Want to be the Uber or Airbnb of your industry? You need to build an online marketplace. Here’s how to do it.
An online marketplace doesn’t sell products or services. It connects vendors that do with people who want to buy. It offers a quick and easy process for a secure transaction to take place. It provides a platform to solve any problems between buyer and seller. Then, it takes a commission.
Companies such as Uber, Airbnb and eBay have become billion dollar firms with their online marketplaces. As a result, it’s an area where many entrepreneurs want to operate. If you have an idea for an online marketplace to disrupt your industry, here’s a way of getting started.
1 – Identify your ideal customers’ pain points
Before you start thinking about software and web development, you need to be sure you have a worthwhile idea in the first place.
Your online marketplace will only be a success if it solves a problem for a group of customers. Before Uber came along, people found taxis inconvenient to find, ride in and pay for. Uber offered solutions to those problems and reaped the rewards. Is your idea as helpful as Uber?
Begin by figuring out who your ideal customer is, the person you want to serve. Build an avatar, with a name, age, gender, demographics and more. Now, think. What problems keep them awake at night? If you could solve that problem, how much better would it make their lives? What would it be worth to them?
Validate your idea by gathering a group of your ideal customers and asking them. Only once you have done this, should you be thinking about technology.
2 – Build your MVP
Once you’re sure your online marketplace idea is worthwhile, it’s time to build your minimum viable product (MVP). An MVP is the first version of your marketplace, with only its most essential features. It’s supposed to be quick and cheap to make. If it turns out your idea isn’t as good as you initially thought it was, you haven’t wasted too much time and money on it. If hopefully, your idea takes off, you can improve it and add features.
The easiest way to get an MVP built is to hire a freelancer. Use a platform such as Crowdskills to find a web developer and brief them on what you need. Once your MVP is built, get it out to real customers and test it.
Alternatively, you could use an existing online marketplace platform, such as Sharetribe, or Arcadier. With platforms like these, the back end is all done for you. You simply customise their marketplace to fit your needs. Of course, this service comes at a price.
3 – Rebuild for scale
When you test your MVP, you should see signs that your online marketplace idea is a winner. Are customers joining your platform? Are buyers finding what they are looking for? Are sellers receiving their payments easily enough? Is the amount commission you are taking making it worth your efforts?
On the other hand, what could be improved? Are there parts of your marketplace that customers are finding difficult to use? What features are your customers asking to be added?
If you are going to rebuild your marketplace in order to scale, you could hire a Chief Technical Officer (CTO). However, if that is beyond your budget at this point, an expert freelancer can help decide your tech stack. At Crowdskills, we have amazing, local, vetted freelance web developers, waiting to power your online marketplace.
4 – Build up your supply side
The pitfall with online marketplaces is a chicken and egg situation. Vendors will only come to your marketplace if there are buyers there to sell to. However, to get buyers to come to your site, there need to be vendors they want to buy from. How do you solve this problem?
Start with bringing vendors on board before you launch. Contact the suppliers you would like on board and offer them incentives to be ‘founding partners’ on your marketplace. Perhaps a lower commission rate, compared to later entrants? Explain to them that they should not expect sales straight away as you are still ramping up, but if they get in early, your marketplace will be a major revenue generator in the future.
5 – Find a marketing strategy for your demand side
Once you have a good selection of vendors for buyers to choose from when they first find your marketplace, it’s time to get buyers on board.
Launch with a bang. Work on your PR to make sure your launch is covered everywhere where your ideal customers may see it. Think about publications and websites which are relevant to the industry where you’re operating.
After that, the choice is yours, whether it’s content marketing, social media, conventional advertising or anything else. Test everything and find the marketing channels that are most effective at building your marketplace.
Let’s get it started!
Once you’ve followed these steps and got your online marketplace idea started, you should see your business growing and growing. More buyers lead to more sellers, and the cycle continues.