Amazon earned a total revenue of $116.444 billion in Q1 2022.
Alibaba marketplace made $32,188 million as revenue in Q1 2022.
eBay marketplace generated $2.48 billion in revenue in Q1 2022.
The success story of these leading marketplaces in terms of revenue showcase the steady growth in the last couple of years. The COVID impact has created ripples in the online shopping sea. It has made physical stores and start-up businesses ride an online commerce building wave to harness the potential of Ecommerce technology.
There are two ways to launch products online, that’s Ecommerce website development and marketplace app development. Here, we will discuss how the marketplace business modelis a lucrative opportunity for businesses.
What is a marketplace app?
The marketplace app is a mobile version of the online marketplace that provides a platform for multiple sellers to list and sell the products/services online using the platform. The verified sellers can upload the products, display them uniquely on the storefront, and sell the products/services. The sellers get the payment after the commission is deducted from the transactions. The customers effortlessly order and get the product delivered to their doorstep. Thus as an entrepreneur, it is important that you knowhow of building a marketplace business model that suits your business.
Which are the different types of marketplace apps?
There are three different types of marketplace apps- B2C, B2B, and C2C. The B2B marketplace app involves businesses selling products/services to other businesses. For instance, the manufacturers sell products to wholesalers.
The B2C marketplace app involves businesses selling to customers. Amazon, eBay, Flipkart, Alibaba, and Etsy are the popular B2C marketplaces that sell offerings to customers. The C2C marketplaces include customers selling to customers.
The platforms are also categorized based on the products they sell. Vertical marketplaces sell similar products from different sellers. Horizontal marketplaces list and sell similar products but with different compositions. Global marketplaces involve various vendors selling different types of products.
How can marketplace app development help start-ups to grow and prosper?
The start-ups can earn millions and get ahead of the curve with a couple of monetization strategies associated with marketplace apps. Despite having marketplace giants acquiring a large share of the market, the start-ups can make optimal money by using one or the combination of the monetization models.
· Commission model
The start-up business gets money from every transaction that occurs on the platform. The business can deduct commission either from the buyer or seller or from both.
· Subscription model
The marketplaces charge a recurring fee from the customers and merchants to allow them to purchase or sell the products/services respectively. Different subscription plans are created to engage different buyers and sellers. It’s also referred to as membership plans that are offered by grocery stores.
· Listing fee
Start-ups charge vendors for listing their products for some categories. The vendors don’t need to pay the listing fee every time they list the products. It’s a flat rate or a certain percentage of product/service price. For instance, Craiglist charges listing fees for posting job listings in some regions of the USA.
· Featured listing
For the vendors looking to improve product awareness, the marketplace helps them with a featured listing where the product is listed at the top of the page alongside the vendor’s profile.
· Advertisement model
The start-ups can allow third parties to put ads on the app in exchange for a certain amount. The users less often consider the ads. So, keep the optimal number of ads on the marketplace and ensure the products must be high-quality else they hurt customer experiences.
· Lead fees
The service-based marketplace generally employs this monetization model that includes sellers paying for every user that connects with them. For instance, thumbtack helps customers meet the local specialists after charging a lead fee.
· Freemium model
The model enables sellers to register and list products for free to initially engage them. Later, access to advanced features or value-added services is provided after a specific amount.
How can start-ups build a marketplace that works like a pro?
· Research the market
Before shaping the marketplace idea into reality, it’s essential to understand the target market, target audience, and the gaps. The research helps in assuring that marketplace offerings stay aligned with target users’ needs so that marketplace gets maximum traction after it’s launched.
· Analyze requirements
The online shopping trends are continuously changing, which makes it necessary for the marketplace business to analyze what’s in demand and what’s outdated. For instance, people turn to the marketplace for price comparison, easier search, and the convenience of getting products from the comfort of the sofa.
· Plan marketing strategies
It’s well-known that marketplace development is not enough to bring the customers to the marketplace. Instead, tactical marketing strategies are important to gain the attention of leading brands to list the products on the marketplace. Intelligent marketing ahead of the marketplace development helps in creating the necessary buzz around the marketplace.
· Identify the features
When the start-up business is done with the research and analysis part, it’s time to outline the list of features that help the marketplace create a distinctive niche in the market and increase sales. For instance, advanced search, voice search, chatbot assistance, social integrations, and AR technology features are implemented in the marketplace to entice users. The marketplace application will have different vendors selling a broad range of products so that the users will get what they are looking for.
· Execute the marketplace development
The marketplace owners are not essentially tech geeks that can handle the marketplace development tasks. It’s vital to find out one of the best app development agencies and partner with them that can help with marketplace application development. Consider the best app developers as a wrong selection can make or break the marketplace success. Also, think about the technology stack because scalability is important to keep your marketplace up-to-date as your business advances.
Marketplace app development has become a lucrative opportunity for the start-ups to make billions. Before taking a step ahead, it’s essential to do the necessary homework from research and analysis to planning and execution for launching the marketplace like a pro. Besides, choosing the right monetization model ahead of the marketplace development enables start-ups to grow and flourish the business as planned. Pick up the right marketplace app type and then direct your efforts accordingly.