define who you should be targeting to build Supply and generate demand. The research compiles the foundation of any development project. User research dives into our target customers, the problems they face, and how to provide the best possible solutions. This takes SEO rankings, feature comparison, SWOT analysis, target market research, and social media analysis into consideration. Marketplace Studio hosts a team of specialists that know how to look and find all of this data for you.
Create Marketplace Business Plan
We will help you from the very beginning to formulate a Business Plan that will cover all of the complicated aspects of your Marketplace. Variables for development will depend on the urgency of its completion, the level of complexity the project entails, and the overall size of the project as a whole. From researching your market to modeling your financials, Marketplace Studio has specialists that can handle it all for you.
Establish a Marketplace Design System
Marketplace Studio walks you through the design process, so you understand how important it is when building your business. A well-planned Design System for Marketplaces includes everything from your fonts, to your brand assets (logo, colors, etc), to your heading structure which is important to your SEO strategy. We shape your brand development to favor SEO advantages and present it in a way that’s easy to leverage and share with future designers.
Marketplace Brand Development
The Brand of your Marketplace is critical to your success. What archetype(s) does your Brand fit into? What color pallet resonates best with your target audience? How do you convey Trust & Safety through the colors & fonts you choose? Marketplace Studio experts will help with it all like a complete Design system guide, branding color pallet, and three logo options, anything you need.
Design Thinking Sprints
Using design thinking as our methodology, we grow and expand your ideas by empathizing with your ideal user and testing it against real-world challenges. Leveraging The Design Thinking Methodology, we can determine exactly what your target personas what in your Marketplace. There are many advantages to iterating at the design level instead of what most startups do, iterate in the code. You will be able to save time, money, and your future team will thank you for less technical debt from legacy code.
Create Design Prototypes
What if you could have a Minimum Lovable Product to validate with your Users without having to write any code? This is the idea behind creating an interactive prototype using Figma at the end of a Design Sprint! Prototyping is a key component of the development process that helps bring your project to life while still leaving space for refinement to fit your vision and needs. Marketplace Studio takes a unique approach to prototypes through the process of Design Thinking, where we challenge UI/UX to create a project that your Users will love.
UX Testing & Validation
By using the prototype, we will be able to find real people to test the designs against to ensure you have the ideal UX for your target personas. This is why we aren't building you an MVP, but instead an MLP (Minimum Lovable Product). We validate our findings against real people and potential clients, so we can find solutions to every challenge the product may face. This will construct the roadmap to develop the high-fidelity prototype into a reality with quality assurance specialists every step of the way.
Integration & Partnership Proposals
Are you asking yourself what tools or platforms should be in your tech stack? Marketplace Studio offers a unique opportunity for third-party partnerships with a network of integration specialists at a range of discounts and value. We can pair you with the best option based on security, reputation, Privacy & Cookie Policies, and get you access to personalized demos, so you can be sure you made the right choice. Everything from Segment, for data aggregation to Trulioo, for ID verification.
Business Requirement Documents
Are you having a hard time aligning your business needs or your business plan with your product roadmap? We can help! We can help craft a business requirement document to match the needs of both your Users and your business.
Design Specification Documents
Have you had issues with past Development teams building a UI to match the design or mock? Writing an intricate three-dimensional Design Specification Document will help ensure the Devs coding your feature know every single detail of the prototype (mock) to a T.
Technical User Story Documents
We can break your Business Requirement Doc, Design Spec Doc & Prototype into digestible pieces for your Development Team to handle. We can write User Stories with pre-conditions, acceptance criteria, and of course, what problem you're solving with context.
When do you want to start building the platform?
It is hard because you don’t want to fall behind on your competition, but patience is key to success when building something as complex as a marketplace. Going through those 12 steps and iterating at the Design level will, without a doubt save you technical debt in the long run.
By working with Marketplace Studio, we will run through this process for you, and will take us up to two months to complete at the most. The good news is that it doesn’t mean you have to wait two months before any code is written. Once we’ve prototyped a workflow and have written the Design Specs and User Stories, we can start coding workflow by workflow. This is the upside to hiring Freelancers because they’re charging by the hour and not employed full time!
How long do you have to build the marketplace?
Time is always going to be an important factor when it comes to development, you’ll always be racing against it. The best way to ensure you complete your marketplace on time and on a budget is to have everything thoroughly planned out and organized for the development team to start coding.
This will limit and prevent any unknown blockers from arising and stopping development until it is resolved. It will certainly limit the number of questions by the developers and give them a recipe on how to bring your idea to life. Planning is crucial when it comes to building a custom marketplace or when bringing in a developer for any reason.
If you are tight on time, I’d recommend checking out Sharetribe Go, the out-of-the-box marketplace for you to quickly validate your idea and the problem you’re solving. Obviously, these types of solutions are limited in some ways, but it allows you to start building your Supply almost immediately while marketing your marketplace. This can be done in tandem with building a custom or semi-custom marketplace with Sharetribe Flex. This way, you’re marketing your platform, building Supply, and generating some level of a network effect. Then you’re able to use the release of your Marketplace 2.0 when the development is finished and your platform is production-ready.
What is your budget to build what you need?
This is the toughest part of building a marketplace. How can you have enough in your wallet to build a custom or semi-custom marketplace out of the gate? It is unlikely that you will have investors with no platform or metrics to show for it, so you’re most likely going to bootstrap.
By following steps one through twelve, you’ll end up with interactive prototypes that you can use to pitch to investors on and get a waiting list of Users to join as soon as it is in production. Of course, you still have the out-of-the-box solution or go with a no-code tool to save money. There is nothing wrong with going that route! For Canadian marketplaces, you can have funding assistance through a few programs such as IRAP, CanExport, and BDC.
What you need to keep in mind is that usually, you get what you pay for and also you’ll see what separates a generalist versus a specialist in terms of companies to do business with for building your marketplace.
Summary
The more you plan, the better off you will be when building your marketplace platform. For founders, there is a great community resource for Marketplace Founders at Everything Marketplaces.
Author’s Note:
Whether you plan on going through this wild journey alone or want to inquire about using Marketplace Studio, I’d love to chat with you! Please fill out the Contact form on our site and schedule an appointment through the automated response email.
