Something we’re often asked by clients and networking peers alike is how an online marketplace could be a viable business solution and how to go about starting one.
In this blog, we’ll cover several areas, including:
An online marketplace is a type of eCommerce website that allows third-party vendors to sell their products via the platform. Online marketplaces essentially give businesses or individuals the ability to create their own mini-store. Popular examples include eBay, Amazon, Depop and Etsy.
Online marketplaces make money through advertising and commission. Sellers will have to pay a fee, usually 10%, to the platform for each product they sell.
Lots of businesses and individuals choose to use an online marketplace to sell their goods when they’re better positioned, i.e. they already have an established market. This is often a niche audience who use the platform. Both sellers and buyers have the security of using a well-known service that provides protection.
As with anything, there are pros and cons to running an online marketplace, so before you get started, it’s worth considering these, and whether or not it’s a suitable business model for you.
Although there’s recently been a boom of online marketplaces, it’s not a new concept. Below we’ve listed some of the most popular online marketplaces across the globe:
Online learning has also recently exploded, with online marketplaces being used as a means of providing those with expertise with a platform to monetise their skills by creating their own content and teaching others. An example includes Tutorful – the platform itself doesn’t sell anything or provide any content; they just provide the means and the security.
If you’re thinking about starting an online marketplace, then there are a few things you might want to consider to help you get started.
First of all, you’ll need a domain, hosting, an SSL certificate and a platform. Choosing which Content Management System (CMS) to use doesn’t have to be complicated or expensive. We recommend WordPress and WooCommerce to get you started. You might also want to consider how you might translate your site into an app.
When setting up your online marketplace, it’s worth doing some research into which niche you’re going to target. Going after a smaller market will give you more chance of success as opposed to leaving it wide open, as there are so many alternatives out there. Once you’ve chosen your niche, it’ll be easier to tailor the platform to their specific needs and make finding vendors easier. If you choose a niche that you’re also personally interested in, you’ll also have a better understanding of the end-user, their needs, and how to appeal to them.
The next step is getting people on the platform. You’ll need vendors to buy into your business model to attract customers. If you’ve gone niche, this step will be tricker in the outset but more sustainable and easier to take off once you’ve got started. Word-of-mouth is your best friend when you’re starting out, and if you go after niche communities, this will be much easier.
We recommend creating an incentive for vendors to get them on board in the early days. Remember, you won’t have any customers to start so this step is critical. You could consider offering no fees for the first six months or a referral fee for those that bring in the most business or additional vendors.
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