How To Build a Multi-Vendor Marketplace MVP

So, you have a great idea for a multi-vendor marketplace, but it's only an idea. How do you prove your idea can turn into a successful business? You need to develop a marketplace minimum viable product (MVP).

Building a marketplace MVP allows you to validate your idea, receive user feedback, and make improvements through an initial marketplace offering with enough features to attract early adopters.

The goal? Get your MVP launched and into your users’ hands as quickly and efficiently as possible so you can start gathering real-world feedback.

There are a lot of choices to make for building version 0.1 of your marketplace, including:

• Do you hire developers to custom-code your marketplace or use low- or no-code tools instead? 
• What marketplace capabilities are essential for your MVP, and which can wait until later versions? 
• How many sellers do you need to get traction?

In this article, we’ll explore:

• What an MVP marketplace is
• How long it should take you to launch
• A step-by-step guide to launching your MVP marketplace
• Tips to create an effective MVP marketplace launch strategy

What is an MVP Marketplace?

First things first—what's an MVP? The marketplace MVP is a stripped-down version of your marketplace that focuses on the core functionality.

Whether starting a new marketplace or expanding an existing one, an MVP is necessary for your startup process. A marketplace MVP  helps you determine whether there's a market for your product or service and assess what features are most important to your customers. In most cases, an MVP actually saves you money by avoiding the costs of developing unnecessary features.

Your marketplace MVP should consist of the essential features customers need but with the bare minimum of bells and whistles. The goal is to get enough feedback to answer the question: Can this marketplace be monetized — and is it worth it?

How Long Should It Take to Launch Your MVP Marketplace?

In short: as fast as possible.

The goal should always be to get your marketplace MVP up and running quickly so that you can validate it with users and confidently move forward with development—or return to the drawing board with minimal losses. 

Launching your marketplace MVP can take as little as one month to six months, depending on:

• Tools: Launching a marketplace via pre-built software takes less time than building and coding one from scratch. Since all marketplaces have the same plumbing, pre-built software gives you the basic infrastructure to configure your marketplace, allowing you to launch much faster. ‍
• Budget and resources: The more budget and skilled hands you have ready to code, iron out workflows, create SLAs, and onboard sellers, the faster you’ll be able to bring your marketplace to life. ‍
• External pressure: Investors might demand a faster go-to-market. You might get wind of a competitor entering the marketplace race. Either way, external pressure can force you to put the pedal to the metal on your marketplace launch.  

A Step-by-step Guide to Launching Your MVP Marketplace

Building a successful marketplace is no easy feat. There are many moving parts, and it can be challenging to know where to start. Follow these steps as you’re building out your marketplace MVP.

1. Be clear on the problem you’re trying to solve

Albert Einstein is frequently quoted as saying, “If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it.” 

The first step to building your MVP should be understanding what your marketplace solves and why that’s important. Identifying the problem your marketplace solves will help you focus your MVP on what matters most instead of:

• Wasting resources and time building nonessential functionality 
• Leading your marketplace build down the wrong path 
• Pursuing a marketplace with zero product market fit

Start by answering a simple question: What is the problem our marketplace will solve? Then drill down: What is the problem our marketplace will solve for our sellers? What will it solve for our buyers? Let these answers guide every capability you map into your MVP. 

2. Identify your goals 

Before you start building, you need to identify your goals for this MVP: What do you hope to achieve by launching a minimum viable product?

• Do you want to validate your concept?
• Demonstrate traction to raise capital?
• Find gaps where you need to build out a team?
  

Whatever your goals, settling on them before you build will help you create a focused and successful marketplace MVP.

3. Determine who you’re building the marketplace for

Successful marketplace operators will tell you time and time again that you’ve got to understand your customers. Not just how they’ll use your marketplace but why they’ll use it — or not.

Start by defining your ideal customer profile (ICP), also known as a customer persona. Defining ICPs will help you optimize your MVP, so you’re more likely to capture the attention of your target market. Your marketplace MVP should strive to satisfy your ICP's motivations, pain points, needs, and expectations. 

• Motivations: What is your ICP motivated by? This, in turn, will help you understand the motivating factors to use your marketplace.
• Pain points: What friction are they currently experiencing?
• Needs: What would they need to eliminate that friction?
• Expectations: What would your ICP need to justify paying for or participating in your marketplace?

How to develop an ICP

You need to build out ICPs for both buyers and sellers. To do this, you’ll have to engage with prospective buyers and sellers by conducting interviews, focus groups, or distributing surveys, and gather intel about thing like:

1. Demographics: What’s their age, location, income level, gender, marital status, family size, occupation?
2. Psychographics: What are their values, goals, motivators, lifestyle choices, interests, and desires? What’s their personality like? What do they do for fun?
3. Behavioral traits: What are their buying habits? How do they use products? What’s their purchase history? Are they loyal customers?
4. Needs and expectations: Why do they need your marketplace? What do they expect from it? How will they use it? What would turn them off your marketplace? 

🔵 Download the ICP personas worksheet to get started 🔵

4. Identify your non-negotiable capabilities and work backwards

Every marketplace has nice-to-haves, must-haves, and must-haves-for-later. It’s important to know the difference. 

For example, building seller advertising into your platform might not be something you offer immediately. Still, it might be a monetization lever you want to offer later, so you need to build the infrastructure upfront. 

Remember: Your MVP’s goal isn’t to determine whether your marketplace can be built—it’s to determine whether it should be built. As such, your MVP should only have essential functionality.

We’ve created a downloadable spreadsheet to help narrow down your non-negotiables. Here’s how to use it:

• Capability: Define the capability you want to create. E.g., ID Verification for Sellers.
• Goal: Write out the capability’s goal. E.g., To ensure no bots or fraudsters can impersonate sellers.
• Dependencies/blockers: What needs to happen before this capability can be launched, and what would prevent it from being launched?
• Timeline: When do you want to build this capability? Does it need to be part of phase one launch or can it wait until later? 

Once you’ve filled in these blanks for every capability, you can review the entire spreadsheet to determine your launch must-haves.

5. Leverage low-code or no-code tools

No code and low code tools enable non-technical users to configure capabilities. No/low code tools get your MVP up and running quickly — which should be one of your primary goals — because they don’t require substantial custom coding or development. 

While a turnkey platform is unlikely to give you 100% of what you need for your marketplace, it can give you an incredible head start on your build because:

• Low/no-code tools have marketplace best practices built in. (And when you're building a marketplace MVP, a head start and best practices are precisely what you need!)

• Low/no-code tools save you money on development costs. Developers charge by the hour. 

• Low/no-code tools allow you to quickly validate your business model. Once your MVP has been validated, you can add on functionality and nice-to-haves in later versions.
  

Note: Not all out-of-the-box platforms are made equally. While many are good to launch your MVP, they often won’t be able to take your marketplace to scale. Try using a tool that’s both easy to get started and easy to scale on, like Nautical’s end-to-end platform. 

6. Find your first buyers and sellers

The phrase “If you build it, they will come” is an oversimplification. It would be more accurate to say, “Build it, get press, network, hire marketing, call everyone you know, fail spectacularly on SharkTank, and they will come — maybe.” 

While there’s no one way to attract your first buyers and sellers, the marketplace founders we’ve interviewed on Operation Marketplace have offered the following tips on marketing your marketplace:

Solve for the constrained side first

Whether your marketplace is seller- or buyer-constrained, focus on attracting those users first. (Most marketplaces are seller-constrained.)

Make it a no-brainer to join

Approach users with a low-effort, low-risk onboarding process, upfront incentives, and an offering that reduces friction.

Leverage your network

Many marketplace founders have experience in the industry they’re building for. If this is true for you, leverage your relationships with suppliers, customers, or even past employers to generate buzz for your marketplace. 

Good old-fashioned cold calling

Create a list of ideal sellers, then slide into their LinkedIn PMs, knock on doors, or take them to dinner. Do whatever you need to do to get in front of decision-makers, secure their buy-in, and get them to sell on your marketplace. Of course, you’ll want to ensure you’re finding sellers in your target market.  

Create buzz

Build so much buzz they can’t ignore you. Strategically buy advertising, host an event for prospective sellers, get featured in industry publications, make the news. Securing even a few big sellers in your industry might be enough to kick off network effects and attract more sellers. 

7. Collect feedback and iterate

As you develop your marketplace MVP, you’ll want to bake in ways to gather user information. Feedback channels include surveys, interviews, analytics, user testing, focus groups, and A/B testing. 

The feedback you collect will be specific to your concept, but generally, you should be looking for:

• How the MVP can be improved
• What parts aren’t useful
• If the MVP would be used as intended
• If the MVP solved a problem
• Concerns about the MVP
• What the user would pay for the MVP 

Marketplace KPIs help you gauge the success of your MVP. Specifically, net promotor scores, behavior metrics, customer effort, and satisfaction scores will reveal the effectiveness of your MVP. 

Once you’ve collected and evaluated feedback based on what’s most important to customers, you can implement a plan to refine the product strategy and implement development changes. Remember: your MVP is an iterative process that continues beyond the first round of feedback. 

Tips to Create an Effective MVP Marketplace Launch Strategy

Don’t be reactive. Instead, let the product lead the way.

Everyone will have an opinion on your marketplace: how you should change it, what’s wrong with it, and what direction it needs to take. Product will think differently than sales, and sales will think differently than marketing. As the founder, it’s your job to gather and weigh all perspectives, determining what’s best for your users based on what your MVP told you.  

Katy Carrigan, founder of Goody, said, “At the end of the day, you know best. You have the most information to make the decision, and the decision isn't always going to be right. But can you defend the decision-making process?”

Don’t succumb to defeat. Instead, get scrappy.

See rejection as redirection from the outset. Better yet, expect to fail. If your great MVP revelation is that version .01 should be trashed, your business isn’t going into the bin with it. Instead, use what you’ve learned to iterate and head back to the drawing board.

Matthew Holder’s first iteration of Loop Golf flopped, forcing him to redirect and create the marketplace he operates today.

“Build [something] as cheaply as you can use out-of-the-box tools. Launch it, put it in people's hands, and have them tell you it sucks. Great. Why does it suck? The best position for me as a product manager and as an entrepreneur has always been either this sucks and it's horrible, or this is really great.”

Don’t be afraid to be wrong. Instead, let go of your ego.

As a founder, you need to know some things, not everything. Allow yourself to be wrong so you don’t waste time and resources heading down a path that leads to a dead end. 

LIVD’s founder, Olivia Mihaljevic, started with one marketplace idea and ended with an entirely different concept. She had this to say about staying agile:  

“I don't think I would have got to that point had I not tested a bunch of things out, figured out what worked, figured out a lot of things didn't work, and then made choices as I had new information.”

An MVP Marketplace is Just the Beginning 

Once you’ve collected feedback, it’s decision-making time: Is this marketplace worth pursuing and developing further? If the answer is yes, it’s time to iterate and develop the marketplace based on what you’ve learned. 

Remember: The first version — second, third, even fourth – version of your marketplace won’t be the last. Just as Amazon began as a bookstore and Airbnb started with literal air beds, your marketplace will go in directions you’d never anticipate. 

Expect to pivot and change direction from your MVP and beyond. The key to success is choosing a marketplace platform that can grow, pivot, scale, and change with you. 

Interested in learning more about how to launch an MVP? Check out Marketplace Bootcamp — a free course to help you launch your marketplace dreams into reality.

About the author: Darren Cody is the Co-founder and Co-CEO of Marketplace Studio, a custom design and development company that specializes in marketplace platforms.