How to create a marketplace
In an era when we buy and sell almost everything online, creating a marketplace to bring people together is a proven strategy. In 2022, you’ll find a nearly infinite variety of marketplaces, from the classic Craigslist, to service marketplaces like Task-Rabbit. Marketplaces can be giant industry leaders like Airbnb or Amazon, or marketplaces that support entrepreneurs and small business owners like Faire.
The goal of any marketplace is to help demand connect with supply. But the form each marketplace takes can differ vastly, from managed marketplaces to niche B2B marketplaces.
If they take off, marketplaces can be an amazing business model, allowing creators to monetize both buyers and sellers on the marketplace. Network effects can create a reinforcing cycle of ever-increasing supply and demand.
So how do you create an ever-growing marketplace? Let’s look at some benefits and then walk through the process.
Why should I build a marketplace? Pros & Cons
Building a marketplace can bring significant top-line benefits. A good online marketplace can:
- Address a large market without building up your own inventory
- Have network effects as a moat against competitiors
- Provide potential client bases for example: buyers, sellers, and third-party advertisers
- Function as a sales funnel: providing a base item (e.g., real estate sales) opens the doors for other sales (e.g., home insurance)
But it’s not all fun and games; like any business, there are potential challenges. Online marketplaces require, among other things, that you:
- Attract at least two target groups nearly simultaneously: you need both buyers and sellers, or you risk an inventory imbalance
- Find a business model that works for you, your supply, and your demand
Inventory imbalance is also known as the “chicken and egg problem”. Without an egg (sellers), there is no chicken (buyers). But without a chicken, there is no egg; vendors go where the purchasers are, and if your marketplace can’t attract buyers, no one will use it to sell anything.
Fortunately, there are a number of highly-effective ways to tackle the chicken and egg problem. We’ve assembled 8 of the most high-impact methods in the following PDF. Download the document for 8 ideas on cracking the chicken-and-egg conundrum!
"The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can't wait for users to come to you. You have to go out and get them." Paul Graham, co-founder of YCombinator
Successful marketplaces (examples)
When talking about marketplaces, Amazon is one of the most successful examples with over 310 million active users. Amazon managed to bring together a vast pool of potential customers along with a near-infinite variety of sellers.
The result is a marketplace that makes over $230 billion in revenue per year.
And Amazon isn’t the only marketplace to find success. Airbnb, Uber, Etsy, and even eBay are classic online marketplaces. All told, the largest online marketplaces in the world sold $3.23 trillion of goods in 2021, according to Digital Commerce 360’s analysis.
How to start to create a marketplace
If you want to set yourself up for success, here are some things to consider.
- Test your riskiest assumptions
Don’t jump into development mode and later realize that you are building something nobody wants. Start by identifying your riskiest assumptions and testing them. See who would like to use your marketplace and how often, and identify other sources you need to succeed.
- Know your potential customers
Do people want what you’re offering? Identify the needs of your target groups. Research demand, and know what potential customers expect.
- Build small (prototypes / Minimum viable products (MVP)) and test it
Build prototypes to validate your underlying assumptions. It might make sense to focus on a niche you know well or see is underserved. MVP or prototype in hand, now you can test your product. Is it any good? Does it fit the customer’s needs? Can you find people who sell it, or can you sell it directly? Answer these questions, and you’ll know what kind of platform you’ll need to sell your products.
- Focus on the chicken and egg problem
The best marketplaces in the world don’t work without user acquisition from both sides. Even Amazon spent $10.9 billion in advertising in 2020. Good news for you - you won’t need to spend anywhere near that amount. But you do need to think through how to attract both sides of a marketplace.
Build your marketplace without a developer
The lower development costs of no-code tools and the speed at which the movement has grown; allow more and more people to build marketplaces easily and for less money. Entrepreneurs don’t have to master code before bringing their products to market, and there’s no need to hire high-end developers.
With no-code, non-technical people are able to build marketplaces of all kinds. But remember: before jumping directly into development, start by checking your riskiest assumptions (read again the segment on “how to start to create a marketplace”) and know your potential customers and their main needs.
No-code lowers the barrier and opens the door for the last step to creating a successful marketplace: Building it yourself.
There are tools like Sharetribe that have a strict marketplace framework, and that will allow you to have a marketplace up and tunning in a couple of hours. And there are other visual development tools like Bubble, that allow total freedom in how to build a marketplace and it can take up to 4-6 weeks.
Some examples of marketplaces built with Bubble are:
Farie: the Swiss platform built with no-code tools to buy and sell cars online
Using platforms like Bubble.io and Webflow —one of the most favorite tools in the no-code ecosystem— HuggyStudio built the whole digital infrastructure of Farie in just three months. As the process of selling cars online is complex and requires a wide variety of procedures behind the scenes, HuggyStudio built customer-facing marketing pages with CRM functionalities, an inventory of cars with filtering functionalities, detailed car listings with 360-degree images, an online checkout process that allows users to add services and car-specific add-ons, integrated swiss payment providers for down payments, and much more!
Comet: the agile talent ecosystem
Comet is a marketplace where tech and data freelancers meet potential clients who need engineers and teams for specific projects. Since its foundation in 2016, they have now a pool of over 10’000 available, qualified and active freelancers. Their goal is to satisfy both sides: relevant and prompt skills for companies, security and inspiring projects for freelancers.
Ideamix: a platform that connects individuals and companies with vetted, experienced coaches.
No-code tools accelerated the build process of the ideamix marketplace. The platform was built in 6-weeks using Bubble.io. The official launch of the marketplace was in February 2022 and, after that, the site was up and running and coaches began onboarding into the platform.
Build it yourself!
With no-code you have two ways to build your own marketplace, each with its own benefits.
- Check out our favorite Bubble tutorials and resources
Work at your own tempo, with all the relevant video tutorials you need. Assignments teach real-life skills to help you build and launch your own custom marketplace.
- Let a No-Code Agency handle it
If you don’t have enough time to build it yourself, the HuggyStudio No-Code Agency can handle it. The team specializes in launching new digital products with no-code, at a fraction of the costs of traditional developers.
Whichever method you choose, you’ll soon be ready to create your own digital marketplace. No-code for the win!
