What Does It Cost to Build a Marketplace? Part 1: Definition, Features Set, Timing

We continue the series of “what does it cost to build” articles in our blog. We analyzed multiple platforms popular in the web today and shared our findings and takeaways on how to develop and maintain a marketplace. The first volume specifically focuses on the definition of a marketplace, its typical features set and timing to build it.

Marketplace Definition

Centuries ago, markets were gathering places and centers of trading and cultural lives. People attended markets to get the goods they needed in exchange for money, to hear news, and to socialize. Little changed since then - except for the fact that we visit online marketplaces now. eBay and Amazon, Airbnb and Craigslist are agoras of the digital era.

Online marketplace is a two-sided platform connecting supply with demand in a certain niche. Primarily, it helps buyers and vendors find each other and offers them an online framework to interact. Marketplaces differ in terms of purposes, interaction mode, functionality and design - these are determined by the nature of business vertical and the actual goods & services offered.

Types of Marketplaces

Online marketplaces could be grouped differently - depending on the criterion for classification.

By services scope, they divide marketplaces into:

  • horizontal. Marketplaces like Craigslist.com and OLX.com, which offer multiple categories of services on a single platform, e.g. jobs, accomodation for rent, miscellaneous services, buying and selling stuff.
  • vertical. Marketplaces which focus on a single service and keep its quality at the head. Examples of vertical marketplaces are Airbnb.com, which specializes solely on temporary accommodation renting, and Uber.com, whose main focus is on transportation.

By nature of services offered, they divide marketplaces into the ones specializing in:

Marketplaces_by_Nature_of_Services_Infographics

Depending on where the services are offered, marketplaces are grouped into:

Marketplaces_by_Service_Places_Inforgraphics

Business model and customer-vendor type also divide marketplaces into:

  • C2C (P2P - peer-to-peer). BlaBlaCar.com and Letgo.com allow goods-money exchange between individual customers;
  • B2C. Amazon.com and Booking.com provide a platform for interaction between businesses and customers;
  • B2B. Alibaba.com or Thomas.com let businesses cooperate with businesses, for instance, with the aim of product sourcing and discovery.

Where to Start with a Marketplace

For any marketplace (irrespective of its category) to be competitive, it should address an actual problem in a certain niche. So if you consider building your own marketplace, start by defining the problem it would solve. The more critical the problem is, the higher chances for success.

The problem would point at the target audience - who faces the issue? Why? What do these people have in common? Are these individual or business entities? Once you answer these questions, you would define if your marketplace would be a C2C, B2C, or B2B.

Further, figure out how your target audiences address the problem at the moment. Would your solution be competitive, timely and effective? If so, then what would be its exact nature and scope of services? A quick tip for startupers: mind the strategy for further scaling and monetisation of your marketplace in advance; work out a strategy for retaining your users on the marketplace so they keep using it again and again.

Answering the above questions is half the battle. Once this is done, we will help you with the technical side of creating a marketplace. We have broken the scope of work down into typical features and estimated the time needed to implement them.

Typical Features of Online Marketplace

To describe a typical features set of a marketplace, we will use an Upwork.com or TaskRabbit.com -like app: a two-sided marketplace where service buyers and service providers interact with each other under a legal and trust + utility framework offered by the platform. The projects/tasks posted by buyers are checked and approved by the platform administrators before they are published for providers. Money is transferred to service providers once they complete the projects/task in a manner satisfactory for the buyer.

User Roles

The marketplace of this type has the following user roles:

User_Roles_Inforgraphics

Basic Features Set and Timing

The exact features depend on the marketplace type, size and niche. The typical ones include:

  • Project Management
    Buyers place the projects/tasks with description, skills required to complete them, time-frame and price for service providers to apply
    • Service buyer
      • Project listing management: add, remove, suspend, remove; list and filter projects - 60h
      • View providers who applied, sorted by rating, time of application. Shortlist providers - 32h
      • Assign provider, enter into a contract - 16h
      • Request Admin moderation - 8h
    • Service provider
      • Search for projects - 32h
      • Apply for a project - 16h
      • View projects history and status - 16h
      • Submit a completed work, request payment - 32h
      • Request Admin moderation – 8h
  • Reviews and Ratings
    Both buyers and providers should be able to rate the projects and each other
    • Both service buyer and service provider
      • Leave review for provider - 8h
      • Rate provider - 8h
  • Messaging
    Both buyers and providers should communicate with administrator and with each other before and during the project(s)
    • Both service buyer and service provider
      • Message the other party. Chat engine with notifications, real-time updates, history and dates - 60h
      • Message Admin, raise a ticket - 16h
  • Payment Management
    Administrators escrow money from buyers’ bank accounts and transfer it to providers
    • Service buyer
      • Wire money (including payment gateway and payment system integration) - 40h
      • Request refund - 16h
    • Administrator
      • Escrow money - 40h
      • Refund money - 8h
      • Wire money for provider - 8h
  • Admin Moderation
    Administrator should not only have full control over buyers’ and providers’ accounts and projects and manage payments, but resolve disputes as well
    • Administrator
      • Generic administration console allowing doing everything as every role, and beyond. Dispute resolution (ticketing system), communication, wiring money back and force, changing, removing and updating ratings and reviews, suspending and blocking users, changing user details) - 80h
  • Authentication and Profile Management
    • Both service buyer and service provider
      • Sign up with e-mail - 4h
      • Sign up with SM account - 4h
      • Login/Logout - 4h
      • Forgot password - 4h
      • Change password - 2h
      • Manage a profile/portfolio - 32h
      • View profile - 16h

Marketplace_Features_Set_and_Timing

A Few Nice-to-have Features

Some nice-to-have features for your marketplace include

  • Notifications (via sms or e-mail), so both service buyers and providers keep abreast of the project/task progress and knew when the money was wired;
  • Website / CMS to maintain a landing or About page, Contact Us and T&C pages, and a legal notice.

Team Lineup

To implement the given features set, we suggest the following team lineup:

Team_Lineup_for_Marketplace_Development

Technical Stack

To develop a marketplace, Logicify would offer the following technical stack:

  • Python as a main development language. It is a good choice for startups since Python is light and dynamic; it has big community and lots of libraries and frameworks available.
  • Django as a web framework. This is a standard framework for Python web apps.
  • PostgreSQL as a database. It has native support from the Django side and good support of the major hosting and cloud service providers. It also supports a rich set of advanced RDBMS features, like transactions, locks, schemas.
  • Angular 5 as the main front-end framework for the web app.

You could build a marketplace with a different technical stack and any features set - whether the suggested basic one or an extended one that perfectly fits your business need. At Logicify, we would be glad to make any of your business ideas come true.

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