M

arket conditions over recent years created a perfect storm for an already growing eCommerce industry to tighten its grip on retail market share. While physical sales from bricks and mortar stores showed a steady decline, eCommerce peaked at more than $5 trillion in 2021, a 16% increase from $4.2 trillion in 2020.

As more businesses discover they can no longer ignore the lucrative online marketplace, they are more than eager to take advantage of established platforms like Wish, Shein, eBay, Etsy, and Amazon for getting their products in front of more customers. 

However, established marketplaces are not the only way to get your goods in front of an online audience. Custom marketplace development offers many opportunities for you to create your eCommerce multi-vendor platform that you control.

This multi-vendor marketplace guide will discuss why you should consider developing a Custom eCommerce Marketplace, the available development options, and how to get started.

What is a Multi-Vendor Marketplace?

A multi-vendor eCommerce marketplace is the online equivalent of a physical mall where multiple vendors can sell products and services from a single website. A marketplace operator does not own any stock. Instead, they bring vendors together and act as the middleman by connecting buyers with sellers.

In return for bringing buyers and sellers together, the marketplace owner receives a commission from every sale. Sellers gain extra exposure for their brand and access to more online traffic than they could achieve on their own.

Multi-Vendor Marketplace Advantages

How customers shop is evolving, and online purchases feature more and more in consumer spending habits. A multi-vendor eCommerce marketplace creates more options for consumers while also giving them more control over their shopping experience. Here are just a few of the ways an online marketplace can benefit consumers and your business.

Diversify your income strategy: A variety of income strategies become available with a multi-vendor marketplace. For example, you could charge a small commission for every third-party sale, and you can create an extra income stream by charging for a premium listing or for appearing in related products or also bought sections.

Get more and higher-quality customer data: The data collected from every interaction is valuable for determining customer behaviors and identifying trends. High-quality data helps you segment customers more efficiently and improve conversions by delivering a more personalized experience.

Test new products and services: Bringing new brands and products onto the platform offers more opportunities for testing without investing in your own inventory.

Easier to scale: A multi-vendor marketplace is much easier to scale than a single-vendor eCommerce platform, as the need for inventory investment is significantly reduced.

Offer more variety: Today’s consumers crave more options and control over their shopping experience. By bringing on multiple vendors you can increase the amount of variety your marketplace can offer, which will help you reach a wider audience.

Types of eCommerce Marketplaces

An eCommerce marketplace will fit within one of three different models:

• Global Marketplaces
• Horizontal Marketplaces
• Vertical marketplaces

Global Marketplace

A global marketplace caters to an international demographic and sells products from every niche and industry. Amazon is an excellent example of a global marketplace, as it is famous for selling everything to everyone.

Horizontal Marketplace

A horizontal marketplace is more focused on its product range. While it does cater to many different industries, the products on offer all share some common characteristics. For example, every industry needs office furniture or Amazon’s retail products that ship to your home. 

Vertical Marketplace

Vertical marketplaces offer specific products to a specialized demographic. There can be many different sources in a vertical marketplace, but only one type of product. Etsy is a good example of a vertical marketplace that caters to the arts and crafts community. UNI Diamonds is another vertical marketplace that sells just one type of product, diamonds, but customers have a  wide selection of vendors from which to choose. Also Uber is an example of vertical marketplace, since it only sell ride share.

eCommerce Marketplace Business Models

When you know you are ready to grab your share of the growing eCommerce trade, you will still need to settle on a business model, of which there are three main options:

• Dropshipping
• Franchisee
• Retailer

Dropshipping Marketplace

A dropshipping retailer has an online portal that lists products from many different vendors but does not carry any physical stock. Rather than storing inventory, the order is shipped from another warehouse using the 3rd party seller’s branding.

Dropshipping works through split orders. Third-party sellers purchase in bulk from a manufacturer, but instead of shipping the entire inventory to the third-party seller, a manufacturer will split the order and deliver products directly to a third-party seller’s customers.

Franchisee Marketplace

A franchisee marketplace model works well for localized selling. Franchisees can come together in a single marketplace to offer goods and services online to a local community. The marketplace owner drives sales and traffic through localized advertising, local SEO, and content creation.

Retailer Marketplace

In the retailer marketplace, the operator delivers an online platform where third-party sellers can offer their goods and services. A third-party seller makes the sale, but the product is delivered by another manufacturer, wholesaler, or retailer.

Traditional CMS, Hybrid, or Headless Marketplace? Which is Better for Custom Marketplace Development

Once you have settled on a business model and chosen whether you want to go global or stay local, your next goal will be to select an eCommerce platform that will suit your goals.

Online businesses are tasked with managing a huge volume of content creation and changes daily. Content-driven experiences are increasingly critical for attracting new leads and prospects to your marketplace.

In a traditional CMS, the frontend, where customers do all their browsing and purchasing, are inextricably entwined with the backend where all the data is processed. 

A regular CMS is much easier to set up and deploy than headless or hybrid options. However, they are more complex when scaling the business, or migrating to a different platform. They are also limited in features for integrating third-party content from many different vendors.

What is a Hybrid Marketplace?

A hybrid marketplace includes support for multiple content delivery systems. Your content creation team is free to use whatever CMS they are comfortable with, while developers have the capacity to deliver the content across many different channels.

What is a Headless Marketplace?

The headless marketplace decouples the frontend CMS without limiting your ability to publish new content. You can easily reuse content on multiple channels, use any front-end framework to tailor the customer experience, and accept content from multiple vendors without compatibility issues. A headless CMS means you can work your business from a content-first approach because you can use the RESTful API to display it in any way you need.

Advantages of a Headless Marketplace

The eCommerce landscape is always evolving, so having a flexible platform is critical to the survival of a multi-vendor marketplace. Here are just a few advantages you will appreciate when working with a headless marketplace. 

Reduced Development and Maintenance

You can use whatever programming language you need for the backend and create your presentation layer for the front end without having to worry about compatibility issues. Developers can work faster because they aren’t confined to the typical limitations of a traditional CMS.

It’s a Low-Cost Future Proofing Solution

A development team can quickly create new functionality on an existing website. For example, let’s say you have created a marketing campaign that uses many different microsites to feature new products or services. 

The marketing team can produce and format the content without having to wait for a bunch of new content templates from developers. You are free to manage and change your content at any time across multiple channels.

Flexible Frontend Development

A headless CMS removes the limits for creating an exceptional customer experience because you no longer have design constraints. Unlike a traditional CMS, where tinkering on the frontend can impact the backend processes, the back end of a headless CMS is not impacted by frontend development. Because they are kept separate, your website visitors will enjoy faster loading times for web pages.

Profiting from the rising popularity of eCommerce will mean you need to carefully consider your approach. Our multi-vendor marketplace guide should help you make an informed choice. The products you sell, the vendors you will partner with, and the demographic you serve will all have an influence on custom marketplace development. If you are ready to get more products in front of more customers, call Towa Software today to learn how to get started.

Towa’s Tech Team will turn your marketplace and e-commerce ideas into reality

Towa’s Tech Team provides Nearshore software development services. We’ll streamline the process of developing advanced and customized marketplace solutions for customers. Our top objective is to provide our customers with the means to develop dynamic and user-friendly online marketplaces rapidly. 

All of which aids our clientele in attracting more potential customers and converting them into paying customers.

Towa’s Tech Team allows for simplified talent augmentation procedures. Through our Nearshore service, we can connect you with a technical crew that is only a short plane ride away, is in the same time zone as you are, and can communicate with you in your native language.

Talent augmentation for remote engineers allows businesses to realize better economies of scale and, most importantly, greater specialization. With this strategy, companies can focus on what they do best.

Contact us to talk about how Towa can help you. 

About Towa

Towa is a leading firm across the United States and Mexico for software engineering and outsourcing, including QA and testing. We offer from Mexico our over +300 engineers capabilities as nearshore delivery model service offerings.

Towa Software has over 20 years of experience to guarantee the quality of every line of code, we are proud of our products and services delivered. We recommend starting small and building trust with your provider before scaling. 

As a leading software development outsourcing company in the USA and Mexico, we have extensive experience in many fields including fintech, banking, payments gateways, e-commerce, retail, marketplaces, health care, Omnichannel, and many more.

You can contact us at support@towasoftware.com or give us a call at +1 (210) 787-4525 for more information.

S

o, let’s say you’ve settled on creating an online market. You might have the following questions in mind: How to Make an Online Market App Like Etsy, Amazon, or Airbnb a Reality? The next question is, how much does it take to build a thriving online market? What technology stack components should you prioritize when creating your retail platform? Alternatively, what characteristics do your virtual marketplaces require?

Increased usage has led to the rapid expansion of the online marketplace platform. In the United States, internet retail sales reached $504.6 billion in 2018, and they are expected to rise to over $735 billion by 2023. There is no denying the success of the P2P business. As a result, launching one’s online store is gaining popularity.

The typical cost of creating an online marketplace is indeed variable. The entire estimated cost of developing a marketplace website that is likely to generate income is laid out in this article. Identifying the appropriate technology stack is the first step toward creating a successful online marketplace.

A technology stack for business growth

Think about the development environments you’ll be working in when planning a marketplace. To what end is this valuable information for business owners? The performance and maintainability of the application will be affected by the technology stack you choose to use. In a nutshell, slow page loads, scalability issues, and update failures can result from using the incorrect tools.

The price tag for building a marketplace website can fluctuate widely based on the technologies you choose to implement. You should select a framework that will facilitate a rapid app development cycle and release.

The requirements for a given marketplace determine which technologies we employ to develop its website. But, the following technologies are commonly used in our marketplaces:

Frontend

• JavaScript
• Angular
• ReactJS
• PHP
• Amplience CMS

Backend

• PHP
• MongoDB
• API Rest
• Node.js

Integrations

• Customer.io, Klaviyo
• Stripe, Paypal, USAePay, Gravity Payments, OpenPay, Mercado Pago
• ShipEngine
• Avalara
• Twilio
• Legacy
• Amazon EC2

Remember that we only covered the most important frameworks and integrations; in reality, the stack will include even more technologies. If we explore alternative front-end frameworks, we may need to revise the entire technology stack if we explore alternative front-end frameworks (Vue.js, Headless, Amplience CMS).

When a company does talent augmentation, it can focus its efforts on what it does best. That eliminates the need for businesses to spend resources on finding and training in-house software engineers. It is preferable to hire a consulting firm to handle the work. The result is streamlined processes and better financials.

Core features for a multi-vendor marketplace

It isn’t easy to put a price on creating an online marketplace without first defining the features that must be included in the final product.

We always advise our clients to maintain a minimum viable product (MVP) in the market first. That way, you can put your theory to the test with little cash outlay. You can expand your platform’s capabilities in the future.

Creating an online marketplace for your goods and services can help you focus your efforts. Keep in mind, too, that first impressions count for a lot. Essential features of a marketplace are presented to aid in developing a functional marketplace.

1. Simple registration procedure

All participants in an online marketplace must register with identifying information (name, gender, date of birth, email, phone number, etc.) if one is to be established.

Also, allowing consumers to join via social platforms is a convenient way to sign up. Facebook, Linkedin, Google logins auth are also crucial.

Make registration as simple as possible to retain visitors who may become paying clients.

2. User profile

The most valuable users in the marketplace serve in two distinct capacities: as buyers and as sellers. Therefore, accounts must be as complete as possible. Admin should be able to add custom fields as required. For example, users can quickly sign up and view the service provider’s details. Vendors should maintain transparent control over all inventory and listings, stock data and adjust visibility controls as needed.

3. Homepage

Making your homepage unique is usually a good idea. Customers universally like a straightforward menu structure. User interface and experience design (UX/UI) should not be neglected. To save you time, here are some pointers for improving the visual appeal of your minimum viable product in online marketplaces:

• Web design that is easy to navigate, customizable search fields, and aesthetically pleasing
• Incorporate previously viewed items to increase conversion rates.
• Insert list of best-sellers
• Including a section with testimonials might help build credibility with site visitors.

4. Manage my listings (for Merchants)

Adding a listing with more detail is a crucial feature for vendors. Customers will have a better overall experience once they arrive at your website, thanks to the curated product catalog you’ve created.

Easily manage to create and update your pricing, product details or service details from a Vendor Portal for an operating seller, having the listings updated is key for success and lot of sales.

5. Flexible payment options

The total amount due is calculated mechanically by the payment system with tax calculation and shipment fees. Customers must be able to view their order summary and payment history. Offering many payment methods is convenient for potential customers. Users of your online marketplace must be able to make purchases using credit cards, Klarna PayPal, Stripe, any other payment processor, or even crypto.

6. Wishlist or favorites

A wishlist where clients can save items they consider buying is a powerful marketing tool. That’s another strategy for making a marketplace website that draws in more visitors. When customers communicate their wish lists to their friends and family, it generates free exposure for your marketplace.

What factors affect the budget in creating a new market?

The amount of money put into a marketplace is proportional to the problems it addresses. The amount of money needed to fund its creation depends on several factors. So, let’s examine the components that go into the final price tag of a marketplace website.

Ready-made (Template-based) vs. custom development (API or scratch)

At first look, it may seem that once you’ve purchased pre-built software (Sass/Paas), you won’t have to make any further adjustments to your website or spend additional money. But if far from reality, in order to maintain and customize to your business needs you will need to hire someone. 

Extra staff members must be hired to implement this program. The cost may also increase as a result of necessary improvements. Not to mention the cost of acquiring the cloud servers required to ensure consistent performance. In addition, customizing a template to fit the logic of your organization can be challenging.

Therefore, making your online marketplace website customizable will take much more time and energy. This could result in a significant increase in both development time and cost.

Set of features

The cost to develop a marketplace website is proportional to the complexity of the underlying platform. When you present your ideas to a software agency, they will break down the cost of each feature for you.

To launch a thriving marketplace, it is sufficient to implement only the most essential features at the outset. However, don’t forget to factor in all the “extras,” as they will determine how much money it will cost to maintain the website. Be sure to weigh all the options that could lead to more costs down the road. Lastly, be sure that you and your consumers will profit from each feature you intend to implement in your marketplace.

Towa’s Tech Team will turn your marketplace and e-commerce ideas into reality

Towa’s Tech Team provides Nearshore software development services. We’ll streamline the process of developing advanced and customized marketplace solutions for customers. Our top objective is to provide our customers with the means to develop dynamic and user-friendly online marketplaces rapidly. 

All of which aids our clientele in attracting more potential customers and converting them into paying customers.

Towa’s Tech Team allows for simplified talent augmentation procedures. Through our Nearshore service, we can connect you with a technical crew that is only a short plane ride away, is in the same time zone as you are, and can communicate with you in your native language.

Talent augmentation for remote engineers allows businesses to realize better economies of scale and, most importantly, greater specialization. With this strategy, companies can focus on what they do best.

Contact us to talk about how Towa can help you. 

About Towa

Towa is a leading firm across the United States and Mexico for software engineering and outsourcing, including QA and testing. We offer from Mexico our over +300 engineers capabilities as nearshore delivery model service offerings.

Towa Software has over 20 years of experience to guarantee the quality of every line of code, we are proud of our products and services delivered. We recommend starting small and building trust with your provider before scaling. 

As a leading software development outsourcing company in the USA and Mexico, we have extensive experience in many fields including fintech, banking, payments gateways, e-commerce, retail, marketplaces, health care, Omnichannel, and many more.

You can contact us at support@towasoftware.com or give us a call at +1 (210) 787-4525 for more information.

(10 min reading)

So, you are thinking about building your own business, or maybe you and your partner are having a great idea and would like to find how to build a business from it?

How to launch your online business?

Data shows that, by 2023, e-commerce revenue is expected to reach $800 billion in the U.S. alone. Now is the best time to start your e-commerce business and build your own tribe.

There are many things to consider like the business plan, what is the product or service you like to sell, how would you deliver it, what technologies are there, what is the brand differentiator, when would you like to start selling? 

Read all 10 bullets to find many answers.

1. Choose your Tribe

To start a successful online business, you have to find the right tribe. What’s your area of expertise? What marketable knowledge or skill do you have? Where do those skills or products fit in the market? What type of products or services do you want to sell?

You must have an idea of what kind of business you want to build, start by researching the market. Look at other businesses in your area and see them as joint opportunities. When looking at an example of a successful e-commerce business in an industry, ask yourself:

• How are they reaching customers?
• What appeals to you about their website?
• What’s their business model?

Some logistical questions you’ll need to answer when finding your tribe includes:

• Is your product or service? 
• Is physical or digital? 
• Do you deliver local or international?

Will you base your business around one-time orders, bundles, or a subscription model?

Get as many business ideas as you can, the online business is super competitive. You’ll want to do some serious thinking about what sets you and your business apart before starting your own e-commerce business.

If you have expertise that’s in high demand, capitalize on that. If you have years of experience in music or baking, for example, start a blog to write about that skill and establish yourself as a knowledgeable person in the market. You can use your e-commerce store to offer your products or services, on-demand online courses, or local deliveries of experiences in your area.

2. Do your research

Find the top competitors in your space and do some research on their history and business model, and get products ideas by researching trending products. Ask yourself what they’re doing that you can follow. Find out what people are looking for in your business and figure out how you can provide it in your unique way.

You’ll also need to identify the barriers to entry in your field and how you can overcome them. Will you need to invest in paid ads?  What is the cost of an e-commerce platform? Need for expensive equipment? Where do you manufacture your products? What other challenges will you face when going to market? How much do you need to invest? Can you start small and then scale your e-commerce business?

Identify any opportunities in the market your product or service can fill. Even if it is something not new, try to deliver it in a way that is unique so you can add value.

Once you’ve identified your opportunity in the market and know what value you’ll bring to the customer, consider doing a SWOT analysis — which stands for Strengths, Weaknesses, 

Opportunities, and Threats. This modeling technique can help to identify potential challenges so you can plan ahead your strategy for your e-commerce business.

Strengths and weaknesses are typically things you can control, like:

• Company culture
• Your reputation
• Your customer base
• Geography
• Partnerships
• Intellectual property
• Assets

Opportunities and threats, are things not in your control, but you can plan ahead, like:

• Regulation
• What suppliers are in your market
• Your competitors
• The economy
• Market size
• Market trends
• Gaps in financing

3. Choose your product and target market

There are several ways you can use to choose your e-commerce product or service. You can provide a solution for a problem in any marketplace, local or worldwide. Lean on your passion. Try these options for finding a product or service you can sell online.

Think about your personal experience. Have you worked in a certain industry that gives you insight others don’t have?

Is there an opening in the market for something that people will need soon based on trends in your industry? Recognizing a relevant trend can make you a leader in the market. Something that fulfills an existing need in a new way. 

You can spot trends in many ways:

• Social listening. Hang out on social media where others in your industry post or where your target customers spend time and see what they say. Browsing trending hashtags or using social listening tools to gather data over time can also provide valuable insights.
• Following search trends. Google Trends is a great place to see what trending products people are searching for. It can also tell you the keywords used most commonly in search, and what problems people are commonly trying to solve.
• Browsing e-commerce websites and aggregator sites. Pages like Trend Hunter or assorted subreddits for your niche can help you sight into developing trends before they get big.

Customer reviews also provide a wealth of data on what your prospective buyers expect from a product. Browse reviews of products similar to the one you have in mind and see what people say. They are a great resource to get new products ideas. Addressing an unsolved need is one way to differentiate your product in a market.

When researching keywords, make sure you look outside of Google. While Google is the search engine most people use, online marketplaces like Amazon, Wish, eBay, or Alibaba have their search functions.

If you’re thinking about selling a product, type in the product name on these sites and see what keywords come up. Say you’re selling guitars. Typing that into Amazon’s search bar turns up suggested search terms like “guitar lessons” and “guitar experiences”. Those results can give you more ideas of what you can do to differentiate.

Finding a market

As you’re gathering product information, study your target market. Who is your ideal customer? What characteristics do they have? This is where creating customer personas is useful.

Personas are fictionalized versions of your ideal customers that allow you to try and predict how they’ll behave. You can create a picture of the person you consider would be best served by your product or service, and figure out how to attract that person.

Answer questions like:

• How old is this person?
• Where do they live?
• What is his/her job? 
• What do they care for?
• What problems do they face?
• What is most important for them?

With all of this, you can find ways to reach them online and what messages they’re more likely to respond to. The information will help you market your product or services more effectively.

4. Validate your product

Now you have an idea for your product or service, and you know who you might sell it to, now you need to validate whether you are right and how to execute the business idea. You need to see whether your business idea is viable in real life. 

You can use several criteria to evaluate your product’s viability. Evaluation criteria can be split into two main categories: market-based and product-based criteria.

Market-based criteria

These are market factors that will influence your product and business model. You’ll want to look at:

• Market size and demand for your product/service
• Who your competitors are and where are they
• Is this a trend, fad, growing market, or flat market
• Whether customers will be able to get this product/service from other sources
• Who your target customers are

Product-based criteria

Once you have an idea of where the market is going and who you’re marketing to, you can move on to the next set of criteria:

• Your selling price
• The potential markup for your product or service
• How many products you’ll stock
• Will you offer a subscription
• The size, weight, and durability of your product, if you’re selling something physical
• Whether you’re likely to experience seasonal buying variations
• Whether your product or service solves a pain point or is more of a passion
• Whether your product is consumable, disposable, or perishable
• Whether your services are re-purchasable or 1 time only
• Regulations or restrictions around your business

Looking at the market and product-based criteria can give you an idea of how much it’ll cost you, how you can sell it, to whom and how many times. 

These criteria can give you a good idea of your product or service’s potential, and help you avoid common mistakes. If you’ve determined that there’s enough market for your product and services, you can move on to other aspects of your business model.

5. How you will source your product or service

If you’re selling a physical product, you’ll need to figure out a model for obtaining it and shipping orders to your customers. There are a few models you can explore here:

Make it

You make the product yourself, by hand, and get it to the customer. This is a highly favorable option if your product is something you can get the ingredients for and make cheaply, like home-baked foods or hand-crafted gifts. You’d need to purchase ingredients in smaller batches to start, you can control the cost and the risk, then scale up when you have more sales.

Manufacture it

If your product is something you cannot make yourself, you could partner with a manufacturer. This alternative makes sense if you have a product you plan to sell in large numbers, as manufacturers normally require you to order in large batches. You’ll need to be able to cover the cost of those initial purchase orders.

Wholesale and resell

Buying your desired product and selling them through your store with a markup. You don’t have complete control over pricing, as the manufacturer sets the price of purchase. Margins for selling wholesale products are around 35%.

Dropship it

A good option if you don’t want to deal with inventory, dropshipping involves partnering with another company that would ship the product for you after purchase. There are no startup costs to make the product on your end, your margin is only about 15%. 

Digital

Guides, eBooks, Blog posts, templates, online video classes, selling your expertise. Anything people can download has the potential to be a product. Digital products can also be a service like consulting, coding, writing, therapy, social media management, or graphic design.

Digital downloads or services are suitable for customers and, depending on what you’re selling, they usually have a low overhead cost too. Experiment with different things until you hit on the product or service that’s right for your business and passion.

6. Do your business plan

You’ll need a road map to follow to keep your business on the right track. Once you’ve defined all the basics, writing a business plan will help you establish goals and get into the details of what you’ll need to run your business and sell to your customers.

If you’re going to get a business loan, lenders and investors will require you to have a business plan. Make sure you make your plan as detailed and professional as possible.

Your business plan should include:

• What your business is
• What you’re selling
• What is the market
• How your business model works
• SWOT analysis
• Company structure and roles
• Financing and capital
• Other resources

Keep your target market and buyer persona in mind as you develop your plan. 

The outline for your business plan will look something like this, from beginning to end:

1. Executive summary
2. Company overview
3. Market analysis
4. Products and services
5. Marketing plan
6. Logistics and operations plan
7. Financial plan

If you’d like something more detailed to start with, it’s easy to find free business plan templates online.

The most important thing is to know what your goal is when you write your business plan. It’ll look different if you’re writing one to obtain startup funds than if you’re outlining the business plan for yourself.

Make sure you keep your tone consistent throughout the document. The best way to ensure this is to have one person write and edit the whole document, completely edit the document before presenting it to anyone.

Finally, keep your business plan short and to the point. It should be 15 to 20 pages max. Make sure it’s long enough to communicate the relevant information.

7. Business name and legal structure

Naming your store is one of the creative aspects of starting an e-commerce business. You’ll need to come up with something that catches the eye, describes your brand, and hasn’t already been taken by somebody else.

You can typically search for domain name availability on Godaddy or CheapDomains. It’s also good to run a search with the U.S. Patent and Trademark Office to avoid future problems. 

A good business name will set the tone for your online store. The name plays into the company’s branding, and the product itself.

When it comes to making your business name, remember to:

• Keep it simple
• Differentiate yourself
• Get creative
• Be original

You’ll also use your business name when you register your business. How you choose to register will affect you legally and financially down the road, so it’s worth doing a little homework to determine which type of legal structure is right for you.

You’ll register your business as one of the following:

• Sole proprietorship
• General partnership
• Limited Liability Corp
• Corporation

Each one will have benefits and drawbacks. You should consult an attorney or other legal expert to determine which one you should choose.

8. Permits and licenses

Some business types need an employee identification number (EIN), it can help keep personal and business finances separate. It’s free to apply through the IRS, and the number is usually assigned right away. You can also apply for an EIN by mail or fax.

You’ll also want to apply for any permits or licenses your business will need to operate in your state. If you’re operating your e-commerce business entirely from home, you won’t need the same kind of permits as a traditional store.

You’ll want to make sure you’ve got it covered. Check your local government’s website or get professional advice for permits or licenses you might need to operate in your state.

Types of permits or licenses you might need for your business include:

• Sales tax permits 
• Professional and trade licenses for certain industries
• Health, safety, and environmental permits
• Signage permits

If you need permits or licenses, be aware you’ll have to pay a fee for them. Add those expenses into your business budget upfront so you don’t have to deal with any financial surprises.

9. Create your eCommerce

Now that you’re finally ready to launch, it’s time to choose technologies and build your online store. There are many e-commerce platforms out there to choose from like Arcadier, BigCommerce, VTex, Shopify, Wix, and many more, so you’ll want to research which fits your needs better.

Depending on your need for a custom unique experience, a headless API eCommerce SAAS is best suited for entrepreneurs and large companies who want to have full control over their online business and but also have everything to effectively market and sell products online.

Remember once your customer makes a purchase, keep them engaged with post-purchase follow-up. You can configure a campaign to users who visit your site, send them offers, specials, best deals, or recommend other products your customers might be interested in.

10. Marketing your new business

Now that your shop is planned out and set up, it’s time to tell your potential customers about the new business and start selling. The research of your target audience will suggest where you’ll run your ads and what content you’ll create to bring in customers.

Don’t be afraid to use multiple channels to market to your customers. If you’ve got a blog, promote it on multiple social media outlets. Put out content relevant to your niche on Facebook, Twitter, Instagram, and YouTube. Try out different tactics in your marketing strategy, like Facebook ads or partner up with affiliate marketers. Use landing pages that make it easy for customers to buy your products.

Be careful about your page copy, product description, and make sure it adheres to current SEO best practices. Make sure your site is simplistic and easy to navigate.

You should consider investing in CRM (Customer Relationship Management) tools for following up with customers, building email campaigns, and keeping them up-to-date with your business offerings, keep your tribe alive is a continuous delivery process.

Get started with Towa e-Business Services

Many things will happen when starting an online business. With the right team, proven process, agile practices, best technology you can make it a success! 

Towa integrates as part of your team to build awesome eCommerce Experiences.

We can build great ecommerce plataforms together

Towa Software has over 20 years of experience to guarantee the quality of every line of code, we are proud of our products and services delivered.

We have expert Project Managers and Innovation Consultants along with top talented teams who have delivered awesome products to customers in U.S.A, Canada, Mexico, London, and Australia.

As a leading software development outsourcing company in the USA and Mexico, we have extensive experience in many fields including fintech, banking, payments gateways, e-commerce, retail, marketplaces, health care, omnichannel, and many more.

You can contact us at support@towasoftware.com or give us a call via (+1) 210-787-4525 for more information.

You can Book a 15-min call call with one of our Customer Success Managers for a conversation.

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. 

Which is the right eCommerce solution for my business?

Finding the right Partner for your E-commerce Business The new trend is to build a Marketplace using SaaS, and extend functionality with a plugins development.

Ecommerce in numbers

In 2019, retail e-commerce marketplace sales worldwide amounted to US$3.46 trillion, and e-retail revenues are projected to grow to a dizzying US$6.54 trillion in 2022 and will continue to drive the future of e-commerce forward. B2B (business-to-business) marketplace sales transactions are set to boom and will account for an estimated 30% of all worldwide online sales by 2024.

Combined, both B2B and B2C (business-to-consumer) marketplaces are expected to grow web sales worldwide to an estimated $7.1 trillion while peer-to-peer marketplaces including eBay and Airbnb will reach $240 billion in combined sales by 2024. However, the area with the fastest-growing global marketplaces will be in B2B.

Currently, only a small percentage of the annual worth of online B2B sales are made via marketplaces however, businesses are starting to realize the benefits of trading with partners via marketplace platforms. In this regard, as more businesses trade online, global sales will continue to grow which will include a wide range of industries and vertical markets.

Should I build around a SaaS?

SaaS, or otherwise known as Software-as-a-Service, is a software distribution model in which a service provider hosts applications via the internet for customers. SaaS falls under the form of cloud computing. Usage is subscription-based charging businesses either monthly, bi-annually, or annually to use the service. These online subscriptions come with their respective technical support and periodic upgrades, SaaS companies deliver usability without bogging down customers with details. You access content through a web browser interface and your content is hosted in either a cloud or shared server. There are a variety of businesses that provide this service for marketplace development such as Arcadier, CS-Cart, Dokan, and Sharetribe.

How can I customize the SaaS?

A plugin is a software add-on that is installed on a program, enhancing its capabilities. It is a form of integration of a separate application to the main platform, either by the platform owners themselves or by other third parties. For instance, you like to add an email marketing tool to your eCommerce business and you are using Shopify or Woocommerce to build your eCommerce, you can utilize the Quickbooks plugin that seamlessly works with your Shopify Store or your book-keeping or LiveChat plugin to create your customer support chat capability. A number of online store platforms offer a plugin that can turn your single merchant shopping cart into a multi-vendor shopping cart experience. Most of these were developed by third-party developers using their respective APIs and Webhooks, and these developers charge a fee for its use.

What option best suits my business model? 

This is the first question that goes through the minds of people who are trying to start their first eCommerce marketplace. Go with a SaaS provider such as Arcadier, CS-Cart, Dokan or Sharetribe, or via a plugin alternative that augments your platform to become a marketplace for online store platforms such as Shopify, Magento, or Woocommerce? It is key to understand the comparisons of their respective software delivery models.

The answer to this question will be dependent on three factors: User preference, costs involved, and feasibility associated with plugin systems.

Using standalone plugins is a great option, but it does have its limitations. For example, the plugin builder will still have to work within the confines of the eCommerce platform to change a user experience that is not natural to the main use case of the eCommerce platform. Dedicated Marketplace SaaS products have been built for the purpose of the marketplace experience in mind, so the user experience is designed from the ground up for a multi-vendor experience.

Build a team for your eCommerce business

Marketplace SaaS solutions are not significantly more expensive than what most plugin developers are charging for the download and use of their plugin. However, the risk of failure that the augmentation using a plug-in to a platform not developed to be a marketplace makes a dedicated marketplace SaaS solution a safer bet. The features provided by SaaS also enable businesses to efficiently create their own marketplace because a lot of the heavy lifting is already done for you, plug-and-play extensions, themes for your front-end, site optimization, dedicated support, analytics, and bug fixes are such examples.

The SaaS option is built-for-purpose but that does not necessarily mean the plugin alternative option should be ruled out, it is still a good option for building a marketplace, however, there lies the problem that all the plugin components on your platform of choice may not necessarily be able to properly shake hands with each other especially on more mature platforms.

Build fast and iterate 

SaaS vs Open-Source eCommerce solutions has their similarities, benefits, differences, and challenges. Both have their own niche market and success stories. A lot of people have built excellent marketplaces around both solutions.

The main factors to consider when choosing an eCommerce solution are budget, technical proficiency, and knowledge, and how serious are your plans to scale your business.

The more niche or more mature your marketplace is, the more customization will require.