Hiring a Marketplace Development Company: What to Know

Building a multi-vendor marketplace can be challenging.

While multi-vendor marketplaces are incredibly difficult to slow down once they find network effects, they also have much higher communication and coordination requirements than a traditional ecommerce store. 

A regular ecommerce store processes transactions between a single seller and their customers, but multi-vendor marketplaces have to accommodate buyers and sellers. That means enabling vendors to add their products to your site and allow for multi-vendor checkout — that’s just the beginning. 

Because multi-vendor marketplaces are so complex, some turn to a marketplace development company to build out their marketplace.

There’s lots to consider before hiring a developer to build your multi-vendor marketplace, and the process has more than one downside. In this article we cover the most important factors to consider before making a decision, including:

• What a marketplace development company entails
• The advantages of building with a marketplace development company
• The disadvantages of building with a marketplace development company
• Marketplace development company alternatives
• Why choose a marketplace platform over a custom build
• How marketplace development companies and platforms can work together
• Key features to look for in a marketplace platform
• Top considerations when hiring a marketplace development company
  

What is a marketplace development company?

A marketplace development company works with clients to help them build online marketplaces.

Marketplaces are more complex than typical ecommerce stores, because they have two customers— the buyers and the sellers. This requires more robust logistics and fintech capabilities.

Since marketplaces can be tricky to build, businesses sometimes hire a marketplace development company to help them create custom-built marketplaces. They handle a lot from planning and design to coding. They can help create important features like vendor onboarding, multi-vendor checkouts, and payment splits. They can also integrate tools for things like logistics, tax compliance, and inventory management.

Essentially, marketplace development companies are your partners for getting your marketplace technology up and going.

The growing demand for online marketplaces

Online marketplaces are booming. Buyers love the convenience. Sellers get access to a larger audience. From retail to B2B, more industries are moving to the marketplace model.

B2B marketplace development is expanding quickly. By 2025, more than half of large B2B purchases over $1 million are expected to be processed through digital self-serve channels like vendor websites or marketplaces.

In B2C, companies like Costco and Walmart have grown their business exponentially in part thanks to building third-party marketplaces on top of their core businesses. Many other retailers are following suit. This trend creates a need for reliable marketplace development solutions.

Key marketplace development services explained

Marketplace development companies offer a range of services. While individual companies might specialize in a specific area, here are some of the key services that most provide:

• Custom marketplace design: Creating a platform tailored to your business needs
• Vendor onboarding tools: Helping sellers join and manage their listings
• Payment systems: Splitting payments between buyers, sellers, and the marketplace
• Logistics integrations: Managing systems for shipping, inventory, and fulfillment
• Tax and compliance features: Meeting financial and legal requirements
• Marketplace app development: Building mobile apps to make it easy for users to access and use the marketplace

Advantages of building with a marketplace development company

Working with a marketplace development company has its benefits. Depending on your business needs, tech stack, and resources, it might be the best choice for your business.

Expertise in complex marketplace builds

Marketplace development companies specialize in building multi-vendor platforms. They understand the challenges of marketplaces. This includes handling vendor onboarding, multi-vendor checkouts, and payment distribution. Their experience helps solve problems that a general developer might overlook.

Custom features for unique business needs

Every marketplace is different. Development companies can build features tailored to your specific goals. Whether it’s integrating unique payment methods, creating advanced search filters, or managing complex logistics, they can help create a solution.

Technical support during development

Building a marketplace requires the right technology. Having technical resources can make a huge difference as they can guide you through the process. Marketplace development companies act as partners to manage technical challenges, plan features, and provide support. This can be helpful if you don’t have an internal team with marketplace experience or technical expertise.

A focused development process

With a dedicated team, development companies can focus fully on your project. They create a roadmap, set milestones, and follow a structured timeline. This can help you feel confident in the progress of your marketplace.

Disadvantages of building with a marketplace development company

Working with a marketplace development company isn’t without challenges— especially when they're building from scratch. Custom builds take time, money, and ongoing resources. For many businesses, the tradeoffs can outweigh the benefits.

Here are the biggest downsides to consider before moving forward.

High costs make custom marketplaces expensive to launch

‍Hiring a firm to build a multi-vendor marketplace is a big investment. Costs vary widely depending on what kind of features you want, the scale you’re starting at, and more.

Generally, though, marketplace development costs are estimated to be in the hundreds of thousands of dollars — and they often enter into the millions — just to launch. Budget overruns are common. In fact, 80% of marketplace builds incur unexpectedly high costs. At Nautical, we've had many conversations with founders working on their marketplace with custom marketplace development companies who have spent hundreds of thousands of dollars, and years, without any marketplace to show for it.

Ongoing maintenance costs

Every line of code eventually requires maintenance. If you’ve paid another company to create your own tailor-made multi-vendor marketplace, upkeep expenses are entirely on you.

Maintenance spending can quickly add up.

Want to make a change to your developer-built marketplace? You’ll need to consult with the team behind it every time. As your custom build ages, this will happen more and more often. In addition, new third-party tools are constantly emerging, but you’ll have to keep customizing your marketplace’s back end to leverage them. 

With major institutions like banks, airlines, and government agencies struggling with aging IT infrastructure, it’s hard to continually update systems — even with vast resources.

Custom development delays launch timelines

‍With marketplace popularity surging, thousands of niche marketplaces are also appearing. The sheer scale of the opportunity costs related to delays are hard to fathom. 

Yet developing custom software means you’re slowing your time to market from the beginning. It typically takes two years or more to get a custom-built marketplace up and running, and the more time that goes by, the higher the opportunity cost.

Hiring an online marketplace development company to build from scratch will also distract you from what you’re best at: the commerce side of the business. You’re effectively signing on to be a project manager. This will be even more challenging if you’re new to ecommerce, as you’ll need to divert resources from your current operations to provide answers to technical questions from the developers.

Many developers lack marketplace-specific expertise

‍Many ecommerce development firms are great at building everyday commerce websites. Far fewer have the specialized knowledge to create an optimally functioning multi-vendor marketplace.

Single-vendor ecommerce stores are simple enough. They use payment providers to accept purchases. Multi-vendor marketplaces, on the other hand, must direct payments to suppliers, distributors, and sellers — and in their preferred payment method. 

Depending on location, multi-vendor marketplaces face increased responsibilities to verify vendor identity. They’re also potentially exposed to broader regulation as they could have a network of vendors in different countries, each with its own tax rules and financial regulations. To top it off, instead of a limited number of warehouses, they’re dealing with many.

Due to these complexities, understanding the workflows between all of the systems that make up a marketplace stack necessitates working with marketplace experts.  

Building out a marketplace that can meet these demands isn’t easy. This makes it critical to ensure that if you do go with a marketplace development company, you find one that can navigate this terrain.

Alternatives to marketplace development companies

You should evaluate other options before building your multi-vendor marketplace with an online marketplace development company.

Here are two alternatives to hiring an online marketplace development company for a custom build.‍

Build on an existing ecommerce platform

It’s not unheard of for marketplace founders to try and launch multi-vendor marketplaces on top of ecommerce platforms like Shopify or Magento. There are some benefits to these solutions, like faster launch times, cost savings, and customer support.

However, traditional ecommerce platforms weren’t designed for the multi-vendor setup. As such, they require many third-party apps and plugins, leaving an operation prone to bugs, outages, and slower run times. 

Plus, it’s often difficult for a multi-vendor marketplace to scale on ecommerce platforms because of built-in limitations. The platform may not allow multi-vendor checkouts, or it might cap the number of warehouses and product variations.

Use a multi-vendor marketplace platform

There are multi-vendor specific tools that can be leveraged at every stage of your multi-vendor marketplace journey. These tools were built specifically for the complexities of marketplace transactions, and can help you rapidly validate your marketplace without the upfront cost of custom development. 

Multi-vendor marketplace platforms like Nautical Commerce have democratized marketplace development. Marketplace platforms orchestrate between the different systems in your marketplace stack and give you the foundation you need to prepare your marketplace for scale.

With Nautical, you can validate your marketplace in as little as 90 days. With a custom build, you’d still be in the planning phase.

If you're still validating your marketplace,  look to leverage no-code or low-code tools to get your marketplace off the ground.

Why choose a marketplace platform over a custom build?

Custom marketplace development can be slow and expensive. A marketplace platform offers a faster, more affordable way to launch. It’s designed to handle the complexities of multi-vendor marketplaces right out of the box.

Faster time to market

Custom development can take years to complete. A marketplace platform gets you up and running in months — or even weeks. With tools already built for vendor management, payments, and logistics, you can focus on growing your marketplace instead of building it.

Cost-effective marketplace website development

Building a custom marketplace is a major investment. Development costs add up quickly, and budget overruns are common. Platforms eliminate these surprises. They come with built-in features, saving you the cost of building from scratch.

Scalable marketplace development

Scaling a custom-built marketplace can be a challenge. Platforms are built for growth. As your marketplace adds more sellers, products, and customers, the platform grows with you. It’s ready to handle the increasing demands of a multi-vendor setup.

Ongoing support and feature enhancements

Custom solutions require constant maintenance. Every update or improvement costs more time and money. Marketplace platforms provide regular updates and new features. You get the tools you need to stay competitive without the extra work

Hiring a marketplace development company to build with a marketplace platform

Marketplace development companies and marketplace platforms are not necessarily mutually exclusive.

Maybe you need custom workflows or advanced integrations. Or you have features that go beyond what a platform offers. Even then, you don’t need a fully custom build. A marketplace development company can build your marketplace on top of a platform like Nautical.

The platform provides the foundation. It handles vendor management, multi-vendor checkouts, payments, and logistics. The marketplace development company then focuses on custom features that add the most value.

This saves time and lowers costs. The developers won't have to start from scratch. They’re building on proven infrastructure.

By combining a marketplace platform with expert marketplace developers you get the best of both worlds.

Key features to look for in a marketplace platform

The right marketplace platform should simplify complex workflows. It needs to support sellers, buyers, and you as the operator. Here are the features that matter most and how Nautical delivers on each one.

Multi-vendor management

Managing multiple vendors is at the heart of every marketplace. Vendors need tools to add products, track sales, and manage orders. A strong platform makes it easy for vendors to join and operate while keeping things organized for you. Without proper vendor management, marketplaces can quickly become chaotic.

Nautical makes multi-vendor management seamless. Vendors get dedicated portals to manage their products, orders, and payments. Marketplace operators maintain full visibility and control. Nautical automates key processes, so you spend less time managing vendors and more time growing your business.

Flexible integrations

Marketplaces rely on multiple systems working together. This includes payment processors, shipping providers, tax tools, and more. A good marketplace platform should integrate easily with the tools you already use.

Nautical offers built-in integrations with leading payment, logistics, and tax providers. You can connect the tools you need without extra development work. Our API-first infrastructure also allows for custom integrations. We built Nautical so that it grows with your business and tech stack.

Customizable experience

Every marketplace operates differently. You need a platform that can adapt to your processes. This includes unique workflows, payment terms, and vendor interactions. A customizable platform lets you build a marketplace that stands out and operates the way you need it to.

Nautical gives you full control over customization. You can tailor buyer and vendor experiences without heavy development.

Top considerations when hiring a marketplace development company

If you decide to work with a marketplace development company, choose carefully. The right partner can make a difference in your success. Here’s what to look for before you hire.

Experience in marketplace website development

As we've covered, building a marketplace is not the same as building a simple ecommerce store. A marketplace development company must understand the nuances of marketplaces.

Ask for examples of past marketplace projects. Look for experience with multi-vendor platforms, payment systems, and logistics tools. Without the right expertise, you could end up with a half-finished product that doesn’t meet your needs.

Ability to work with existing solutions

A good marketplace development company doesn’t need to reinvent the wheel. The marketplace development company should build on top of existing solutions. There's no need to start from scratch.

Ask if they’re familiar with marketplace platforms. Can they integrate custom features while leveraging existing tools?

Post-launch development support

A marketplace isn’t finished once it launches. Bugs happen. New tools emerge. Your business will evolve. Post-launch support helps your marketplace stay updated and competitive.

Choose a development company that offers ongoing support. They should help fix issues, improve features, and keep your marketplace running. Without this, you’ll face costly delays and rising maintenance expenses.

A multi-vendor marketplace platform is the solution for scale

Ready to build your multi-vendor marketplace? A marketplace platform like Nautical will get you there faster. 

Whether you decide to hire a marketplace development company or not, using a marketplace platform can be a cost-effective tool that comes with built-in marketplace best practices.

The bottom line: Building your marketplace custom is a resource intensive choice. Choose a multi-vendor marketplace platform and start connecting buyers and sellers quicker.