How Much Does It Cost to Build a Marketplace in 2020?
What is a marketplace? A marketplace is basically an independent platform that operates online, and its purpose is to connect buyers and sellers directly. No actual warehouses are required to store items, because the database contains descriptions and photos of goods. To survive among competitors, the marketplace must provide the most advanced security features for E-commerce Fraud Detection, guarantee the integrity of a deal for each side, and offer features such as detailed tracking of purchases in real-time.
What are the benefits of marketplaces? The main advantages for businesses are the following: ● ● ● ● ● ● ● ●
You will get an additional channel on which to advertise and sell your goods or services; Compared to other sales channels, marketplaces require lower marketing costs; More opportunities for international sales; Marketplaces are loved by customers and very convenient; An established online marketplace improves your brand image and builds client loyalty; Getting independent reviews and opinions on your products or services makes them more attractive and ultimately increases sales; Marketplaces make it easier to find new business partners; and They work 24/7 with no limits on operating time;
Amazon is the biggest marketplace in the United States. Initially, it was an online bookstore but has now expanded to include toys, electronics, pieces of art, and tons of other items. In 2020, it’s a multi-billion-dollar corporation with 11 marketplaces across the globe with a customer database from 180 countries. Amazon became a technological company and now offers cloud infrastructure services (AWS), analytics services (Alexa), other software products, and multimedia content. They leverage Artificial Intelligence for Predictive Analytics in Retail to know what a customer wants and even provide Customer Demand Forecasting with Machine Learning. As you can see here, the marketplace is not the sole business model for Amazon, as they are looking to grow in other directions in order to remain the leader in E-Commerce.
So, how much does it cost to build a marketplace? These options, according to average costs, are available. $1,000-$5,000 budget Building a platform from scratch with a hired team of experts is not an option at all because of the costs involved. However, you can consider leveraging a SaaS solution or maybe an open-source software marketplace. Using a generic e-commerce and website builder is also a great possibility for this amount of money — if you can code and you don’t need the help of a software development team, you can try to build it yourself.
$5,000-$50,000 budget This is a great budget to work with. You can use API-based software, build a marketplace website, and still have some money left to implement new features. Hiring a developer and using generic website builders or open-source software is also a possibility here, but you must be aware that you might not have much money left for updates. This budget is still not sufficient to build a platform from scratch with hired software developers. $50,000-$150,000 budget This budget is perfect for hiring top software developers and building your custom marketplace from scratch with all the necessary features. You are limited to only what you actually need to achieve; all options are available with this budget.
Sources for more information on Marketplaces 1. 2.
https://spd.group/ecommerce-solutions/build-a-marketplace-in-2020/ https://www.forbes.com/sites/richardkestenbaum/2017/04/26/what-are-online-marketplac es-and-what-is-their-future/#1f6e6ab53284
3.
https://www.mti.gov.sg/Resources/feature-articles/2020/Trends-in-E-commerce-in-the-Se rvices-Sector
4. 5.
https://www.gsb.stanford.edu/faculty-research/case-studies/e-commerce-building-blocks https://rubygarage.org/blog/how-to-build-a-marketplace-startup
