How to Develop Online Marketplace MVP

The online marketplace is a platform where one can review, compare, and buy goods or services from different vendors. Generally speaking, the marketplaces are the mediators between the buyers and the sellers. 

The clients look for the product or services they need. And the system displays the sellers that are able to offer the necessary item or jobs.

It is not surprising that the marketplaces have become so popular. You no longer need to go to the shopping mall. Or surf the web looking for the services you need. Online marketplaces are also convenient for vendors too. They help them expanding the audience and getting new clients from all over the world.

No doubt the idea of creating an online marketplace is alluring. How to create a product to satisfy the needs of your target audience? You may first develop a marketplace minimum viable product (MVP) with the core functions. 

In this article, we shall speak about the marketplace MVP development. Besides, you will get to know how much it costs to build a marketplace MVP.

Types of marketplaces

The online marketplace is a platform where one can review, compare, and buy goods from different vendors. Generally speaking, the marketplaces are the mediators between the buyers and the sellers. The clients look for the product or services they need, book them, and buy.

Marketplace MVP: Types of marketplacesMarketplace MVP: Types of marketplaces

As the online marketplace industry grew, the more kinds of marketplaces appeared. Here are the most popular types of online marketplaces: 

  • Goods and products 

Marketplaces that sell goods and products are often closely related to e-commerce. This type of marketplaces operates by charging a fee during a payment transaction. 

Examples: eBay, Amazon, Etsy, AliExpress.

  • Services 

Service marketplaces are especially popular with B2C and C2C types. It means that either businesses or customers provide services to clients. This type of marketplace can operate on different marketplace monetization models, including commission, subscription, or advertising models.  

Examples: Uber, Airbnb, Booking.com, Couchsurfing, Upwork.

The participants of this type of marketplaces buy and sell the products of their intellectual work.

Examples: TravMedia IMM, Matpra Media Marketplace, MediaMath.

  • Investment and crowdfunding 

The marketplaces can also be a solution for business-to-business communication. With crowdfunding marketplaces, it is possible to find investors, suppliers, or deals worth thousands or even millions of dollars.

Examples: Kickstarter, Indiegogo, CircleUp. 

How to Develop Online Marketplace MVPHow to Develop Online Marketplace MVP

What is the Minimum Viable Product (MVP)?

If you have an idea of a service that will be useful to your target audience, surely it is high time to implement it and develop marketplace MVP.

However, it would not be reasonable to start with the development of a fully-featured product immediately. It will take a huge amount of time and money. And upon its release it may come out that the idea is no longer viable. So the clients are not ready to pay for this product they do not need.

So how to avoid such a situation and to save your resources (time, money, time)? Firstly, conduct research on your target audience by presenting them with your marketplace MVP.

Minimum Viable Product (MVP) is the first version of your product which has enough features to attract early adopters. As well as validate the idea but does not contain any extra functions.

Building an MVP will help you to:

  • check if your product is interesting to the target audience 
  • define if the core functionality is chosen correctly
  • find out which features are the most useful and popular
  • create a base of potential clients and early adopters of your product
  • determine the possible problems, in order to prevent or solve them at this early stage.

Is an MVP so different from a fully-featured product?

In fact, there is a big difference between an MVP and a fully-featured product. An MVP helps to validate the target audience. Unlike a fully-featured product that is developed to serve the particular target group. In addition, a marketplace MVP development always costs less compared to a fully-featured product.

The cost of an MVP is lower than a fully-featured product’s. However, it is a mistake to think that an MVP is raw and poorly made. An effective marketplace should be a qualitatively-driven application. It should contain only the most important features. The features that are capable of solving the users’ most critical problems.

Having a successful MVP helps to reduce the time and money for a fully-featured app. It allows you to present it to a loyal, validated audience.

Marketplace MVP: Correct discovery phase processMarketplace MVP: Correct discovery phase process

Why does your marketplace need an MVP?

Idea Validation

You may love your ideas,  each and every business idea  – requires double-checking.

If it turns out that the users are not ready to pay for your service, it will help you save money by not investing in a non-viable product. In case some features appear to be unpopular, you will know at an early stage. And will not waste your resources by developing them further. 

If the users like the idea of your marketplace, they will become early adopters of your product even with its minimal version. And will probably remain loyal, even if competitors decide to launch something similar.

3 reasons to validate your marketplace idea:

  1. Lack of experience. Well, a vendor may be great at business. But not every vendor knows how to create a marketplace MVP product which would be strong and reliable to fit the market. 
  2. Time. When you are a startup, time is everything. Your competitors may develop their products faster than you. And the faster you get market feedback, the faster you can release a full version of your marketplace.
  3. Time-to-Market Reduction. You can spend a year or more on developing a fully-featured product. But why? Take a few months on delivering the core functionality with an MVP to your audience. Thus, moving ahead of your competitors. Time can be of the essence to some types of marketplaces. Start with something small and promising and at the same time of high quality.

As we can say from Sloboda Studio’s experience, the development of MVP usually takes from a couple to 6 months.

Costs Saving

Of course MVP development costs some money, too. But it is still less expensive than a fully-featured project. It is worth spending a solid budget only after validating your business idea. Meanwhile you can invest this money in promoting your marketplace MVP to early adopters.

MVP attracts early adopters

Early adopters are the first people who are gonna interact with your product. Why are they important? Early adopters not only help to test the features of your marketplace but also form your initial pool of loyal users.

Fundraising

After launching your marketplace MVP and getting enough traction, you can go ahead and pitch your marketplace to investors. The important thing is you should have numbers to justify your request to raise funds.

The features of an online marketplace MVP

Although MVP is not a fully-featured product, its functionality should be sufficient to satisfy the needs of your target audience and to understand which of them are the most effective and should be developed first. We have experience successfully launching products with the following functions:

Although MVP is not a fully-featured product, its functionality should be sufficient to: 

  • satisfy the needs of your target audience 
  • understand which features are must-have and which are not needed by users

Here are the most common and requested features for building an online marketplace MVP:

Homepage

The homepage is the very first page. Your customers will see it when they come to your web application. As usual, this page contains all the valuable information about your marketplace. This could be description, greeting messages, and some of the key functions.

TikkTalk Homepage

Registration

While a home page is the face of your project, the registration page is a door. Creating an account is one of the first things your customers are gonna do when they decide to use your marketplace. Add various options of registration, like signing-in with an email or social networks. Otherwise, your customers just won’t be able to buy or sell goods on your marketplace.

TikkTalk Registration Page

User Profile

The user profile section is equally important for both suppliers and vendors. The vendors need to know some key information about the suppliers or sellers and vice versa. 

Well, some may say that buyer’s profiles are not that necessary to fill in. But some suppliers may need this information for safety reasons. For example, Airbnb landlords may be interested in buyers’ profiles so they could understand who they rent their apartments to.

Airbnb User account

User Roles

Any marketplace has at least two types of customers. For example, you can allow your users to choose between being consumers and suppliers or buyers or sellers. Consumers post the job and specify the requirements for suppliers. Suppliers can see all suitable jobs, detailed information about the consumers, and send them requests or messages.

Let’s take for example TikkTalk. This is a marketplace of interpreters for which Sloboda Studio developed a marketplace MVP. This service divides its users into three types of roles:

  • Interpreters
  • People who would like to book an interpreters
  • Organizations who would like to book an interpreters
Marketplace MVP: TikkTalk User RolesMarketplace MVP: TikkTalk User Roles

TikkTalk User Roles

Search

Every user journey starts using a marketplace with searching for the needed services. Your search system should be simple and understandable for users. The search tool allows your user to find any product within your marketplace within a single click.

Usually, users either search by a keyword or category. Additionally, to searching, you can also add filtering, sorting, and tagging.

Marketplace MVP: Amazon Search & FiltersMarketplace MVP: Amazon Search & Filters

Amazon’s Search & Filters

Booking

As soon as a user decides what service provider to choose, they would want to book a service. Your booking features should be marketplace specific. For instance, for a Clarity and Airbnb-like marketplace. Here you would want to include a built-in calendar.

Marketplace MVP: Airbnb CalendarMarketplace MVP: Airbnb Calendar

Airbnb built-in calendar

Notifications

This feature enhances the user experience for the marketplace customers and generally boosts users’ activity. 

The notifications are helpful when it is needed to inform users about the:

  • service upgrades
  • new features
  • new messages from other platform members
  • their order requests

Notifications can be arranged as push notifications inside your marketplace platform. Or just as text messages or emails.

Marketplace MVP: Airbnb NotificationsMarketplace MVP: Airbnb Notifications

Airbnb Push Notifications

Product Page

This feature provides your users with detailed information about each product or services your marketplace offers. 

Usually, the product page has:

  • name of an item
  • pictures
  • short description
  • features of an item

Later on, you can extend the product page. For example, an ability to post video reviews. 

For marketplaces, the product page is one of the most important web pages. It is a point where buyers decide whether they need to make a purchase or not.

Marketplace MVP: Amazon Product PageMarketplace MVP: Amazon Product Page

Amazon Product Page

Messaging

The Messaging tool allows users to communicate with each other. The buyers can use this tool to ask sellers for some product details, delivery, any costs, and payment-related questions.

Marketplace MVP: Airbnb MessagingMarketplace MVP: Airbnb Messaging

Airbnb Messages Feature

Payments

Any marketplace can’t survive without a payment system. 

A marketplace can use one of the below-mentioned payment flows:

  • Prepayment
  • Escrow payment
  • Post payment

Escrow payment is a commonly used marketplace payment flow. With this model, a marketplace charges a user at the moment of booking. Although, a payment provider, for instance, Stripe.

For purchasing goods, customers usually pay with a credit card. To enable these payments marketplace has to be connected to one of the payment providers like Braintree or Stripe. In some situations, a correctly chosen payment method can expand your business internationally, helps to increase sales, or even reduce the fraud risk. 

The most popular payment gateways for marketplaces are:

  • Stripe
  • Braintree
  • PayPal
  • MANGOPAY
  • Adyen
  • Skrill
  • Square
  • Dwolla
  • Google Checkout
Marketplace MVP: Airbnb PaymentsMarketplace MVP: Airbnb Payments

Airbnb Payment Page

Read more: How to Choose a Marketplace Payment Solution

Feedback

After cooperation, the consumers and suppliers can leave feedback about their partner’s work. In case of any problems, the Administrator acts as a mediator in the disputes between the consumer and the supplier.

Marketplace MVP: Airbnb ReviewsMarketplace MVP: Airbnb Reviews

Airbnb Reviews Page

Admin Panel

An Admin Panel is a part of your project that isn’t visible for your users. Though, it is no less important. It allows you to monitor and manage the interactions between users of your marketplace. As an admin, you can also add new products and check payments. As well as receive statistics about your marketplace workflow and users’ actions.

Technologies used for the realization of the function: ActiveAdmin or RailsAdmin.

Marketplace MVP: TikkTalk Admin DashboardMarketplace MVP: TikkTalk Admin Dashboard

TikkTalk Admin Dashboard

How do we build an MVP for online marketplace

Creating the MVP involves analytical work. A perfectly made product will be a favorable foundation for a successful startup. And helps to gain the audience loyalty at the early stages of the development. To build a marketplace MVP that will satisfy as many of their needs, conduct a detailed analysis of the client’s business. The work on such a project at Sloboda Studio includes the following steps:

  • Discovery
  • Defining the core features
  • UX concept & wireframes
  • MVP Development
  • Getting market feedback
  • Support & Maintenance
  • Developing a fully-featured product

Step 1: Discovery

Any successful project starts with thorough market research. You may ask how it affects the coding. Well, it does not. But here in Sloboda Studio, we care for our clients. And we need their project to be the first and the best on the market. That’s why we need to research the competitors & determine weak points. And create a roadmap for further development. 

Step 2: Defining the core features

Add only those which are needed for the proper work and representation of your marketplace. Remember that here you need to create not enough features to represent your project for early adopters and investors. But you need to keep a balance, so your project won’t be looking poor. 

Step 3: UX concept & wireframes creation

The UX and wireframes are the last steps before you can jump to programming. At this stage, ask designers to think about the user experience. Therefore, you can create a useful and user-oriented marketplace. Wireframes are the clickable representation of your future platform. They will show you your future marketplace.

Step 4: Development

So how to build a marketplace website MVP? In Sloboda Studio, we develop marketplaces using an Agile methodology. It helps us provide a step-by-step marketplace MVP development process. So we won’t miss any detail and will be able to fix something right away. And without having to wait for the final tests. We love working with Ruby on Rails framework and PHP programming language. These technologies give us an opportunity to develop our marketplaces faster than market competitors and provide better speed and scalability.

Step 5: Getting market feedback

For any marketplace MVP, it is not enough just to launch a product. The next step is getting market feedback to see whether your customers are happy with the product. Or are there some issues that need to be fixed? Know what your users think about your product? so, we can upgrade your marketplace in accordance with this feedback. This step isn’t connected to the business or discovery stages. But it is still valuable as it shows you a vector for further marketplace growth.

6: Support & Maintenance

We develop and launch the first MVP and get market feedback. What’s next? We continue to support and maintain our product. And we recommend doing so. Because the technologies are constantly evolving. And even the perfect code may require some upgrades later.

How Much Does it Cost to Build an Online Marketplace MVP

What is the price for the development of an MVP for marketplaces? It depends on the stack and the way of construction. If the website is based on a ready-made template or it is developed from scratch. 

Hiring freelancers working with a ready-made template appears to be the fastest solution. And the cheapest one. However, the result may be not as you expected. It is rather difficult to customize the template so that it functions as you want. And they are not capable of handling a big number of queries.

The decision to build MVP for the marketplace from scratch is a far more complicated work. It implies a coordinated work the different specialists. Each of them performs his own role in the project:

  • Backend web developers. They will work at constructing the architecture of the future application and at server-side development
  • Frontend web developers. They will work at client-side developing and the correct functioning of the user interface
  • QA engineers. Testing is an essential part of application development. With the help of the QA-team, we ensure that the application meets the client’s demands. And works correctly
  • Project management. The team will be effective when different departments are coordinated by a single person. A PM knows all the specifics of the project. The project manager is a mediator. The client can address all kinds of issues to that person

Delegate the work on your custom MVP marketplace to a professional company. So, you will receive professional developers, QA-engineers, and a project manager at your disposal. Below, you see approximate pricing for an MVP of a marketplace with the functionality we have described above:

Marketplace MVP: Custom Development CostsMarketplace MVP: Custom Development Costs

The price is calculated based on the average hourly rate of European developers, which is about $40/hour. Of course, these are approximate figures. In order to give more precise information, we need to thoroughly study the business model of your project and your needs.

How to measure the success of the MVP

Feedback

We already mentioned this. The feedback and communication are extremely important for the MVP stage of a marketplace. You can start gathering feedback while you start promoting your project. Visit thematic forums or ask your users for feedback. Or even ask them to evaluate your web application.

After you get your customers’ opinions about what they like and don’t like, you can upgrade your features to make the product more convenient for your users.

Average order value

Average order value (AOV) is a metric that tracks the average dollar amount from every order at your marketplace. How to calculate the average order value of your marketplace? Just divide the total revenue from your orders placed by their number. 

Usually this metric is calculated once a month.

For example, ley’s surmise the last month your e-commerce platform sales were $21000 and you had a total of 500 orders. 1000 divided by 500 will be equal to 42. Therefore, the last month’s average order value equals $42.

Marketplace MVP: Average Order Value MetricMarketplace MVP: Average Order Value Metric

Gross Merchandise Volume

Gross merchandise volume is a metric used to calculate the gross revenue. That shows a total dollar volume of all sales on your marketplace during a particular period of time.

The simplest formula for GMV calculation is in taking the total price of customers’ purchases. And multiply it by the number of sold items. For example, your marketplaces sell 15 items for $50 each. Then your gross merchandise volume will be equal to $750. 

Marketplace MVP: Cross Merchandise Volume MetricMarketplace MVP: Cross Merchandise Volume Metric

Number of Active Users

The number of active users measures how many customers visit your marketplace in a particular interval of time. 

How to calculate this metric?  You need to divide your daily active users by monthly active users. Therefore, you will get a user ratio percentage. 

For example, your marketplace has 1000 users a day and 5000 users a month. The daily active users by monthly active users ratio will show you the rate of returning customers.

Marketplace MVP: Number of Active Users MetricMarketplace MVP: Number of Active Users Metric

User Management

User engagement shows whether your users are satisfied with your marketplace. How? This metric shows if the users find your product useful. For example, if the sellers can sell their products or services and the buyers are happy with their purchases. You can track the engagement to improve your marketplace convenience and increase sales. 

Net Promoter Score

The Net Promoter Score is a metric. It measures your users’ desire to recommend your marketplace to other people. Basically, it is an index that ranges from -100 to 100.  You will be able to define if your buyers are happy with your services. Or whether they like your brand at all.

This metric is calculated as the difference between the percentage of ‘promoters’ and ‘detractors’. 

For example, you’ve got 35% of promoters, 45% passives, and 20% Detractors. Then your Net Promoter Score result will be +5.

Marketplace MVP: Net Promoter Score MetricMarketplace MVP: Net Promoter Score Metric

Customer lifetime LTV

Customer lifetime is a metric that shows you how much time each customer spends working with your online marketplace. 

Therefore, you can analyze these data. In case if the customer’s lifetime is too short, check what’s the reason. After that, it is possible to improve your marketplace MVP.

Marketplace MVP: Customer Lifetime LTV MetricMarketplace MVP: Customer Lifetime LTV Metric

Our expertise in marketplace MVP development

TikkTalk

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TikkTalk is an online marketplace platform offering interpretation services for video and phone conferences. It connects the interpreters with the clients, governmental and non-governmental organizations, and individuals. And facilitates the communication between the parties and optimizes the business processes.

Our Solutions:

The clients are getting access to a global community of interpreters. There they can find people with the necessary languages, certificates, and ratings. After releasing a Minimum Viable Product, we received a lot of feedback. Then, we developed a fully-featured online marketplace. 

Conclusion

We have spoken about the importance of a high-quality MVP for your business. We hope we have answered your question about how to build a marketplace website MVP.

Create the MVP version of a custom marketplace, so you can:

  • Check if your product is interesting to the users
  • Define if the core functionality is chosen correctly
  • Find out which features are the most useful and popular
  • Create a base of potential clients and early adopters of your product
  • Determine the possible problems, in order to prevent or solve them at this early stage

Now you know how to create a marketplace website MVP. Need an exact estimation of the project and the help of professionals in marketplace building? Please contact us with your request.

Posted by Contributor