How to Build an Online Marketplace: Custom Development with Marketplace Software

Got an idea for a marketplace you want to implement?

Here you will learn how to build it, the options you have and important considerations for creating an online marketplace.

Two main options to build your own marketplace: 

• Custom development
• Off-the-shelf solutions

Custom development of your online marketplaces

Custom development means building software for a client from scratch, all new or with API services. In this case a custom marketplace software. You can hire an in-house team of developers or outsource your marketplace development.

Custom development is a good choice to:

• Commit to build a long-term project
• Raise investment and solve a specific pain
• Have greater flexibility
• Add more features and specific customization 
• Have control of your project
• Integrate with any external APIs and services
• Have a scalable solution
• Build a custom UI/UX

Pros of custom marketplace development

• Compatibility: your marketplace can be made compatible with different devices, technologies, external API services and other tools.
• Personalization: you can build the marketplace to your specific business needs and requirements.
• Scalability: a custom marketplace can handle any number of listings and users, no limit in growth.
• Security: custom development allows more tools for securing your marketplace against fraud and malicious activity.

Cons of custom marketplace development

• Time: to build something great requires time and commitment from a team, finding the right partner and dedicated team is essential. 
• Cost: custom development requires bigger investment. The bets practice is to build an MVP to gain traction, find investors to raise money for further product development.

With consumers consuming content and making purchases through many touchpoints traditional eCommerce platforms are in need to accelerate innovation.

Marketplace solutions

Off-the-shelf software is a ready-made solution. They can be a good quick start for validation of the business. 

Off-the-shelf solutions are best suitable for

• Validation of business idea
• Easy to implement solution
• Use out of the box features 
• Less investment

Types of marketplace software builder:

1. SaaS – Software as a Service
2. CMS – Content Management System
3. Vendor-hosted
4. Self-hosted (open-source or closed-source)
5. Headless API – Application Programming Interface
6. Marketplace Builder with SDK
7. Marketplace with a basic front-end template
8. PaaS – Platform as a Service

1. SaaS – Software as a Service

SaaS is a software model where software is as subscription, rather than bought and owned, and is centrally hosted.  

The Saas marketplace platform could be the most suitable for marketplaces with a relatively simple business idea, or a niche & non-technical team. 

One of the most common pricing models for such services is a monthly and yearly subscription fee. The exact price may depend on the number of transactions made through your marketplace, the number of listings (published goods or services), or the total number of users that have been registered on your platform.

Pros of SaaS for marketplaces

• Little or no technical effort to start from the founder’s perspective
• Experienced technical support from SaaS provider

Cons of SaaS for  marketplaces

• Low flexibility in terms of both functionality and UI
• High price after reaching some number of users, listings etc.

Hosted version:  

• The provider takes care of servers and tech support.
• You get regular updates of version and latest features
• Some payment gateways are available
• Little technical knowledge is need
• Little or no customization the backend
• Limited customization frontend (CSS, HTML, and JavaScript)

Self-hosted version:

• You are responsible for installation
• You are responsible for the technical skills
• The level of support depends on many factors
• Some code can be re-written
• Requires bigger investment

Best choice Vendor: Arcadier Marketplace Builder – Scale version 

2. Content Management System (CMS)

СMS is a software used to create and manage digital content. Marketplace CMS gives more flexibility than custom SaaS in terms of logic and UI customization. The developers for the marketplace team have more control over the code base and can create pages and transaction flows with more complexity. To build the marketplace you must hire a team of developers who have experience with this specific CMS or tech stack on which it is built.

Pros of CMS

• Flexibility for UI and business logic customization
• Can access a pool of vendors 

Cons of CMS

• Need to find the right developers with a particular CMS tech to customize it (if a vendor doesn’t offer any customization support)
• Additional development cost, if it doesn’t feature public API or integration with external APIs.

Vendor-hosted: 

• Vendor offers hosting and deployment services. 
• Vendor provides backups and updates for your marketplace
• Access a team of dedicated developers through the vendor to customize it according to your needs.

Self-hosted: 

• open-source marketplace CMS or it can be a commercial lifetime license
• You control deployment, scale and customizations to meet your needs
• You are also responsible for technical support.

3. Headless API

Marketplace Headless API (or so-called API as a service) is the evolution of SaaS marketplace technology. An API is a set of requests and methods between a server and a client.

All the vendors of Headless Marketplace APIs provide great flexibility for customization to build your marketplace idea. A great solution can be built with APIs. They are also great to customize the UI and logic.

Some vendors offer an SDK marketplace library (or set of libraries for different programming languages) that wraps low-level calls to your API from marketplace front-end over HTTP or GraphQL, this can accelerate your development. 

Some marketplace API providers offer a frontend template that uses their marketplace API (+ SDK). A particular marketplace developer may use it as a starting point and customize or even rewrite it from scratch later if needed.

Pros of Headless API

• Totally customizable UI and maximum business logic flexibility (with the API endpoints)
• Easy to integrate Headless API into existing website or e-commerce sites (Some API vendors offer connector scripts for some target e-commerce platforms)
• Full flexibility for marketplace builders in terms of API support, QA and DevOps

Cons of Headless API

• The UI and UX for the marketplace need to be created from scratch or based on a frontend bespoke template. 
• Some vendors manage hosting, deployment, and backups of the front-end. 
• Need for a dedicated team of engineers to build your marketplace

Top Vendor: Arcadier Marketplace – Enterprise version 

4. Platform as a Service (PaaS)

“Platform as a Service” or “Marketplace Platform” is the new enterprise type of a marketplace tech approach. PaaS is a digital platform that allows people to build marketplaces and services by using the API services.

Paas is a great toolkit for a marketplace builder, means more flexibility for the UI/UX and logic are APIs, the deployment and administration are done through the platform portal interface. It is a mix of open-source, API as a Service and Infrastructure. 

Here you gain much more flexibility for customization. Here you have access to the frontend and backend. The downside is that you’re tied to the platform’s grid of deployment and scaling servers. For some, you need your vendor to provide DevOps and support. Other vendors will help to provide Tier 1 services for scaling at a cost. 

Pros of PaaS Marketplace Builder

• All pros of the Headless API
• Plus some Vendors provide support and consulting for both front-end and back-end parts of a marketplace

Cons of PaaS Marketplace Builder

• There is some Vendor dependency in terms of long-term commitment 

Best Vendor: Arcadier Marketplace Builder

What to consider when deciding to develop a marketplace?

Budget

Is your capital under USD $25,000? An off-the-shelf solution could be an option of low-budget to start with limited functionality. Another option available to you is starting with a discovery phase and building PoC, if you plan to pitch your idea to investors to raise money.

Do you have USD $25,000+? We suggest building something with a Saas, Paas, with Headless API to customize your Marketplace. 

Deadlines

Want to launch a marketplace MVP in less than three months? Your options are SaaS Of-the-shelf. 

Have more than three months? Go custom, build something with a Headless API option, create our unique ecommerce experience. 

Investments

Have limited funds? Go with a pre-build Saas or Paas, with litte customization.

Are you willing to fundraise further? Custom development is better to innovate, using a Headless API vendor will be the best way to go. Hire a dedicated team of experts. 

Size of your marketplace

Less than 100,000 users in your marketplace? SaaS or PaaS are a perfect fit. Find if the vendor is able to scale when needed.

Planning to have more than 100,000 users? A Headless API with scalability or custom development with a Team of experts are the best approach for scalability. 

Technical Skills

Not Tech founders? You can hire a Team of eCommerce experts to build a custom marketplace with SaaS or PaaS. The top value of custom development is personalization. By building a marketplace with the right tools, you will be able to design it exactly the way you want it to be. 

Want to hire a dedicated team of eCommerce experts? We might be able to help you, depending on the stage of your eBusiness we can jump in, build a team of experts, to provide the right mix of tech skills, innovation and business sense.

Summary

When planning to build an online marketplace you have two options: custom development or an off-the-shelf solution. 

Off-the-shelf software for marketplaces comes in four different shapes: SaaS, CMS, Headless API and PaaS.

While deciding what is most convenient for you business, remember these questions:

• What is your budget?
• When are your deadlines?
• Do you plan to fundraise?
• What is the desired size of your marketplace?
• Do you have the technical skills?

If what you need is a fast and less expensive option? 

Then an off-the-shelf solution is the way, we are the right partner to help you build your MVP with best time-to-market and with little investment. (SaaS, PaaS, Headless API) 

But if you want to build a marketplace to your specific needs, scalable, more secure, hyper-personalized?

Then custom development is what you need. Here at Towa Software, we build custom marketplaces with highest-standards of quality, best rates in North America and with an expert team of developers, ecommerce consultants, innovation manager, UI/UX designer, QAs testers and Scrum Masters.

Book a 15-min video call with us. 

The world is changing and eCommerce is developing faster than ever.

With consumers consuming content and making purchases through many touchpoints traditional eCommerce platforms are in need to accelerate innovation.

There are new purchase buttons on many devices, from tablets to IoT in the kitchen and laundry rooms. You can even by with voice commands with Alexa and Google Home, read reviews, and place orders. The new consumer is adapting to the new IoT era, even if most retailers are not yet.

eCommerce companies who are moving with this trend are gaining market share, while others are facing challenges to move ahead. One of the major challenges is how to create these new channels, how to build these solutions?

The answer is API Headless eCommerce.

What is headless API ecommerce?

Is an eCommerce Solution that stores, manages, monitor, delivers any product or service without a default front-end delivery channel. Meaning you can build your own customer experiences with it.

With a headless eCommerce platform, the front-end (or the “head”), which can be a template, theme, or any desire storefront, is decoupled and can be changed, removed, or added to innovate your unique customer experience and consume the same backend.

Developers can use APIs to deliver things like products, quantity in stock, customer reviews, or top-selling items to any screen or device, while the front-end developers can build in any framework, channel, or device.

Basically, all functional elements (such as forms, blogs, banners, products, etc.) of the system can be programmatically managed. This includes the creation and management of the content components.

In other words, headless eCommerce architecture is built for the new age (mobility, IoT, hyper-personalization)

In contrast, traditional eCommerce platforms have their heads define and locked. They have a predefined front-end that is tightly coupled with the back-end, so even if there are plenty of customization features and unrestricted access to code, the platform is only designed to deliver content in the form of websites and maybe native mobile apps.

A headless API eCommerce architecture delivers a platform via a RESTful API that has a back-end data model and a cloud-based infrastructure. Since the platform is not coupled with the back-end, new eCommerce brands can build and deliver anything to satisfy customer needs.

Now new eCommerce players can build products, services, and payment gateways on top of smartwatches, kiosk screens, Alexa devices, and everything you can imagine.

How headless API eCommerce works

An eCommerce platform or software as a service works by communicating between the presentation or front-end channel and application layers through web services or application programming interface (API) calls.

So for example, when a user clicks a “Buy Now” button on their smartphone, the presentation layer of the headless eCommerce platform sends an API call to the application layer to process the order. The application layer responds with another API call to the front-end layer to show the customer the status of their order.

Headless API ecommerce vs traditional ecommerce

Here are three main differences between traditional ecommerce platforms and API headless ecommerce services:

1. You build your own front-end

Traditional eCommerce

Front-end developers working on a traditional commerce system encounter several constraints when it comes to design and the overall process. Any changes made would require a great deal of time to edit the database, the code, and the front-end platform as well. Developers are also limited to what can be updated and/or edited without the risk of voiding a warranty or preventing any future upgrades.

API Headless eCommerce

With the removal of the default front-end layer, headless eCommerce enables front-end developers to create a user experience from zero which fits perfectly with their target market needs. Front-end developers don’t need to worry about modifying databases in the backend as all they have to do is make a simple API call. In other words, front-end developers are given all possible tools to craft personalized customer experiences.

Here you can work with product managers, innovation managers, and marketers, to define what is the best experience for your company.

An API headless solution is far better than a based template

2. Full customization & personalization

Traditional eCommerce

Traditional platforms offer a predefined experience for both your customer and for the administrative user. But these platforms do provide not much flexibility for customization or personalization. If you are satisfied with the experience provided by these traditional platforms, that experience is the default for all customers.

API Headless eCommerce

Traditional eCommerce platforms constrain developers and users to what they define as the correct user experience. With API headless platforms, since there is no front-end, developers can create their own user experience from zero. You have more control over the look and feel of your eCommerce platform and you also have control over the user experience for both your customer/merchants and your admin users.

3. More flexibility and adaptability

Traditional eCommerce

In traditional solutions, the front-end is tightly coupled with the back-end coding and infrastructure. This leaves little or no room for flexibility to make any desired customizations. To make single customization, developers need to edit multiple layers of coding between the front-end right through to the database layer that is defaulted in the back-end.

API Headless eCommerce

Since headless eCommerce has already decoupled the front-end and the back-end, this creates endless possibilities for customization when required. To make any changes, you simply need to have a front-end user experience developer. You can make changes either big or small, from implementing a custom checkout flow to adding a new field to a customer account — both are very straightforward to execute with an API headless eCommerce architecture.

API Headless ecommerce: Advantages

The biggest retailers are switching to API headless ecommerce; there are many reasons why your Brand needs to do it too.

1. Omnichannel

A headless content management system will help publish your content anywhere. For an eCommerce site, that means showing and selling your products, discounts, or customer reviews to any channel you want to.
You can sell through Alexa, your mobile app, progressive web apps, and even through refrigerators with screens.

With a natively headless API eCommerce platform — like Arcadier — you don’t have to re-architect your platform to publish across channels. It’s made from architecture to be decoupled from the original user template, it is made to facilitate building your own customer experiences.

2. Keep your competitiveness

A headless API eCommerce platform enables you to deploy constant updates without impacting your back-end system or other services like Purchase History, Checkout process, onboarding process, you can completely customize your marketplace experience. So you can easily make any changes to your front-end to match consumer needs and market trends.

Major eCommerce brands using traditional platforms usually roll out an update every few weeks. In comparison to market leaders whom they deploy updates every day or every week, with less service interruption.
With a decoupled system, you don’t have to roll out an update to the entire system, only part of the system. You can update and deliver what your consumers want faster, with less impact on the overall system and keep your competitiveness.

3. Agile Marketing

A headless API eCommerce system can encourage new technology adoption with ease. This is perfect when designing new customer experiences. The system architecture helps marketing and business teams deploy multiple sites across different brands, divisions, and portfolios.

Finally, thanks to the flexibility provided by a headless API eCommerce platform, marketing teams deploy a new site in days instead of months, your brand can reduce the time-to-market when launching a campaign from a few weeks to a few days.

4. More personal and consistent customer experience

The customer experience must be consistent within your brand and stores, even though customer needs may change over time, they should receive a consistent customer experience across all devices and channels.

Customers want to buy from eCommerce brands that understand their needs across all channels. The eCommerce company already knows what a consumer has bought some items. It uses this data to power the personalization of eCommerce, mobile apps, and social channels.

5. Seamless Integrations

As you may already know, a headless eCommerce solution must have an API, which makes it easier to integrate and communicate with other front-end devices. You can add new devices, expand to new opportunities, and outreach to more customers using the same API. Also, it will take your team weeks to integrate your eCommerce platform with a new device, not months.

Towa customers experienced this first hand, using Arcadier headless API eCommerce platform to integrate with Legacy systems and ERP, an integration that helped streamline their customer journey workflows.

6. Better conversion

With a headless API eCommerce platform as a service, you can try and test different templates and approaches. For example, you could experiment with a different back-end search solution while running the same front-end search.

A headless API eCommerce allows you to run continuous tests and optimization cycles which will help you get a better understanding of your customer, while improving your rate of learning faster than others retailers.

7. Faster time-to-market

If you plan to build a multi-channel or Omni-channel eCommerce experience with a traditional eCommerce platform, your time-to-market will be slower, moreover scaling will be difficult to achieve.

A headless API eCommerce platform empowers brands to focus on building front-end experiences on different devices and touchpoints, the content and listings are stored centrally and delivered via API to everywhere you want to. Decouple architecture facilitates a faster time-to-market better suited when planning to open new channels, entering new countries, and innovating the market.

The shortcomings of headless eCommerce

Headless API eCommerce platforms have a few issues that need addressing.

1. Manage costs

A headless eCommerce platform does not provide you with a front-end, developers will be required to build their own. This is great, as it allows developers to build front-ends that are bespoke for each device and touchpoint. On the other hand, building templates and user interfaces from scratch can become time-consuming and costly. Additionally, developers will need to troubleshoot and work their front-end creations, leading to ongoing costs beyond the initial build.

The costs increase even further when you factor in the fact that the marketing team now depends heavily on the IT team to launch landing pages and content on different devices.

2. Marketing efforts

A pure headless API eCommerce platform offers no front-end presentation layer, so marketers will not be able to:

• Create content in a WYSIWYG editor.
• Preview pages to see how it will look like on the end user’s device or screen.
• Immediately prototype, review, create and publish content without relying on the IT department.

Marketers are dependant on the IT team not just to build the front-end presentation layer, but also to update it and populate it with content.

Not a marketer-friendly environment.

Headless API eCommerce supports omnichannel experiences

The concept of “omnichannel” means that a customer can use the same online platforms to shop both online and offline, on any device, at any time. The main objective of headless API eCommerce platforms is to offer a seamless customer experience across channels, these eCommerce platforms are a fundamental component of the omnichannel retail experience.

Customers who used multiple channels to purchase online buy more than those who only used a single channel. Plus, those customers who used multiple online channels purchased more at the brick-and-mortar stores than those who used only an individual channel.

Other headless eCommerce platforms to evaluate

Headless eCommerce is an emerging space, however, there is a variety of eCommerce platforms offering APIs that facilitate a headless or decoupled approach to eCommerce. Here are three software providers to consider in the space:

1. Shopify Plus

Shopify Plus users have access to APIs which can expose products and selling options information to third-party systems. Still, a CMS will be needed to handle additional content at scale. Company based in the USA.

2. Magento 2

Magento 2 users can leverage Magento APIs to showcase and sell products but will need to rely on a third-party web CMS to handle large quantities of content at scale. Company acquired by Adobe based in the USA.

3. Arcadier

A full headless API eCommerce platform as a service is an all-in-one headless commerce solution that can power omnichannel eCommerce experiences. Customers such as B2B medical suppliers, B2C homemade foods, and C2C service experiences delivered to your home, and many other different business models have used Arcadier Marketplace builder to power their eCommerce digital experiences. Company HQ in Singapur, with offices worldwide, in all major cities London, Australia, Mexico, Las Vegas.

The future of commerce: decoupled

A headless API eCommerce solution resolves many issues (nowadays the emerging technology of wearables and house devices powered with IoT), it also conceives other issues to manage, as discussed earlier.

A decoupled eCommerce platform is similar to a headless system in the sense that both front-end and back-end are decoupled. However, unlike a headless eCommerce, a decoupled eCommerce doesn’t remove the front-end delivery layer from the equation entirely. This architecture gives marketers back their power in the form of content authoring and content previewing, while also giving the brand the same headless freedom needed to deliver content to different devices, applications, and touchpoints through APIs.

You could say a decoupled eCommerce gives you the best of both worlds—and that’s why we foresee the future of eCommerce is decoupled.

A decoupled eCommerce system provides ease-of-use similar to traditional eCommerce software but with the flexibility of a headless system.

It’s the best of both.

Talk to us Book a 15-min call to discuss your project.