From Amazon and Etsy to niche projects that gather small but loyal audiences, we can cite numerous examples of websites that function as marketplaces.

The digital transformation is ongoing, and the online commerce market will continue to grow. Therefore, even in a highly competitive environment, new players can always find ways to enter and fill new niches to build a loyal customer base.

Let’s talk about what marketplaces are, types of online marketplaces, their main functions, and how to monetize them.

  • 47% of digital purchases worldwide happened via online marketplace platforms.
  • Only 6% of B2B buyers do not currently use online marketplaces.
  • 75% of B2B procurement spending is projected to take place via online marketplaces over the next 5 years.
  • 53% of retailers are adopting tools that assist them in selling through various channels (Shopify).

What is a Marketplace and How Does it Work?

In short, we can define the term marketplace as follows:

Marketplace is a trading platform allowing third-party vendors to sell products through their website/app. Product cards are uploaded into the general marketplace catalog and placed next to the offers made by other entrepreneurs.

Marketplaces are convenient for businesses to attract customers quickly without the need to create their own websites. In their turn, buyers who receive access to a wide range of products from multiple sellers can benefit from them as well.

How a marketplace works - a simple explanation
How a marketplace works: a simple explanation

Even if you possess your own website and already successfully attract customers through various channels, being listed on some marketplace may look compelling as an additional sales channel and a business awareness tool.

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The Main Types of Marketplaces

Depending on the market type, product, interaction model, target audience, industry, and other criteria, we can distinguish several main types of marketplaces.

  • B2C (Business-to-Consumer) Marketplaces. These platforms connect businesses directly to consumers. Examples include Amazon,, and eBay when businesses sell directly to consumers.
  • B2B (Business-to-Business) marketplaces. Multi-vendor platforms that facilitate transactions between businesses. They cater to the specific needs of industries, such as bulk orders or wholesale supplies. Examples include Alibaba and ThomasNet.
  • C2C (consumer-to-consumer) marketplaces. These types of marketplaces allow consumers to sell goods and services to each other. eBay and Craigslist are classic examples, allowing users to list and buy items from each other.
  • P2P (peer-to-peer) marketplaces. A subset of C2C that focuses on the sharing or renting of assets among individuals. Examples include Airbnb for lodging and Turo for car rentals.
  • Vertical marketplaces. These platforms focus on a specific industry or niche, offering products or services within a particular sector. Examples include Zillow for real estate and Autotrader for vehicles.
  • Horizontal marketplaces. Offer products or services across multiple industries with a common underlying characteristic. An example is Etsy, which focuses on handmade or vintage items and craft supplies.
  • Service marketplaces. These websites connect service providers with customers who need those services. Examples include TaskRabbit and Upwork, which offer a wide range of services from home repairs to freelance work.
  • Digital product marketplaces. Platforms for buying and selling digital goods such as software, e-books, music, and online courses. They address challenges such as licensing and instant delivery. Examples include Steam (video games), Bandcamp (music), Envato (digital assets), and Udemy (courses).
Main types of marketplaces
What types of marketplaces exist? Image source: Code & Care

Evaluate Your Idea, Assess Market Potential, and Analyze Possible Competitors

Preliminary analytics is a vital development phase if you plan to create an online marketplace and turn this startup into a successful business. You have to make sure your product will be in demand.

Below are several tips that will come in handy:

  • Narrow down the niches you want to work in and define problems you plan to solve for your target audience (sellers and buyers).
  • Find out the market size you are interested in. You can do it using data from various sources like or search demand analysis tools like
  • Study what your potential competitors (or players in related industries you intersect with) offer.
  • Make sure you really understand your target audience’s pressure points and can offer a product to help them solve the issues.

You can do this work yourself or hire a digital marketing professional to conduct the study.

The Key Features for Successful Marketplace Websites

When you start your own marketplace startup, its functional capabilities will differ depending on the niche, chosen development strategy, and other factors. Let us recollect the most essential ones, crucial for successful product development.

Registration & onboarding

Setting up an account is the first step your customers will have to take to interact with your marketplace. You may want to allow them to sign up via email, Google account, or social networks.

If your resources and budget are sufficient, you can additionally consider the user onboarding process to ensure your customers’ smooth interaction with your website.

User profile & vendor page

A personal profile area is an equally important element for sellers and buyers. It contains critical user data — some information is public, and some is confidential.

Buyers’ personal areas include order history and sellers’ personal accounts, accordingly, store data on added products, sales, etc. Moreover, sellers should be able to create their store webpage and apply quality design.

Markerplace vendor page example
Source: YITH WooCommerce

User roles

The marketplace platform can provide three main user role types: a seller, a buyer, and an admin. Depending on the project type, it can also be a moderator or an author.

All these user types will have different available functions. For instance, sellers should be able to add, edit, and delete product cards (orders) and other similar options.

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Product page & catalog

The product page provides buyers with important information about a product or service. For example, it can include pictures, a description, main features, reviews, similar products, etc. As is the product catalog, it is among the most necessary elements of any marketplace.

The product catalog presumes a complex architecture consisting of categories, subcategories, and filters based on various product specifications. If such a catalog has a well-thought-out structure, it will be convenient for users and streamlined for a search engine optimization (SEO) strategy.

Product page on marketplace, example
Image source:

Search algorithm

High-quality, fast, and advanced catalog search is the basis of any successful marketplace platform. Mind that a large audience will generate a lot of search queries and create a significant load on the website’s database.

Therefore, before building a marketplace website, consider establishing a proper database architecture and ways to reduce the load beforehand.

Ratings & reviews

A reviews and ratings system is acceptable for ranking sellers and merchandise within the website. This feature allows buyers to make the right choice in favor of the best offer. At the same time, do not forget about some kind of safeguard against rating fraud on the part of unscrupulous users.

Shopping cart

The ordering process and the shopping cart interface should be convenient and intuitive. Besides, think of allowing visitors to add merchandise offered by various sellers to the cart with the option of making a purchase as one or separate orders.

Shopping cart example on marketplace website
Marketplace / E-commerce Shopping Cart by Galyna Nesteriuk, Dribble

Payment & delivery

Integration with payment systems (providers) and delivery services is executed by connecting payment gateways and corresponding APIs. Providers introduce the necessary tools, and marketplace developers have to integrate them correctly on their websites.

Booking (optional)

If you develop a marketplace to provide services, you will want to provide users with the possibility to pay for a service or counseling and to make bookings for later dates. The booking feature usually includes a built-in calendar. Examples of such platforms are and

Private messages

This marketplace feature allows direct communication between the parties to the agreement, for example, to clarify important points or discuss variable product properties.

Notifications & Alerts

You can implement notifications either as email messages or push notifications within the platform. They can inform visitors about orders, order status changes, messages on the platform, and other activities.

Marketplace alert for product search

Moderation system

Content moderation executed by the marketplace admins is an essential feature. Moderators should have the possibility to reject improperly designed seller profiles, product pages, or even user comments.

Additionally, think of the possibility of sending messages to users to explain what rules they violate or what changes they have to make.

Seller analytics

An analytics dashboard is an essential feature for sellers on any platform. It should provide sales data and the possibility of building reports, for example, for a selected period or comparison tables with several periods. The report may contain various valuable data for sellers.

Marketplace vendor dashbpard (seller analytics)
Image source:

Admin dashboard

Marketplace admins should have considerable possibilities in managing catalog categories and attributes, users, content, and other aspects related to marketplace functioning.

The admin dashboard should allow monitoring and managing interactions among users. Being an admin, you will have the capability to add different types of pages, check transactions, and get essential statistical data about your website’s performance.

Above, we have listed the primary and most necessary features an online marketplace should have. As you develop your platform, you may want to add more of them or improve the available ones.

How Do You Monetize Your Marketplace? Choose the Right Revenue Model

The choice of a monetization method depends on numerous factors. Consequently, if you want to understand what works well in your particular case, you will have to conduct a thorough preliminary analysis or test different methods in each specific scenario.

Read about the main ways of monetizing your marketplace:

  • Paid registration. It presumes a fixed one-time payment done by a seller during their registration and store page creation. So, you can start earning even before your startup makes significant profits for you. However, sellers should comprehend well what value you offer to them.
  • Subscription. That is one of the most convenient monetization methods for a marketplace. It is based on regular monthly payments. You can diversify this approach by offering your customers several levels of access to your service capabilities to choose from.
  • Listing fee. When sellers list their products for sale on your marketplace, you can charge them a listing fee. This fee can be fixed or tied to the product price depending on its category and other parameters.
  • Sales fee. That is a splendid and efficient marketplace monetization strategy. The more orders pass through your website, the more money you earn. This approach also stimulates sellers to be keener about developing their stores on your platform.
  • Leed fee. It can be a fee for an actual deal or a small sum just for the fact of contacting the potential customers. This model is suitable for service marketplaces.
  • Sponsor listing. It presumes paid store or product promotion on the actual platform. You can also offer sellers to buy product newsletter integration or promotion through other marketing channels.
  • Freemium. All users can work with the marketplace free of charge. They will have to pay only for specific functions or advanced features. For example, they can pay for placing more products, etc. The freemium model attracts more users due to free access to platform services but requires paid features to be valuable enough to generate income.

In any case, whatever marketplace monetization method you decide to choose for your platform, it would be best to think it through thoroughly in advance. This way, you will not have to change the rules of interaction with sellers too often and profoundly.

Why You Need to Start From Online Marketplace MVP

To test your ideas in real-world conditions, it is not worth developing a complex, large-scale product and spending a great deal of money and time, as you cannot be 100% sure users will like it. A highly efficient approach is to develop a solution with a minimal set of features, launch it to test its viability and give it another brush later if necessary.

MVP stands for Minimum Viable Product. That is a test version of your marketplace that introduces sellers and buyers to your platform’s basic functionality and allows you to verify your idea without spending extra money.

The development speed is the key benefit of an MVP. It is necessary to get it up and running as soon as possible, and to do so, ready-made solutions or scripts are the best option.

Markeplace MVP explain
Image source: JayDevs

An MVP differs from a fully-fledged product by a reduced set of options and a simpler design. However, it should reflect the essence of the project and be usable.

For instance, a marketplace MVP can offer sellers to use a personal account to upload product cards and show a catalog to buyers to allow them quick purchases. At the same time, such a platform may operate without trading page customization features, personal areas for buyers, and a loyalty program.

How Do You Scale a Marketplace in The Future?

Once you know for sure your idea will be a success, and your marketplace will bring revenue, your next significant challenge is scaling. To grow as a business, your startup must attract more sellers and buyers and set up more sources of income.

Here are some proven practices for scaling your marketplace in the future:

  • Invest in marketing, especially SEO that allows you to generate relatively free traffic. Moreover, a systematic marketing approach has an exemplary cumulative effect.
  • Help sellers operating on your platform with tips on how to promote their stores and increase sales. Share your knowledge with them about marketing techniques that have proven effective in your case.
  • Develop a mobile app to gain a competitive advantage and set up an additional sales channel. Moreover, it will increase your website users’ loyalty.
  • Study similar startups in related niches and look for attractive solutions and ideas you could implement on your platform. If you put all these things to the test, you will know how to increase audience retention and business revenue.

Our experienced team follows the latest industry trends to build custom platforms for buying and selling products online. If you need a trusted technology partner to build your own marketplace, contact us, and let’s discuss the details!

Andriy Nayda
Andriy Nayda Head of Web & Mobile Department at SmartTek Solutions