The success seen with platforms such as Etsy, Not on the High Street and Airbnb has generated an unprecedented interest in marketplaces. They have proven that the model can be applied to just about any business in a way that is scalable and has the potential for huge growth.
What’s more, this market is evolving at a great rate which makes it the perfect time to become an entrepreneur in this field and build a marketplace platform.
That’s not to say that it’s not a big undertaking, but the technology is now available to make it a success assuming you have an informed strategy, understand the best practices, and are willing to put in the hours!
In this guide we want to tell you some of what we’ve learnt here at Code23, which will help enable you to become part of this exciting industry… and put you in a great position to build a marketplace that’s viable.
Initially we’ll talk about why this has become such a booming market, the challenges you may face, why it’s crucial to be clear about your own objectives, the best time to launch (now!) and the importance of engaging your users.
It’s worth noting here that funding for projects that are part of the Collaborative Economy industry is already almost five times more than that of the most successful social networks (think Facebook, YouTube etc) since December 2015. And that gap keeps getting bigger. According to a study by PwC, the size of the collaborative economy industry is currently around £11 million, with that figure expected to reach £247 million by 2025.
The beauty of marketplace businesses and the reason they are so scaleable is that you don’t actually need your own inventory to run one – think of Etsy which doesn’t own any actual retail space. In other words, you can create an online marketplace that is hugely successful without having big layout costs for the initial inventory. – removing a great deal of the risk often associated with starting a company.
This has opened up an opportunity to thousands of entrepreneurs in many different sectors who may have previously not seen a way to market.
But let’s not kid ourselves, to build an online marketplace and make it successful isn’t a foregone conclusion, it takes hard work and commitment.
Having a fantastic idea that you believe in and launching a marketplace is just the start. Just think, if you don’t have your own inventory initially, how are you going to attract buyers? and equally, how are you going to sell the idea to people so that they bring their own inventory into your marketplace?
Unless you get really lucky, it is unusual for a marketplace to become successful overnight, there is a time period required to build critical mass. This can be because many marketplace ideas will require a change in mindset. Think of Airbnb, the concept of staying in other people’s homes was previously unheard of and unfamiliar. It’s important that when you set out you are very clear in what it is you want to achieve. Break this down into three simple questions:
Be certain about why you want to create a marketplace. Be honest with yourself about this – is it because you want to work for yourself? You believe it will make a difference to the world for the better? You simply want to be wealthy? It actually doesn’t matter what the reason is, but as long as you are clear and honest about it you can develop the correct strategy to make it happen.
A word of advice – it’s best if it’s something you are truly passionate about, if it means a great deal to you, you are far more likely to dedicate time to it and ultimately make it successful.
There’s a big difference between envisaging a small business that will require minimum staff and one that is expansive and will require funds being raised from venture capitalists. In the second instance, to attract investment you’ll need a clear business strategy, a solution to an identified problem, strong UX design concepts or a Minimum Viable Product (MVP) as well as figures to show how you’re going to turn your investor into a very wealthy investor!
Once you’re clear on your initial thinking and goals, from a practical point of view you’ll need to consider how to actually build a marketplace. If you can’t write code yourself you’ll need to find a specialist marketplace development agency to do it for you.
Work out which parts of the process you have experience in and where you are going to need help and advice. Take into account how much you want to spend, who your contacts are and where you can utilise your own professional experience. All of these factors will impact the way you start up your marketplace business and your initial stages.
While many start-ups already consist of a capable team of founders, if you’re on your own without the necessary technical skills, don’t let that put you off, you can still make it happen… you just need a trusted digital partner to help you make the right decisions throughout your journey.
Of course, the features and functionality on offer will play a key role in the success of your marketplace but there’s more to it than that. Your initial idea and drive is what will make it successful, and your ability to sell it as a viable proposition that people will want to buy. In other words, focus from the outset on developing a Minimum Viable Product (MVP) and getting it launched as early as you can.
By doing this you’ll soon know if you have a great business idea without a great deal of upfront investment… what you don’t want to do is spend a lot of money on something that further down the line clearly wasn’t such a great idea after all. And because you won’t know if the idea has legs until you offer it to people, get it out there as soon as possible while making sure you can, at least at a minimum level, deliver the solution you’re promising.
In the initial stages focus on the idea rather than the platform. The best platform in the world won’t make a success of a bad idea that no-one is interested in. It’s really common for people to mistakenly spend too much money and time on developing a sophisticated platform that could work worldwide… before they’ve convinced a dozen people they have a viable idea.
By getting feedback from customers and potential customers you can keep refining your proposition until you have it perfected. It can’t be over-emphasised just how important customer feedback is… keep talking to people, their input is invaluable. It’s the validity of your proposition that will see your business succeed or fail – the platform is an integral part of that but the world’s most all singing all dancing platform won’t turn an unwanted proposition into a wanted one – its customers that do that.
Once you’re happy that your idea is sound, it’s time to get it out there… it’s time to build a marketplace platform! That’s where we come in. Here at Code23 we take a user-focused approach, using our advanced headless platform we are able to offer a completely unique customer experience, one that isn’t based on templates or pre-made layouts. Rather building a fully scalable, optimised and lucrative multi vendor marketplace to increase engagement and drive sales.