Online marketplace series: Setting up your online marketplace
Welcome to the 2nd part of our Online Marketplace series! If you didn’t, check out the 1st part of our online marketplace series to get you started!
If you’re here, that means you’re serious about starting an online marketplace. We’d be happy to help you so feel free to reach out to us and let’s get your online marketplace up and running!
In our previous article of this series, we talked about some basics such as conducting research, planning the marketplace operations and choosing the monetization strategy.
And today – we’re going a bit more in-depth.
We’ll talk about some essential features, payment solutions, different types of marketplace software, and finally – assembling a winning team!
Let’s dive in.
Identify the essential features for your online marketplace
First of all, when launching your online marketplace, you won’t need all the features that pop in your mind right away.
The best way of building a successful marketplace is to start with a set of basic features and build upon them as the business evolves.
The whole idea here is to launch fast and add new features according to insights gathered from your data.
Now, there are 3 different sets of features we’ll talk about. To get a grasp on what we’ll talk about and how we’re going to build our features, here’s a short overview.
- Sellers want to sell products. This means we’ll have to enable them to list their products, sell their products, and dispatch them efficiently.
- Buyers want to buy products. This means we’ll need to enable them to search and buy the products as quickly as possible.
- The platform connects buyers with sellers and generates revenue doing it. This means we’ll need to establish a specific set of tools to support this.
Now, let’s start first with seller features.
Online marketplace features for sellers
Our goal here is to make sellers’ lives easier. To get this done, first, we need to make it easy for them to get started on your platform.
Quick and easy onboarding
The simpler the whole onboarding process, the higher the possibility of new sellers flocking into your online marketplace.
Here, we need to make sure that the signup and onboarding process are as straightforward as it gets.
First, you’ll need to have in mind that your vendors probably aren’t selling their products only on your platform.
They could have their own eCommerce websites, or they could already be selling their products on some other marketplaces.
So, you’ll want to make it easy for them to list their products.
When listing a product, a good product information management practice is to create simple product listing forms, all while having a convenient way for them to create different product variations and disbanding all of the non-crucial fields.
Another good practice here is to enable your sellers to import their products from third-party platforms such as Amazon Marketplace, Shopify, and so on. It could make the whole process a lot easier.
Convenient order processing
To minimize the amount of work your sellers need to do in order to process their orders, you’ll want to offer them a way of managing and processing all of their orders as efficiently as possible.
Every time your sellers receive an order, it would be great to instantly notify them while allowing them to mark those orders and print slips.
Along with that, a good practice is to offer a way of specifying the tracking numbers. Your buyers will appreciate it.
Your sellers are here on your platform with one purpose – to sell their products!
So, it’s a good idea to enable them to increase their sales by promoting their products. Here, you could enable them to create and distribute their own coupon codes and even take part in discount campaigns. Moreover, you could even help them improve their sales through personalization and personalized experiences.
Quick sidenote: We’ve put in a huge amount of effort into Pimcore, a digital experience platform, that offers all of that and much more. Above, we’ve linked an article where you’ll be able to see what can you do with Pimcore’s personalization engine. Check it out!
Your end goal, by launching an online marketplace, is to connect buyers and sellers in a lucrative manner. This is one of the ways you can achieve it.
In our previous article, we’ve mentioned how important it is to enable buyers to communicate directly with sellers.
So, it’s a good idea to offer your sellers a way to receive and answer buyers’ questions, and also to receive reviews on their product listings.
Online marketplace features for buyers
Imagine yourself in a situation where you’re browsing some online marketplace.
You’re looking to find a product, purchase it, and receive it, quickly and easily.
So, our mission here is to make this whole process as easy as possible for your buyers.
Powerful search options
If your buyers can’t find what they’re looking for on your online marketplace, they’ll go somewhere else.
To bring the number of buyers exiting your marketplace to a minimum, a powerful search is a prerequisite.
According to research conducted by Baymard Institute, buyers are searching for products in many different ways.
This type of insights can give you an idea of how your product search options may work.
Convenient checkout process
When designing a checkout process for your online marketplace, you’ll want to know more about your buyers.
Some questions you could ask yourself to clarify this a bit are:
Make your checkout process as straightforward as possible and make sure you’re offering the payment and delivery options your buyers are already expecting to see.
Reliable order and tracking processes
If by any chance your buyers make an order your seller can’t complete, you’ll find yourself in a trouble and lose a customer.
You’ll want to avoid that and make sure your sellers are reliable. Enable your buyers to track their orders and notify them about every status change of their orders.
That way, your buyers will know what’s happening with their orders whenever they decide to check.
Communication with sellers
Whenever a problem arises, you’ll want it to be dealt with as soon as possible.
If your buyers can communicate with sellers even before they make an order, there’s a higher chance that they’ll purchase something on your online marketplace.
Online marketplace platform features
The goal of your online marketplace is to generate revenue by connecting buyers with sellers.
So, to make this happen you’ll need the right set of tools and features to support your online marketplace.
Let’s take a look at some features your online marketplace should have.
Suitable payment gateways
Payment gateways are essential to every website doing business in eCommerce, and online marketplaces are no exception.
You’ll need to make sure your online marketplace supports all the needed payment gateways.
Operation management tools
When running an online marketplace, you’ll want to stay up to date with all new activities happening on your platform.
To make sure you have control over your marketplace, you’ll want to consider features such as notifications, alerts, activity overviews, and tools for moderating catalogs.
No platform ever became successful by staying hidden on the internet.
You’ll want to spread the word of your online marketplace and make sure you have a steady flow of users coming to your platform.
Besides paid marketing activities such as social media ads and Google ads, your marketplace will be much more visible if you decide to build it from the ground up having marketing in mind.
You’ll want to lay the groundwork for search engine optimization, making sure all of your pages are optimized for Google primarily.
Besides that, social media integration may play a huge role in marketing your online marketplace.
Also, UX and UI design of your marketplace are of high importance. It can either make or break your online presence. Having that in mind, make sure you have a team of experienced designers dedicated to improving your platform.
When running an online marketplace, you’ll surely want to have a set of standard analytics tools.
Moreover, you’ll want to make sure your vendors also have those analytics tools available on your platform.
Still, when it comes to advanced analytics tools, developing one for your platform may prove to be a long and costly battle.
So, it would be great to offer an integration with some advanced analytics tools such as Google Analytics. Your vendors will highly appreciate it.
Besides these essential features and tools we’ve named here, there are many more that would be nice to have. When launching your platform, consider launching it with a standard set of tools and features and build more upon feedback.
All in all, these features are certainly similar to classic eCommerce website features (some are exactly the same, it’s still eCommerce, right?), and yet there are many more novelties.
Choosing the payment solution for your online marketplace
To make sure your online marketplace business is sustainable, you’ll need to enable secure and reliable payment processing.
When compared with traditional eCommerce, there are a few differences when it comes to payment processing.
There are several different types of payments you’ll be processing on your online platform:
- Payments from buyers
- Payments from sellers
- Payments to sellers
- Payments to third parties
You can already see why solving the payment processing issue is going to be challenging.
To make sure that order payments are processed correctly, you may want to consider the following 3 ways of payment processing:
With this kind of payment processing, payments from your buyers will go directly to your sellers, meaning your platform will not be involved in this transaction.
If your platform doesn’t get involved in the transaction, some issues may arise.
You’ll have fewer opportunities to charge your transaction fees or to handle refunds.
Moreover, your customers will experience a major issue on your platform. They won’t be able to buy products from different sellers in one session and they’ll need to go through separate checkouts.
In essence, direct payments aren’t a great option when choosing a payment solution for your online marketplace.
With this type of payment processing, your platform will collect all of the buyers’ payments and later redistribute it to your sellers.
This allows for a single checkout and handling refunds and returns, but you’ll need to put in extra effort to track your sellers’ finances.
This may prove as a challenge for your platform, so give it some thought before choosing a payment solution.
When it comes to split payments, all of your buyers’ payments are split at checkout and distributed among your sellers.
And while it happens, you’ll be able to charge all of the fees and handle the transactions successfully.
Split payments solve the issues that appeared with the previous 2 types of payment processing.
One of the biggest challenges here is the complexity of implementing this kind of solution in your online marketplace.
Over the years, the situation has improved and now there are many payment processors that can handle split payments.
Some of these are Stripe Connect, Mangopay, and PayPal for Marketplaces.
How to choose a payment solution?
Choosing the right payment solution for your online marketplace is of the utmost importance.
There are a few factors that will impact your decision, the most obvious one being the cost of the solution.
So, to make this decision a bit easier, ask yourself the following questions:
Try to find the right ratio between selling fees and payment processing fees, or you may end up with no profit at all after the payment has been processed.
Find the best online marketplace software solution
We’ve come to an important part of creating your online marketplace business.
After you’ve created the whole plan of operations, chosen the features and payment solution, it’s time to choose a software solution for your online marketplace.
There are many different options to choose from.
So, here are some tips on choosing the right one.
Consider what type of online marketplace are you building
Are you going to sell products, services or you’re going in the direction of online bookings?
Platform designed for online bookings may not work out well if you’re going to sell physical products.
Take into account the features you’ll need
You’ll want your online marketplace software to be able to support the features you decided to use.
Does it support the payment solution you chose previously? Can you implement the features you decided on already? How’s it going to handle logistics and shipping?
How good is its user experience?
This may get overlooked, but it’s extremely important. UX can make or break your online marketplace.
If it feels difficult to use and it isn’t as intuitive as you’d want, it probably isn’t the solution you’re looking for. The users will want the best user experience they can get their hands on and you need to make sure it all happens on your platform.
Who are the people building your software solution?
You’ll want to know who are the people working on your project and what kind of results can you expect from them.
An online marketplace often requires years of continuous support and updates, and you’ll want a reliable solution provided here.
When you find the right solution provider, the chance is you’ll be treating them more as a partner than just a solution provider. They’ll be heavily involved in your business and you’ll be able to turn to them regarding any issue on your platform.
How big is your budget?
It’s safe to say, the budget isn’t a great priority when choosing a software solution.
Paying a few hundred dollars more today for a better solution can save you thousands of dollars in the long run.
Going with the cheaper solution isn’t worth it when it comes to the online marketplace business.
But still, defining a budget from the start is a good way to go.
Assemble a great and reliable team
When running an online marketplace, you’ll need to have a great team that’ll help you make it work.
Here are some essential roles your online marketplace is going to need.
Designers and developers
Regardless of the software solution you choose, you’ll need to have some technical skills to pull it off.
You don’t need to be a developer or a designer, but you’ll surely want to have them on your team. It’ll make your life much easier.
Investing in both designers and developers can be extremely profitable in the long run, so have that in mind.
Marketers and salespeople
To get the most out of your online marketplace (and to get the business started), you’ll need to promote your online marketplace continuously.
That’s where sales and marketing come in incredibly useful.
Your marketers and salespeople will take care of finding both buyers and sellers for your online marketplace.
It’s safe to say that you’re also going to do both sales and marketing, ensuring your business is on the right track.
You may want to acquire some new skills such as:
- Email marketing
- Social media marketing
- Community management
These are some basic skills when it comes to promoting your business and over time, you’ll most likely master them.
But don’t hesitate to invest in your team. Running an online marketplace is rarely a one-man job and if you’re aiming to go big – then it sure isn’t.
Online marketplace administrators
If you already checked out our first article in the online marketplace series, you already know that running a marketplace on an everyday basis is an exhausting task.
You’ll need to manage your sellers while keeping them happy, monitor everyday activities, resolve customer complaints, manage your team, do the paperwork, manage the payments, and so much more.
When just starting out, you may be the person that’s going to do almost everything, but you’ll surely want to delegate some of your work.
Consider hiring either full-time employees or agencies to help you out.
Each of them has its own pros and cons.
Recruitment and hiring is a long and thorough process, so be sure to put great effort into it.
It’ll most certainly pay off in the long run.
And here it is, we’ve come to the end of our 2nd article in our online marketplace series.
To recap, today we’ve talked about:
- The essential features your online marketplace will have
- Different payment solutions for your online marketplace
- Online marketplace software solutions and how to choose them
- Assembling a winning team around your business
If you’ve missed our 1st article of the online marketplace series, worry not, we’ll link it here for you.
And if you’re ready to continue – take a look at the 3rd article in the online marketplace series! You’ll learn more about launching the marketplace and making sure it goes down successfully.
Also, if you’re in need of reliable and trustworthy solution partners, we’d be happy to help! We have experience in building successful eCommerce platforms and we’re focused on developing online marketplaces.