5 Steps to Launch an Online Marketplace
E-commerce has evolved from online banners to one of the most progressive ways of goods and services purchase and sales that embraces individual approach and wide opportunities for all kinds of audience.
E-commerce is represented in the number of forms: online stores, online auctions, and of course marketplaces.
An online marketplace is a special type of e-commerce platform which connects unlimited number of buyers and sellers and helps to develop trading networks which makes negotiating, settlement and delivery easier and more efficient. Transactions on such multichannel platform are processed by the marketplace operator.
Let’s describe 5 main steps on the way to your own online marketplace.
Step 1. Find your niche.
In order to find your niche explore people’s needs. It is better not to focus on a single asset like cars or real estate – the more effective approach is to define the needs of existing community. This will help you to find the problem of your target market and think about the way of solving it with the help of your marketplace.
Step 2. Solve legal issues.
Register a legal body and find a lawyer who has exceptional knowledge in ecommerce and solve all legal issues finding out what aspects may concern e-commerce business in your country. Dealing with legal issues at the beginning will help you to develop your business later without any hindrance.
Step 3. Make up a business plan and pay special attention to the following issues:
Define what business model to follow. In particular it means you need to find out what kind of operations would be allowed for buyers and sellers at your marketplace (direct sales, auctions, requests for proposals), what reports you need to be available. Usually it is a good idea to give your customers a wide range of opportunities and flexible settings so they can choose the best way to sell their product.
Consider logistics management as you’ll need to provide broad reach of prices and terms of different transportation companies, lower logistics costs, and reduced vulnerability to transportation service disruption as well as find the most convenient payment way for buyers and sellers. This will help in both ways: whether you are going to act as a seller putting products into auctions and direct sales or you’ll let others to accomplish trade operations at your marketplace.
Choose payment system. Analyze the market and choose the most convenient payment system for the niche you are in. Also it is important to choose the system that covers the most popular payment options in your region or the payment processing including the biggest number of options. Make an agreement with the payment system and open merchant account for future transactions.
Develop income schemes that you want to have on your platform. Usually there are several ways of income for the platform owner: commission percent from auctions purchase or sales (it is possible to set commission according to the product type or just for listing the product at the marketplace), commercial accounts payments, delivery fee, top-positioning fee, money withdrawal commission, insurance service, freight, the list is endless. Choose the ones that work best for your business.
Choose and buy a unique domain name for your project. The domain name is the first thing that attracts people to your marketplace. Do not hesitate to consult experts in the industry how to choose the best option.
Step 4. Choose the right software provider.
While searching the market it is a good idea to evaluate the price and quality balance. When choosing a provider first pay attention to the technical side of the platform suggested. To be sure consult specialists to know whether the provider uses the most modern technologies. Secondly look for the provider who will care for all technical issues as server and hosting services in a package which will save you time for marketing and promotion.
Do not be flattered by cheap script solutions for less than 2 000 -3 000 dollars that can be found on the Internet. They leave much to be desired. Don’t pay twice – make quality product at first time.
Be careful of those providers who require royalty fees from software income. E-commerce is not the kind of industry where it is necessary. On the contrary, free updates and simple, convenient platform management as well as flexibility and customization are a must!
Step 5. Do the marketing
Marketing is the king. If you don’t invest enough of you time, efforts and investments in your platform marketing and promotion it won’t be used by people.
Make your marketplace participants feel like a community. Find the right communication channels. All successful e-commerce businesses have a strategy for attracting customers to their sites. Without a carefully thought-out plan, turning a profit becomes much more difficult. Various marketing options online businesses have at their disposal include SEO, PPC advertising, email and SMM campaigns.
Additional options include bonus and partner programs which can help either to attract new clients or retain the existing ones. Try as many instruments as you can and find out what works best for you.
Think of your future clients’ retention by organizing special advertising campaigns for existing clients, get feedback and improve your business.
If you are still not sure where to start learn from the best experiences. Look at success stories of eBay, Uber, Airbnb and implement their schemes of working adapting of course to your business.
Ecommerce is a huge multi-billion dollar industry and is expected to grow by 20% this year to $1.5 trillion globally.
Ecommerce is constantly changing and evolving with new technology and changes in consumer behavior. It’s increasingly becoming more sophisticated and mobile.
Up-to-date statistic data to inspire future online marketplace owners:
- 71% of shoppers believe they will get a better deal online than in stores
- 80% of the online population has purchased something using the internet, 50% of the online population have purchased more than once
- Online sales in in the first quarter of 2014 were up 13% compared to same quarter 2013.
- Cyber Monday 2013 was the biggest online sales day of all time with US$1.7 billion spent.
- 36% of consumers spend 30+ minutes comparison shopping before making a decision on purchasing a commodity product; 65% spend 16+ minutes doing so.