If you already own an eCommerce business and want to expand your SKUs by on-boarding other Vendor products or someone who is looking to establish a new Online Marketplace business or someone who just want to know what it takes to build an Online Marketplace, then this blog is for you.
Idea is to cover top 10 pre-requisites required to build an Online Marketplace business. As you might know online Marketplaces broadly has three entities, the platform owner (who owns the brand and eCommerce technology platform), Vendor who owns the products and the Consumers who buys.
Of course there are variations to this model, in some cases fulfilment is done by Vendors directly to Consumers, in some it is routed through platform owner, in some the platform owner is also a Vendor selling his or her own products etc. Few e.g are Amazon, Alibaba, Etsy.
Key points to consider if you are planning to setup your Marketplace
- Identify what is going to be your differentiator, is it your service, exclusivity on few products, free shipping or something else. If you can’t find your differentiator it is better not to start in the first place, because you need your differentiator to grow your business.
- Create a feature set matrix which lists the features you would like to have in your Marketplace, see if you can come up with some unique features which are a great value add to consumers and are not available on your competitors’ website.
- Some of the critical decisions will be around, Vendor level check-out vs single checkout, product level shipping vs cart level shipping, calculating duty in real-time vs not, product pricing using real-time currency conversion vs pre-fixed weekly average etc. Before starting off, think through some of these aspects as it will help you save some time.
- Find an eCommerce agency which has prior experience on building Marketplaces and share your creative brief and feature set. Finding a right partner here is of utmost importance as it can make or break your business.
- While there are plenty of platforms available for B2B or B2C eCommerce, there are not many for B2B2C businesses. Avoid the temptation to build a platform from scratch because you are not finding what you need in a platform. At a closer look, you will be able to identify features which can be customized for your needs and you can also use third party extension softwares to help build your Marketplace.
- On the technology side make sure that the platform is highly configurable as you will get varied request from Vendors to accommodate product level promotions, volume offers, product activation / deactivation and many more needs. Also make sure that the platform in scalable in terms of handling concurrent consumers, high number of Vendors, product SKUs etc.
- Start working on getting the right product Vendors for your business, there are various aspects which needs to be discussed with each Vendor, like revenue sharing, shipping method, payment terms, product return and replacement policies etc. Make a comprehensive list of things which you will need to formally sign-off before on-boarding a Vendor (like a Vendor kit).
- Make sure that you have exhaustive Vendor management module as part of your Marketplace platform, right from on-boarding Vendors, product management, pricing, shipping methods, inventory, label printing, fulfilment module, email notification, invoices etc.
- If you are planning for multi-country implementation, please work with the agency in planning multi-language, shipping, payment and duty methods. You will have to figure out various 3rd party component which will need to be integrated to make the multi-country Marketplace successful.
- From a marketing stand-point identify a digital marketing agency, who can promote your brand and bring in those early customers to your Marketplace. There are tons of ways you can generate traffic to your website, but all of which will cost moneyJ. Make sure you plan adequate budget for this.
- And here is a bonus tip, unless you are developing MVP (minimal viable product), go heavy on creative and content, because that is what is going to tell the consumer who you are? And will help them engage with your brand. As a Online Marketplace owner what you own is not the products but your brand and the image attached to it.