How to Create a Marketplace: Build a Multi-Vendor Website

What is an Online Marketplace?

An online marketplace is a platform that connects buyers and sellers. Marketplaces aren’t responsible for manufacturing products, fulfilling services, or owning inventory. Instead, they are a one-stop shop for buyers to access multiple sellers offering products or services. 

Notable marketplaces include Amazon, Uber, Airbnb, Wayfair, Faire, StockX, and eBay. 

The Most Important Features to Create a Marketplace Website

The marketplace model has several notable differences from first-party commerce. First-party commerce refers to companies selling and fulfilling their products or services. 
Marketplaces, on the other hand, engage in “third-party commerce.” While first-party commerce has one seller, marketplaces have many sellers. A marketplace’s primary function is to connect buyers and sellers, not to manufacture and distribute products.

Multi-vendor marketplaces have three distinct features:

1. Marketplace Vendor management

Marketplaces don’t own their inventory. Instead, marketplaces rely on vendors for inventory and, in many cases, shipping, and fulfillment. 

As a result, vendor management is a significant part of the marketplace merchant/operator’s job. Maintaining consistency and quality across tens or hundreds of vendors requires a high level of governance. Marketplace operators achieve this by:

• Distributing service level agreements that govern vendors
• Setting parameters for product information and presentation
• Providing vendors with a portal to manage their shops

2. Vendor payouts 

The ability to take payments from customers is a common denominator across all ecommerce websites. But when it comes to marketplaces, you also need to be able to pay out your suppliers. This requires different financial technology. Timely vendor payouts are critical to a healthy supply. When vendors can trust that they’ll be paid the right amount and paid on time, they’re more likely to keep selling on the marketplace.  

Calculating and orchestrating payouts can quickly overwhelm manual accounting methods as marketplaces grow. The best way to manage payouts is by augmenting the process with fintech purpose-built for multi-vendor marketplaces.

3. Multi-vendor checkout

Unlike first-party commerce, a single marketplace transaction can contain items from several vendors. Buyers expect to have one shopping cart and checkout experience for everything in their cart – regardless of who the sellers are. As an online marketplace operator, you need to be able to break down the order into separate orders for your sellers on the backend, including notifying the vendor of the sale, calculating the vendor payout, and communicating shipping details back to the buyer.

Marketplaces manage these logistical challenges by adopting technology that can trigger alerts between systems for point of sale, inventory, shipping, and email automation.

Why create a marketplace website?

Here’s why investing in a marketplace model makes sense.

Rising popularity and market growth of online marketplaces

The global marketplace industry is booming. Consumers enjoy the convenience of finding everything in one place. Sellers value access to a broad customer base. In 2022, over 96% of all shoppers used at least one online marketplace. This trend shows no signs of slowing down.

Revenue potential in the marketplace model

Marketplaces can earn revenue from many streams. Transaction fees, subscription models, and even advertising can generate steady income. Unlike traditional e-commerce, marketplaces don't rely on selling their own products and therefore don’t take on inventory risks when expanding their offerings. This flexibility makes them a strong business model. That's why Best Buy is reintroducing a marketplace model in 2025.

Solving unique buyer and seller needs

Marketplaces create value by solving problems for both sides. Buyers get variety and competitive pricing. Sellers gain exposure and access to tools that boost sales. This mutual benefit drives platform growth and loyalty.

Benefits of a multi-vendor marketplace model

Multi-vendor marketplaces expand opportunities for growth. They also reduce risks associated with traditional retail models.

Scalability and product assortment

Adding vendors leads to more product offerings. The beauty of a marketplace is that as your product offerings grow, your inventory burden does not. More vendors mean more products without increasing your inventory burden. This diversity keeps customers coming back. Etsy is a prime example of scalability and product diversity. By hosting thousands of sellers their product offerings become varied enough to serve every niche interest. There are over 100 million items listed on Etsy!

Lower inventory and fulfillment costs

Vendors typically handle their own stock and shipping. This lowers your costs while keeping operations efficient. You can focus on building the marketplace, not managing products. The inverse can also be true. For example, Walmart is adding a new revenue stream to its marketplace by offering fulfillment services . — Even when the order gets placed on a site other than Walmart's.

Building brand loyalty among buyers

Buyers trust platforms that offer variety and convenience. A well-run marketplace creates a seamless shopping experience. This builds loyalty and drives repeat business. 82% of customers prefer to continue buying from a company they trust, even over trendy alternatives.

Types of marketplaces

Not all marketplaces are the same. Each type serves a specific audience or purpose.

B2B marketplaces

These platforms enable trade by connecting businesses. Companies use them to buy wholesale or specialized goods. Examples include Alibaba and ThomasNet.

B2C marketplaces

B2C marketplaces focus on consumer goods. Sellers list products for individual buyers. Marketplaces like Amazon and eBay dominate this space. But there are still thousands of niche marketplaces.

Product marketplaces

Product marketplaces focus on physical goods. These can include anything from electronics to handmade crafts. For example, Etsy is a B2C marketplace that focuses on products.

Service marketplaces

Service marketplaces are platforms offer services instead of products. Examples include Upwork for freelancers.

Rental marketplaces

Rental platforms let users rent items instead of buying them. They range from equipment rentals to peer-to-peer car sharing. Think Turo for renting cars or Rent the Runway for fashion.

How to Create an Online Marketplace: A 10-Step Guide

Step 1: Define your marketplace idea and vision

Your marketplace vision sets the foundation for your business. In short, it should establish the “why” of your marketplace. Why even create a marketplace? Be clear about your marketplace vision before conceptualizing your minimum viable product (MVP).

To define your vision, answer the following questions:

What kind of marketplace entrepreneur are you?

There are three types of entrepreneurs, according to Emyth Revisited. First, there’s a true entrepreneur, a visionary who’s always chasing an idea. Second, there’s a manager driven by data, efficiency, and getting a product to market. Third is a technician with a preexisting understanding of the domain, products, and consumer. Determine which one you are to understand your strengths — and then hire for your weaknesses. 

What’s your why?

Are you building to sell or building to scale? Understanding why you’re building your marketplace will help you determine the business’s growth trajectory and how you allocate your budget. If you want to IPO, you’ve got to be in it for the long haul. If you’re building your business for cash flow, you want to ramp up the marketplace in as few as five years. 

Solving problems for buyers and sellers

Since marketplaces are two-sided, operators have to solve an appealing problem for both supply and demand. Your marketplace might provide clear value to one side. But appealing to the other side might require creativity. For example, if a marketplace is an obvious sales solution for suppliers, adding a “buy now, pay later” feature could establish product-market fit with buyers. 

Timing 

You can have an amazing idea, but if the timing is wrong, success will be very difficult to achieve. 

Take Instacart, the grocery delivery marketplace, for example. In 2019 they were losing $25 million every month. At the time, grocery delivery wasn’t commonplace for consumers, and many felt attached to doing their own grocery shopping. But when the pandemic hit the next year, suddenly grocery delivery became essential. In April 2020, they made a $10 million dollar profit. By the end of 2020, they had $350 billion in grocery sales.  

This is an extreme example of the impact of timing— after all, it’s not every day that a pandemic sweeps the globe. But, the role of timing in every business is undeniable. This isn’t always something that’s easy to predict, but tools like user interviews and keeping a pulse on the industry at large can help navigate timing. 

Competitor analysis

Identify the direct marketplace competitors and non-marketplace competitors in your space. Get real about what they do well — and determine how your marketplace can do it better. There are ample opportunities to modernize traditional industries with the marketplace model because it is relatively young. 

Our competitive analysis template can help you map out the market landscape.

Dive Deeper: Map Out Your Marketplace Vision
‍
A marketplace business canvas helps you plot out the foundational elements of your marketplace vision.
Download the template →

Step 2: Choose your marketplace business model

Your marketplace business model determines how you will earn revenue. Importantly, your revenue model identifies which side of your marketplace will pay: the buyers or the sellers. 

There are many marketplace revenue models to choose from, but the most popular are:

Commission model marketplace

The marketplace charges a take-rate on the sale of goods, typically from the seller. Another way to charge commission is by a fixed fee on each transaction. Example: Amazon. 

Subscription model marketplace

Buyers or sellers get access to the marketplace by paying a set fee on a recurring basis. Example: UpSplash.

Listing fee model marketplace 

The marketplace charges sellers a fee to list a product or service. The seller pays regardless of whether the listing sells. Example: eBay.

Determining who pays (Buyer or sellers)

Typically, the side that pays is the side more incentivized to pay. For example, if the marketplace operates in a demand-constrained market, there is more supply than demand. Since demand is rare, the marketplace charges sellers because they offer access to demand. The opposite is also true. The buyer should pay if there is a shortage of supply. 

Dive Deeper: Understand How Marketplaces Make Money

‍Marketplaces use different revenue models than first-party commerce websites. Here’s what to consider when choosing the best model for your marketplace. Read the article →

Beyond the business model, founders also need to decide on their business entity. It affects liability protection, taxes, and your ability to raise capital. According to Arjun Mahadevan, CEO of doola, two of the best structures to consider for a marketplace are are a Limited Liability Company (LLC) or a C-Corporation.

An LLC is a flexible option that offers personal liability protection and simpler tax reporting, making it ideal for smaller teams or early-stage marketplaces. On the other hand, a C-Corporation is typically better for businesses that plan to scale quickly or attract venture capital, as it allows for stock issuance and is generally more attractive to investors. Both of these structures have distinct advantages depending on your business goals. 

Step 3: Financing the creation of a marketplace

There are several ways to finance your marketplace, from bootstrapping to debt-to-equity investments. 

Bootstrapping your marketplace build

Bootstrapping refers to using your savings or leveraging assets to fund your business— meaning you get no outside investment. While this means you take on more of the risk, it also means more freedom. 

If you’re in a position where you need funding from other sources, you have two main options: Debt and equity. 

Create a marketplace with debt financing

Debt refers to bank loans, lines of credit, and funding that must be paid back with interest. Note that debt is rarely an option for businesses just starting out because the riskier you look to the bank, the higher your interest rate will be. 

Create a marketplace with equity financing 

Equity financing refers to selling a small portion of your business (also known as ‘shares’) to investors to raise capital. Equity funds don’t need to be repaid, nor do they accumulate interest. Investors only make money when you turn a profit.

Marketplace investors

While venture capitalists are often the first types of investor to come to mind, there are many types of investors you can seek marketplace funding, including:

• Friends and family
  Friends and family know who you are, believe in your abilities, and may provide enough capital to get you started. Just ensure that you outline the risks to them — they’re not professional investors. 
• Angel investors
  Angel investors are private investors interested in your industry, supporting small businesses, or helping founders.
• Institutional investors (venture capitalists)
  Institutional investors are professional investors who invest using funds from outside sources with profit top of mind.
• Strategics (corporate investors)
  Strategics are corporations that will invest in maturing businesses, often with the intent of eventually buying them.
  

While it takes more work to become a venture-backable marketplace, the effort can be worth the reward.

When it comes to choosing which route is best, it depends on the type of marketplace you’re starting, your stage, and the resources available to you. 

Dive Deeper: Marketplace Bootcamp on Debt vs. Equity Financing
‍
Explore the nuances of debt and equity financing to determine the best and safest options to fund your marketplace start-up.
Watch now →

Step 4: Develop user personas for sellers and buyers

Successful companies create a marketplace experience that caters to user needs. To focus your marketplace on users, start by understanding sellers' and buyers’ motivations, pain points, needs, and expectations. 

Create ideal customer profiles (ICPs) for your marketplace

Your ideal customer profile (ICP) refers to the buyers and sellers that perfectly fit your marketplace. While your ICP might change after launch, it’s important to take the time to outline who you believe you’re making the marketplace for.

Understanding buyer and seller motivations

Your buyers and sellers will likely encompass more than one persona. Lay out who they are, including demographics, psychographics, behavioral traits, and preferences. 

Acquiring this information will require some effort. Be prepared to set up informational interviews, get involved on message boards, and ask questions in community groups.

Segmenting target markets and prioritizing user groups

You'll likely notice competing preferences once you’ve created personas for your ideal sellers and buyers. Instead of trying to go after everyone at once, split your users into tiers and prioritize them one at a time. How do you decide who to target first? For the initial iteration of the marketplace, consider the following:

Lowest friction to join

Who is marketplace participation a no-brainer for? You want to build the marketplace for those most likely to use it. 

Willing to tolerate bugs

The users you’re building for should be willing to participate in the marketplace’s development — warts and all. 

Incentivized to pay for the platform

Develop the marketplace for users so fed up with their problem that they’ll pay to fix it. 

Advocacy potential

Users who cannot live without your product will most likely advocate for it and help generate buzz.

Dive Deeper: Marketplace Personas Worksheet

‍Complete this marketplace personas template to get a full picture of your marketplace participants.
Download the worksheet →

Step 5: Outline the marketplace’s minimum viable product

A minimum viable product (MVP) represents several firsts: the first step in building the marketplace of your dreams, the first step towards validating your marketplace idea, and the first iteration of your marketplace. So, what is an MVP exactly?

An MVP is the most basic version of your marketplace that you can launch while delivering value to your users. It contains only essential functionality and should be geared toward testing. The goal of an MVP is to validate your assumptions and facilitate a quick go-to-market. 

How to create a marketplace MVP roadmap

Once you’ve identified your high-priority ICP personas, you can outline the product requirements for your MVP. 

1. Map out your MVP functionalities‍
Start by listing your non-negotiables. An MVP should only contain the functionality essential to relieving your ICPs’ pain points—nothing more, nothing less. This helps facilitate a faster go-to-market so you can start the feedback loop. 
Use our MVP roadmap template to start this process.

2. Work backwards
Organize functionality into now, next, and later. Save big ideas for later versions. For example, if you aim to offer “pay by crypto,” start with credit card processing and mobile payments and work up to crypto in the future.

3. Don’t be reactive
Just because a competitor starts offering same-day delivery doesn’t mean you have to. Stick with nailing the basics. There’s no rush to add on bells and whistles — but there is a rush to validate your core concept.  

Maintaining speed to market for feedback and validation

You need to get feedback fast. The feedback loop is the process of collecting user input, analyzing it, and making improvements. Shortening the feedback loop is the goal. It means you're acting on insights faster. Tools like Canny let users suggest features, report issues, and vote on priorities. Session recording platforms like PostHog also help. You can view user behavior which often shows things we don't see because we're so close to the product.

Once you’ve gathered feedback, test changes. Use A/B testing tools like VWO or ABTasty to test changes on small portions of your audience. For example, you might test different onboarding flows or layouts before rolling out changes to everyone.

Dive Deeper: Marketplace Bootcamp on MVP Development

‍Get a detailed approach to developing a framework for your MVP and creating your marketplace roadmap.
Watch now →

Step 6: Build marketplace supply

As a marketplace, you have two customers: buyers and suppliers. Supply is typically the hardest part of the marketplace to get right. Not only do you have to find them, but you must also convince them to join, onboard them, vet their products, and keep them engaged. 

Finding and engaging marketplace suppliers

Ultimately, you want suppliers to come to you. But early on, you’ll likely have to seek them out. 

• Tap into your network: To find vendors for your marketplace, look to your extended network. Seek out connections on your social channels. Reach out to past colleagues to facilitate warm introductions. Approach vendors selling on similar marketplaces. 

• Join community groups: Reddit, Facebook Groups, and other online forums can be hotbeds of potential suppliers. You can engage these forums to spread the word about your marketplace while e-meeting prospective suppliers and learning more about their needs. 

• Industry events: If you have the resources, consider participating in conferences and tradeshows. You want to be wherever your target seller engages, especially if they’re in an environment conducive to innovation or discussions about their industry.

Offering value to marketplace suppliers 

Once you’ve found your suppliers, your job becomes to get vendors to join your marketplace. Initially, it’s unlikely you’ll have any proof of ROI. To counteract this, remove friction to join and give sellers success as quickly as possible.

Some strategies to do this include:

Giving them a “bird in hand”

Build out “ghost supply.” Ghost supply is live marketplace listings without an assigned supplier. You can offer prospective suppliers any ghost supply sales in exchange for signing up as a vendor.

Claim your listing

Create the supplier's listing. Show them what joining would be like and how easy it would be to make revenue.

Offer them marketing

Cover the cost of advertising the supplier’s listing on your marketplace. This two-birds-one-stone approach generates sales for the prospective supplier while promoting your marketplace. 

Create incentives 

Offering initial incentives can encourage hesitant vendors to join. You can use things like reduced fees, free listings, or preferred promotional spots. Once they see results, they’ll be more likely to stay long-term.

Build a community 

Build a vendor community. Use forums, group chats, or networking events to connect vendors. This fosters collaboration and makes them feel part of the marketplace’s success.

Dive Deeper: Marketplace Bootcamp on Seller Experience
‍
No sellers, no marketplace. This bootcamp will teach you how to find, attract, and onboard sellers.
Watch now →

Vendor onboarding strategies for a multi-vendor marketplace

Consider vendor onboarding your first impression with vendors. It’s important to make the process as frictionless as possible so they can start to see value quickly. Here’s how you can make onboarding easier. 

Simplify: Use easy-to-follow guides or demo videos to show vendors how to list products and manage orders.

Support: Have support staff in place to answer the inevitable questions.

Training: Provide optional training sessions or webinars for new vendors. These can cover platform features, best practices, and strategies for increasing sales.

Tools: Equip vendors with tools to help them succeed. Analytics dashboards, pricing guidance, or sales trend reports can help vendors.

Feedback: Create a system for vendors to share their feedback about the onboarding process. Use their insights to make future onboarding easier and more effective.

Step 7: Create a customer experience for your marketplace buyers

Before you launch your marketplace, it’s critical to think through the customer experience you want to provide. While the details are different for every marketplace, one thing is unanimously true: all marketplace customer experiences must prioritize adding motivation and removing friction in the buyer’s journey. 

Below are some things to think about as you define your customer experience.

Designing an intuitive marketplace user experience

Your home page is the only thing 100% of your customers see. Ensure its look, feel, and copy speak directly to your users. From a technical perspective, your website should load quickly, be easy to navigate, and present relevant search results quickly.

Optimizing checkout

Checkout is the highest friction point in the buyer journey. The fewer clicks between “add to cart” and “pay now,” the better. Ensure you offer preferred payment methods, like credit card, debit, or buy now, pay later, and don’t feel you have to reinvent the wheel. Use a payment provider that is both pre-built and familiar to customers, like Stripe. 

Marketplace searchability and filtering 

Since marketplaces offer more listings than first-party commerce sites, search is a critical function. To get it right, you need to understand what’s important to your users. 

Take the marketplace Tall Size for example. As a marketplace for tall women, garment length is very important to their customers. Co-founder, Nicole Murphy, understood this when designing the stores’ UX. More than just the inseam of jeans or sleeve length, she knew that it was critical for customers to be able to search by non-standard measurements, like the width of the shoulders or the torso length on a one-piece. 

Understanding your customers’ behaviors can help create filter and search options that define the buying experience for your customers.

Create your marketplace’s customer support 

Give customers a way to contact you. Email customer service and an FAQ webpage may be enough when you’re starting out. Over time, you can scale your customer service channels to include chatbots and phone support. 

Dive Deeper: Marketplace Bootcamp on Buyer Experience
‍
Learn how to create an elegant, frictionless buying experience— and the customer success metrics you should monitor from day one. Watch now →

Step 8: Choose technology to create marketplace

There are so many moving parts to a marketplace. It’s a task that’s impossible to perfect without the right technology stack to keep operations efficient and purchases flowing. 

Marketplaces are more complex than single-vendor ecommerce stores and, therefore, require more advanced technology. Below are some types of software to consider.

A marketplace platform

A marketplace platform is the foundation of your marketplace. It’s your command center for operations and is responsible for routing information between adjacent fintech and logistics systems. Your marketplace platform sets the groundwork for the seller experience and the products on your website. 

Choosing a marketplace platform is not a decision to take lightly. The platform you choose will impact budgeting, scalability, and operations, either imposing limitations or providing opportunities as your marketplace develops.

The alternative to using a marketplace platform is to custom-build your marketplace. 

Fintech for marketplaces 

When it comes to finances, it’s critical to choose a reputable technology. Marketplaces may require several solutions to fulfill the financial side of marketplace operations, which includes payments, payouts, and taxes.  

When it comes to payments, make sure you choose an established, PCI-certified software that offers at least basic payment options, like debit, credit, and mobile checkout. 

Remember: receiving funds is only one side of marketplace payments. Be sure to also choose a payment processor that automates seller payout processes, including commission calculations, batched payouts, and pushing out funds to sellers. For example, Stripe Connect. 

Taxes are also an important peice to consider when choosing your technology. As the merchants of record, marketplaces are responsible for remitting taxes. In many cases, you’ll have to remit taxes both in your operating jurisdiction and in your sellers’ operating jurisdiction. Look for marketplace-specific tax software that determines taxability, applies accurate rates, and streamlines regional compliance. 

Logistics technology for marketplaces 

Logistics technology encompasses the tools that manage the movement of goods from sellers to buyers. When shopping online, buyers expect fast and reliable delivery experiences, and technology plays a big role in powering that. Some logistics technology to consider, depending on your marketplace, include: 

• Warehouse management systems: For marketplaces that hold inventory, warehouse management systems communicate sales to warehouses and track fulfillment.
  
  
• Order management systems: Order management systems centralize order processing, notify sellers of orders, and communicate seller tracking information to buyers.
  
  
• Customer relationship management (CRM): CRMs centralize customer information from sellers and buyers and automate communication between parties at different times in the marketplace journey. CRMs go beyond logistics, as they contain everything from contact information to buying preferences and purchasing habits. Some marketplace platforms will also act as a CRM.

Product information management 

PIMs bring all marketplace product information together in one location and set standards for presenting that information. PIMs ensure buyers are directed to the right product and see consistent information. 

PIMs are responsible for:

• Data collection 
• Organization
• Enrichment
• Categorization
• Normalization

The software you need will depend on many factors, including the type of marketplace you’re building, your resources, your budget, and your need for scalability. We’ve compiled a list of our favorite marketplace software here.

Should you build or buy your marketplace technology?

The first technology challenge marketplace founders will face is the buy vs. build dilemma. To start, ask yourself the following questions:

• Do you currently have a viable marketplace? If not, how soon do you want to get one running (and how soon will your money run out?)
• Have you validated your business model? If not, are you willing to invest in a platform you may have to scrap?
• Where exactly do you need to differentiate? Does your back-end experience need to be unique? Or just your front-end experience? 

Marketplace software: build vs. buy

Not sure how to build a marketplace website? Here’s what you need to know.

Building is highly customizable, but it’s also expensive and time-consuming. If you build a marketplace with a development company, you must continually invest and maintain any customization you make; it’s an ongoing expense.

Pre-built marketplace platforms, on the other hand, are more rigid, but they’re built based on market discovery and industry trends. They already know the market and the tools operators need to get started. Buying allows you to focus on testing and validating the marketplace instead of being consumed by the technology.  

Dive Deeper: Marketplace Bootcamp on Marketplace Technology
‍
Make sure your marketplace has good bones. Explore the need-to-have components of a marketplace technology stack. Watch now →

Step 9: Implement trust-building strategies

Trust is the cornerstone of any online marketplace. Building trust from the start is much easier than rebuilding it after losing it. To earn trust, proactively bake it into your marketplace’s systems by:

Verifying vendors and establishing standards

Ensure your vendors are who they say they are by performing an identity check or interviewing them as you would any employee. 

Also make sure to have vendors sign service-level agreements that set out the terms of service. These contracts set your expectations in stone and help ensure consistent service as your vendor roster expands. 

Using social proof

User reviews are self-policing. Good sellers are rewarded by buyer confidence, and bad sellers are weeded out by lack of sales. 

Establishing clear and effective communication

Establish buyer expectations by having clear product descriptions and accurate details. The goal is that the products delivered match the products advertised. Frequent touchpoints, like “order received” and “order dispatched,” assures buyers they’re getting what they paid for. 

Protecting against fraud

Protect marketplace users by using a payment processor that is PCI or 3DS certified. Additional fraud protections are escrow, two-factor authentication, know your vendor (KYC), and anti-money laundering (AML) checks.

Dive Deeper: Marketplace Trust is Make or Break
‍
Marketplace trust takes time, effort, and governance to build — and seconds to break. In this article, you’ll learn why trust is important, how to get it, and how to lose it. Read the article →

Step 10: Market your marketplace website

Once you’ve launched your marketplace, how will people know to visit it? It’s easy to forget about marketing when you’re stuck in the trenches trying to create a marketplace.

Here are the marketing strategies we recommend using when you’re getting started.

Leverage existing communities and networks

Start by spreading the word about your marketplace to people interested in your success: your personal and professional network. Join conversations in community forums, participate in groups where users engage, and attend networking events to tell your story so prospects can follow your success.   

Set up your social media 

Prioritize the channels where your users are active. It’s better to create consistent, high-value content on a few channels than be present on all channels but with half-baked posts. 

Develop engaging content marketing

The goal with content is to become an authority on your marketplace’s area of focus. To do this, go back to your ICP personas. Center your content — social media posts, blog posts, podcast episodes, videos, Reddit responses — around solving your target audience's pain points. 

Optimize for marketplace SEO

Search engine optimization is the process of capturing organic search traffic by improving your website. SEO ensures that when someone searches for “1960s credenza,” the search engine lists your vintage furniture marketplace at the top of the results.

Basic SEO includes: 

• Conducting keyword research

• Using keywords in your website headings, subheadings, and product descriptions

• Filling out meta descriptions on your website backend

• Customizing URLs

• Completing all the steps in our marketplace SEO checklist

Collaborate with partners

Adjacent companies and suppliers with the same ICP are the perfect partners for collaboration. Work together on promotions, blog posts, webinars, referral programs, and other marketing campaigns that reach your combined audiences. You can consider paid partnerships with influencers or affiliates if your budget allows.

Create buzz for your marketplace with public relations (PR)

PR refers to strategic communications that engage the public and create buzz. When launching your marketplace, consider announcing your marketplace launch in a press release and performing media outreach by pitching relevant media publications. (Need help writing a pitch? Start with this template)

Dive Deeper: Marketplace Bootcamp on Marketplace Marketing
‍
Generating buzz requires more than an Instagram account. Learn how to communicate your unique selling proposition, set up marketing systems, and leverage organic and paid growth channels. Watch now →

Marketplace management and scaling strategies

Scaling a marketplace takes more than growth. It requires ongoing maintenance to keep users engaged and operations smooth. If you create a marketplace without a solid foundation, scaling can lead to chaos instead of success.

Best practices for marketplace maintenance

Follow these best practices for maintaining and improving the quality of your marketplace.

Updating and optimizing marketplace features

Keep features fresh to meet user needs. For example, Etsy often updates search tools to help users find products faster. Use data to identify what’s working and what’s outdated. Regular updates also help you stay ahead of competitors.

Monitoring seller and buyer satisfaction

Implementing Net Promoter Score (NPS) surveys can help gauge satisfaction, making it an important marketplace metric to track. Tools like SurveyMonkey and AskNicely are simple options for conducting these surveys. Pay attention to support response times as well. Buyers value quick responses and clear communication. Fix common pain points to improve retention.

Managing vendor quality and compliance

Set clear standards for vendors. Platforms like Uber deactivate drivers with low ratings or non-compliance. Use automated systems to flag quality issues and review regularly to keep your marketplace trustworthy.

Addressing technical issues and platform stability

Downtime kills trust. Build redundancies to handle traffic spikes. Regular stress tests can also prevent surprises.

Analyzing user behavior

Use tools like Google Analytics or PostHog to track behavior. Look at drop-off points in the user journey. If buyers abandon carts, improve checkout flows. If conversion rates are low on certain products, try A/B testing to improve them. Varnish & Vine is a niche e-commerce store that drove a 43% increase in revenue by optimizing on-page content.

Expanding into new markets and regions

Expanding into new regions brings opportunity and risk. Each market has unique challenges. A thoughtful approach can make the difference between success and failure.

Strategies for entering new industries

Know the market before diving in. Research industry trends and understand what your new audience needs. Adapt your product or service to meet these demands. For example, DoorDash expanded beyond food delivery into groceries. They identified a growing demand for convenience and adjusted their strategy to serve it.

Start small with a pilot program. Test the new vertical, gather feedback, and refine your approach before scaling up.

Expanding marketplaces to new regions

Localization is key when entering new regions. It involves more than translation. You'll need to consider pricing, culture, and local laws. For instance, AliExpress offers localized payment methods like Cash on Delivery in some countries.

Common mistakes when creating a marketplace

Building a marketplace is complex. Avoiding these common mistakes will save you time, money, and frustration.

Overlooking early-stage user research

Assume nothing. Engage with potential users before building your site. Zappos is a great example. Their founder tested customer interest by posting photos of shoes from local stores online. He only bought the shoes after someone placed an order. This simple test proved demand and shaped the business without wasting resources. Early research like this makes sure your marketplace solves real problems.

Building a technology stack that doesn't grow

Choose technology that grows with your marketplace. Imagine spending a year building a custom marketplace only to find it doesn't work well with other tools as your business expands. This mistake can lead to expensive fixes.

Ignoring regulatory requirements

Breaking rules can shut down your marketplace. Study local laws and regulations before launching. Take rideshare marketplaces like Lyft for example. They had to adjust operations to meet different state requirements.

Underestimating the cost of getting users

Acquiring users costs a lot. Plan for this early. High customer acquisition costs (CAC) can sink a marketplace fast. Take Homejoy, for example. The home-cleaning marketplace launched in 2012. They offered big discounts to attract customers. It worked at first. But getting loyal, paying customers was too expensive. They couldn’t keep enough full-price users to cover marketing and discount costs. By 2015, they shut down. Use smarter tactics, like referrals or partnerships, to keep costs under control.

Neglecting vendor onboarding and retention

Vendors are the backbone of any marketplace. Make signing up simple and support ongoing success. Regular communication and resources can help vendors thrive.

Focusing too much on features instead of core value

Users care about solutions, not extras. Craigslist succeeded because it focused on simplicity and solving real problems. Avoid building unnecessary features that distract from the core value your marketplace provides.

Skipping testing and early feedback loops

Test early and often. Beta launches help identify problems and make it easier to use. Airbnb started as a basic website for one city. It refined its approach through user feedback before expanding nation-wide and then globally. Testing reduces costly mistakes later.

Overcoming the challenges of creating an online marketplace

Like any business, when you create a marketplace there will be challenges. The more aware you are of these challenges, the better prepared you’ll be. 

Managing marketplace costs

80% of businesses that launch a marketplace incur unexpectedly high costs during their build. Unanticipated costs are the number one killer of start-up marketplaces. Entrepreneurs typically lose control of costs when they custom-build a marketplace platform or modify a system designed for first-party ecommerce. Custom builds and modifications require the constant attention of developers to deal with integrations, custom features, upgrades, and updates.

Balancing marketplace supply and demand

On one hand, marketplaces oversaturated with competition will turn sellers off. On the other, marketplaces with insufficient supply are unattractive to buyers. Maintaining the delicate balance between buyers and sellers is critical to keeping the marketplace active, which means operators must be 1. armed with the metrics to see which way the tides are turning and 2. agile enough to solve for the side that requires attention. 

Watch Operation Marketplace: Strategies for Curating Marketplace Supply with Jason Leung 

Maintaining focus on the core mission

On a quest to cover a large scope of aspirations, it’s easy to lose sight of the details that make a marketplace experience positive. An example would be over-automating processes in an industry that values in-person interaction. It’s easy to get excited — and then distracted — by visions of grandeur for your marketplace. Your challenge is staying true to your core: solving a problem for buyers and sellers.

Watch Operation Marketplace: Finding Your Focus with Adam Gellert 

Addressing technical challenges

The foundation of every multi-vendor marketplace is a technology stack that runs like a well-oiled machine. Managing technology integrations is challenging enough when dealing with numerous applications of your own. But, in many cases, marketplace platforms must also integrate with vendor technology.

Watch Operation Marketplace: Taking on Technical Challenges as a Non-Technical Founder with Julie Schulte

Finding product-market fit

Many entrepreneurs try to create a marketplace only to find that they cannot validate their concept, and they must pivot to meet the market’s needs. Entrepreneurs get into trouble when they get tunnel vision on a concept that misses the mark. The key is to iterate until you’ve found an undeniable product-market fit. Be confident knowing that overhauling an MVP is a plot twist in many successful origin stories. 

Watch Operation Marketplace: Finding Product Market Fit with Matthew Holder 

Resources and support for marketplace founders

There’s no right or wrong way to build a marketplace, but learning how to start a marketplace can reveal an easier way. When you’re learning how to start an online marketplace you want to ensure you:

‍

• Have a clear vision of how your marketplace will solve a problem for buyers and sellers
• Define how your marketplace will make money
• Create a plan for financing and identify potential investors
• Understand the wants and needs of your ideal customers and the problems they face
• Map out requirements for creating your minimum viable product
• Locate and generate interest in a pool of early-bird suppliers
• Dream up a customer experience that adds motivation and removes friction
• Be selective in choosing the technology stack that will power your marketplace
• Make trust-building a priority and bake it into your processes
• Generate buzz for your marketplace as you’re building it

While we’ve given you the steps to creating an online marketplace, there’s always more to learn. Getting peer support in the early stages of marketplace development can help make an overwhelming to-do list more manageable. 

Marketplace Bootcamp is a series of expert-led educational videos that explores each of the topics we covered in this article in greater depth. 

🔵 You don’t have to go at creating your marketplace alone. Join Marketplace Bootcamp for free! 🔵