How To Build A Marketplace App: A Definitive Guide

Before the internet, a marketplace meant a physical location where vendors could sell their products/services to customers. But digitization has changed everything, including the very definition of a marketplace!

Today, an online marketplace is a digital platform that allows vendors to sell their products/services worldwide. Similarly, buyers can get a product/service of their choice through online marketplaces without leaving their homes!

Recent statistics reveal that around 2.14 billion people shop online, which equals 27% of the world’s population.

If we talk about the US alone, around 70% of the population shops online. And by the end of 2024, global online sales will surpass $7 trillion (That’s $7000 billion… Let that sink in!)

So, if you are also thinking of building a marketplace app to get your share of the pie, then you are on the right track! As long as you build a good marketplace app that’s loaded with features & delivers something wondrous, you will have no problem establishing your presence among the online successful marketplaces.

That’s why today we will look at what is a marketplace app, what features it should have, and how to build a marketplace app!

What is a marketplace app?

The best part about online marketplaces is that any vendor living in any part of the world can sell their products/services to a global audience.

Similarly, buyers can buy products/services from a vendor living in any part of the world. You can think of an online marketplace as a mediator that bridges the gap between the buyers and the sellers.

Here’s an example of how an online marketplace works:

Let’s say Mr. Smith wants to buy fishing rods, but their prices are too high in his hometown. So, he goes to an online marketplace and buys the same fishing roads at a fraction of the cost from a vendor in China.

This creates a win-win situation for the buyer (Smith) and the seller (The vendor from China). And through this process, the marketplace also gets to earn revenue by taking a percentage of the sales’ value from the whole transaction!

5 Popular marketplace apps

Now, let’s take a quick look at some popular marketplaces with millions of customers and billions of dollars of revenue.

(You can look at these marketplaces to get ideas about what makes them special. Then you can use that knowledge to build a successful marketplace of your own):

1. Amazon

With more than 310 million customers, Amazon is the #1 online marketplace. In 2021 unaided, Amazon managed to earn a net revenue of $333 billion.

Today, the word “online shopping” goes hand in hand with Amazon, which goes to show the popularity of Amazon among online consumers.

Amazon still continues to enjoy the top spot since it was among the earliest online marketplaces of all time.

And if we are to highlight one unique feature/service of Amazon, it would be the option to select an exact delivery day. Amazon was the first ever marketplace ever to introduce that option.

2. eBay

With more than 138 million active users, eBay is among the top online marketplaces. Unlike Amazon, which focuses mainly on B2C, eBay also allows the C2C business model where consumers directly deal with each other.

This adoption makes it possible for people to find everything from electronics to home equipment to Justin Bieber’s hair.

In 2022, eBay’s revenue was close to $9.7 billion, which is way higher than most big-name retail giants!

3. Craiglist

The Craiglist platform is visited by 250 million users every single month! Unlike Amazon & eBay, Craiglist only offers its users to add listings while the payment takes place off the platform.

Another difference between Craiglist vs. Amazon and other similar marketplaces is that the former follows a C2C model. That’s why the listings on Craiglist are very diverse and cover everything from buying/selling items to most other services.

We only have Craiglist’s revenue numbers from 2021 which suggests that it earned close to $660 million that year!

4. Airbnb

Airbnb is a unique marketplace that connects homeowners with those seeking a rental place. A homeowner can list their place on the Airbnb platform along with the price & all other requirements.

On the other hand, someone looking to rent out a place for a short period of time can use Airbnb to find a suitable place.

So, instead of buying/selling different products and services, Airbnb deals with the rental of homes & other buildings.

Statistics show that almost 150 million users are registered on the Airbnb platform. In addition, almost 1 billion stays were booked on the Airbnb platform, which makes it the top marketplace for finding rentals.

5. AliExpress

Available data suggests AliExpress marketplace receives close to 390 million visits per month. According to Shopify, this marketplace ranks #5 among the top 10 e-commerce marketplaces based on its traffic, revenue, & cap size.

AliExpress is built on a B2C business model and allows its visitors to source cheap products directly from China. Similarly, it also allows vendors from China to sell their products to a global audience.

11 must-have features of a marketplace app

After looking at the popular marketplace apps, we have come up with some essential features that must be present in every online marketplace.

The key term here is “essential,” as these features make up the basic functionality of a marketplace. To truly stand out from the competition and offer something truly extraordinary to the users, you would have to create a unique selling point for your marketplace.

For example, some marketplaces have started offering augmented reality features on their platforms. This means a marketplace that sells T-shirts can allow visitors to turn on their webcam and check whether a particular T-shirt looks good on them or not!

If you can manage to bring a unique feature like this to the table, the chances of your marketplace’s success will increase manifolds.

With that out of the way, let’s look at the features that are the hallmark of a typical marketplace app:

1. Registration

The registration into the platform must be hassless and straightforward through multiple options. These days, it is no longer a good idea to only rely on good-old email registration.

The registration page of your marketplace application should offer a signup option through different options such as:

• Email
• Google
• Facebook
• iCloud/Apple Acc

It is also a good idea to separate the registration process for sellers and buyers, as you would need different information for each account type.

For example, you may need more information from a seller during the account signup, such as company name, tax info, etc. But a buyer who just wants to create an account and buy products/services on the platform shouldn’t have to disclose this much & type of info!

2. Account Management

Another must-have feature is comprehensive account management for both buyer & seller accounts. Some of the typical features that fall under account management include:

• Sign in
• Forgot password
• Account recovery
• Delete account
• Profile pictures
• GDPR-Compliance
• Change email
• Ban account
• Payment preferences

Some of these features can be provided directly to the end users, while others can be reserved for the management team only. For example, the ban account feature can be used by marketplace management to ban fraudulent sellers and buyers.

3. Search

Another important feature of a good marketplace app is the option to search with filters. This allows the buyers to search the marketplace for their desired product/service and even filter the search results.

Some of the filters that should be incorporated into the search are:

• Location (Town, City, Country)
• Prices (High to Low | Low to High)
• Seller ratings
• Product ratings
• Ascending order (A-Z)
• Descending order (Z-A)
• New products
• Brands (For example: Search only for Apple products)
• Color (if applicable)

Basically, the more search filters offered by the marketplace, the easier it gets for the buyers to search the marketplace and make a purchase.

In addition, you can also include other features in the search to increase the discoverability of your marketplace. This includes keyword auto-complete, listing categories, and availability search.

Similarly, even the sellers can use the search feature for product research and to take a look at how the competition is doing!

4. Product Pages

Vendors should be able to list their products/services on the marketplace with as many details as possible. The best way to achieve that is to include detailed product pages that include the following:

• Tags
• Keywords
• Product Images
• Product Description
• FAQs
• Reviews
• Ratings
• Videos

This would be beneficial for both the vendors and the buyers. On the one hand, it would allow buyers to get full details about the products/services they want to buy. On the other, it would allow vendors to provide details about their products/services and thus increase their conversion rate.

5. Notifications

The next must-have feature to consider when building a marketplace app is notifications. This includes browser push notifications and email/SMS notifications.

You can send notifications to the users about:

• Discounts
• Promotions
• New Messages
• Events
• Product Availablity
• New Arrivals
• Shipping Updates

etc

The basic idea of these notifications is to increase the user’s engagement with your marketplace & ultimately increase the conversion rate.

6. Shopping cart

A shopping cart on an online  marketplace is just a no-brainer for an e-commerce website. works just like a shopping cart works in your local retail store. In an online marketplace, users can add items to the shopping cart and then continue to browse the marketplace for more products.

This allows the users to add multiple items and then checkout in one go without buying each product individually.

You don’t have to go all the way out with designing the shopping cart feature, as the only function it’s supposed to accomplish is the ability to add or remove shopping items. You can also include a subtotal that tells the users about the total cost of the products present in their shopping cart.

7. Admin panel

Admin panel allows the owners to perform the related administrative tasks of the marketplace. This feature is specifically made for the site’s administration and, thus, would not be available to the end users.

Some of the features that should be present in the admin panel include:

• Data collection
• Traffic analytics
• Delete users
• Ban users
• Unban users
• Managing discounts
• Managing products
• Remove listings
• Suspicious activity alerts

And so on…

Basically, the more features that are present in the admin panel, the easier it will get to manage the marketplace effortlessly!

8. Payment gateway

On a typical e-commerce website, only the shop owner gets paid. But in the case of a marketplace, all the vendors receive payouts!

That’s why a good marketplace should have a dedicated payment gateway that supports handling payments from buyers as well as payouts to sellers.

In addition, the payouts to vendors will also have to follow certain regulations, including the AML (anti-money laundering laws), fraud prevention, tax laws, as well as any local laws.

In addition, all the payments coming from the buyers will need to be split between the marketplace and the vendors. Accordingly, that’s another obstacle to overcome!

To do so, you may include a payment gateway for the buyers that accepts payments. Likewise, you can integrate a different payment gateway for vendor payouts with multiple options such as Bank Transfers, wallet transfers (e.g., PayPal), and so on.

Some of the features that should be a part of the payment system include:

• KYC for sellers
• Payment Authorization
• Refunds
• Seller payouts
• Payment split (b/w vendors & marketplace)
• Payment authorization (3D security)
• Secure payments page

9. Messaging

Proper communication can help the buyers get information or ask questions from the vendor. Similarly, it allows the vendors to interact with customers on the platform.

So, yet another important feature to consider for your marketplace app is messaging. De facto, the messages may also be essential to resolve disputes between buyers and sellers.

You can create a system where the disputes are first routed to the vendors, who must communicate with the buyers. And if the issue still remains unresolved, you can step in and solve the dispute for both parties.

Even with that aside, the feature of messaging would make it easy for the vendors and buyers to interact with each other. This can increase engagement as well as the conversion rate.

So, at the end of the day, the messaging feature simply means more cash-on-hand from your marketplace.

10. Augmented reality

Augmented reality is a new feature that is less widespread than other features. So, if you can manage to bring augmented reality to your marketplace, it could prove itself to be a unique selling proposition (USP) & will help you stand out from the competition.

For example, augmented reality technology can be used by potential visitors to check how different beauty products look on their faces with the web camera. Similarly, users can also try different clothing articles, watches, hats, and other items through the webcam.

Of course, augmented reality wouldn’t work in every situation, but if it makes sense, you should seriously consider it!

11. Seller tools

Empower the vendors on your marketplace by providing them with dedicated seller tools. This will make their job easier and will eventually generate more sales. This, in turn, means more revenue for you as you will be getting a cut from every sale generated on the platform.

Some of the seller tools that should be included in the marketplace include:

• Inventory Management
• Analytics
• Add/remove products
• Discounts
• Promotions
• Buyer blocklist
• 3rd party shipping management
• Order updates
• Refund management
• Earnings overview

So, if you are in the process of building a marketplace or are thinking about how to build a marketplace app, then make sure to write down every single one of these must-have features!

How to build a marketplace app

The process of marketplace app development can differ depending on the features, design, tech stack, and so on. In addition, the business model you choose for the marketplace app can also dictate the process of building a marketplace app.

That’s why we will look at some general steps that are involved in building any type of marketplace app:

1. Pick your niche

The first question that needs to be answered is: “What will be the niche of your marketplace?”

As you can see, there are some marketplaces where users can buy and sell anything. For example, Amazon and eBay are broad niche marketplaces where pretty much everything is listed as long as it is legal.

On the other hand, there are marketplaces such as Airbnb, which only focus on property rentals. So, you can’t expect to buy a toothbrush on Airbnb!

So, the first step is to decide whether your marketplace will be about a particular niche or it will cover everything.

To give you a good starting point, we have listed some of the fast-growing niches you can adopt for your marketplace:

• NFTs – An NFT marketplace is a digital platform where users buy & sell non-fungible tokens (NFTs).
• Fitness equipment – The pandemic has changed how people exercise and stay fit. That’s why a marketplace only focused on fitness equipment will allow you to tap into a multi-billion dollar industry.
• Professional Services – You don’t have to limit your marketplace only to tangible products. You can also create a marketplace where people can get professional services for plumbing, electrical work, woodwork, & even technical services (app development, web development, graphics design, etc.)
• Online Education – A marketplace built on this niche can allow the vendors to sell their courses or offer coaching services to potential buyers.
• Organic Products – By the end of 2030, the organic products market will be worth $564 billion. So that’s yet another good idea for building a marketplace.

2. Choose an app type

Will your marketplace be a mobile-only application, or will it be a web-based application accessible through the web? Maybe, you want to do both (a mobile app and a web app)?

We, at CDC, recommend you opt for a hybrid app that grants immaculate digital experience on mobiles just as on desktops (and pretty much any other device!). This path will take more time and money, but it would allow you to offer your marketplace to all users regardless of their device.

3. Choose a business model

In this stage, you need to determine the business model of your marketplace. Currently, there are three popular business models for a marketplace:

1. Business to consumer (B2C)
2. Business to business (B2B)
3. Consumer-to-consumer (C2C)

A good example of a B2C marketplace is Amazon and AliExpress. Similarly, the Alibaba marketplace is built around the B2B business model. And if you want to see some C2C marketplaces, you can look at eBay and Craiglist.

We have to note that Amazon is increasingly supportning a hybrid model where it does sell its manufactured products while simultaneously allowing other people to list their products. Amazon then takes care of the storing and shipping of those products.

4. Choose a development firm

If you have an in-house team of developers, you can skip this step. But if you don’t have a development firm or if they are not experienced in marketplace development, you would have to find a reputable development firm.

Normally, it is usually best to outsource the marketplace development to another firm that has the talent & the expertise to pull it off. This would allow you to hire the services of the best talent out there!

When choosing a development firm for building your marketplace, you need to keep the following in mind:

• Reputation – Only work with reputable firms that have a proven track record in the development space. You can start by looking at the reviews on their Facebook page, Yelp, Clutch, and Google reviews.
• Expertise – The development firm must have expertise in developing a marketplace based on your idea! It is always a good idea to ask about any past projects they have done in marketplace development.
• Price – What will be the cost of developing a marketplace? You must strike a fair balance between the cost and the expertise!
• Timeframe – How long the development firm will take to complete the project? You wouldn’t want to work with a development firm that takes a lot of time or has a history of taking more time than what was initially agreed upon.

5. Determine key features

At this stage, you must determine what will be the key features of your marketplace app. We have already listed some must-have features that should be present in every marketplace.

Ideally, your marketplace should have all of these features and then some more. To get some inspiration about more great features, you can look at popular marketplaces.

In addition, the development firm you have chosen will also collaborate and work with you to determine the key features of your marketplace. However, that will only be possible if you work with a good development firm such as Canadian Digital Consulting that knows about the latest trends & what works best for marketplaces.

6. Choose tech stack

Choosing the tech stack is a step that may or may not require your involvement. If you are not a tech-savvy person, you can leave this step to the development firm.

But if you have a preference for a particular tech stack, you can convey that information to the development firm and discuss things further. For web-based marketplace apps, the popular tech stacks are given below:

• Xampp stack
• MERN stack
• Serverless stack
• LAMP stack
• MEAN stack

And to build a dedicated mobile app for the marketplace, you can decide to either go for native development or cross-platform app development.

7. UI/UX design

At this stage, the UI/UX of the marketplace will be developed. Now, many not-so-hot development firms end up designing a user interface based on what & what doesn’t appeals to their staff.

Instead, the user interface (UI) and the user experience (UX) should be designed based on what the customers want. And there’s no better way to figure out a good UI/UX design than to look at popular marketplaces.

I am not saying that the UI/UX of popular marketplaces should be copied completely into your marketplace. This would rob your marketplace of its originality.

Instead, the popular marketplaces should be checked to understand the common UI/UX components and then incorporate them into a unique and fresh design.

It is important to ensure proper collaboration with the development firm to ensure that the UI/UX design is up to the standards and truly reflects what you want from a marketplace.

8. Development

The development process involves both: front end & back end development. The front end development deals with turning the designed UI into a functioning code. This is usually done with the help of HTML, CSS, and JavaScript.

Once the front-end portion of the marketplace is complete, the development firm will move to the back-end development.

This involves building the admin panel and writing programmable logic that will make the marketplace functional! You can think of the front-end portion of the marketplace app as the build part that’s seen by the visitors (The page you are seeing right now is the front end).

The back end is the portion that involves setting up servers, databases, API usage, architecture, and so on.

9. Testing

Before going live, the marketplace app will be extensively tested by the development firm. You can also look at the marketplace and look for any bugs or errors that need to be fixed.

If possible, you can also invite a group of people to your marketplace for beta testing. If you decide to go with this route, you will have the added benefit of getting valuable feedback from real users!

10. Launch

Congratulations! You have built a marketplace app, and now it is ready to compete against others on the web!

To get the most out of investment & to make your marketplace stand out, you must allocate an ample budget for marketing. This will help you to attract both buyers and vendors to your marketplace.

Conclusion

As you can see, to build a marketplace app you need to go through a lengthy process that includes many dynamic pieces. In addition, building a marketplace the right way (with all the features & a good UI) is also essential to withstand the competition.

That’s why we have listed some of the best features that should be included in your marketplace. We have also listed the steps that are normally involved in building a marketplace.

As long as you follow the tips and steps mentioned on this page, you will have no trouble starting your own marketplace.