Hero background

Online marketplace development – the ultimate guide

New technologies mean new possibilities

According to this principle, more and more marketplaces move partially or entirely from reality to the online world. Offering and selling services or products has never been easier and more accessible. So is it worth investing in the development of a digital marketplace? What does it involve, and how to get started? If you are asking yourself these questions, then this guide is for you.


Getting started - what is a online

When you think about an online marketplace development, the first thing that comes to your mind is probably such a platform as eBay or maybe Aliexpress. Among lots of people, the most recognizable marketplace model is the typical B2C (business to customer) e-commerce store. This is a good lead, but the list does not end there. You can run your online business in many other ways.

What is the digital marketplace?

Let’s start with specifying what a digital marketplace or in other words, an online marketplace is.

The digital marketplace is a type of e-commerce website, where product or service information is provided by multiple third parties. As an alternative to traditional stores, it gives space for both vendors and customers to make any transactions. In a digital marketplace, consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating retailers or wholesalers. In general, because marketplaces aggregate products from a wide array of providers, the selection is usually wider, and availability is higher than in vendor-specific online retail stores.

The big boom for digital marketplaces took place in 2014. Their great potential and possibilities were noticed then, and when those platforms started to expand across different service verticals, there was no way back. And it was for good, of course. Lots of online marketplaces offer a wide range of goods and services that meet almost all consumer needs, others are targeted at specific segments. Therefore, it is beneficial both for businesses that by entering the area of ​​offering their goods online can make a fortune and for consumers who have whatever they want at their fingertips. This is where the great popularity of digital marketplaces derives – from the advantages offered.

Differences between the digital marketplace and e-commerce

We need to clarify this very important point. While digital marketplaces and e-commerce platforms appear to be the same, as both of them are used for online business purposes, there are many differences between them. Let’s think about it this way – an e-commerce website is nothing but a single seller’s web store. A marketplace platform, on the other hand, is managed by an individual company with lots of contributors in the shape of multiple vendors. Once we have briefly defined them, we can immediately notice that their form of operation will be slightly different.

Here are the key differences between the marketplace and e-commerce:

CostThere are many off-the-shelf solutions available. Seller pays for hosting on the chosen platform. Require lower initial costs.Building from scratch requires more money. This investment is paid off by imposing a commission on the sellers using the platform.
TrafficThey offer a huge selection of products, which means that traffic is much greater.The store owner needs to drive buyers to their site.
MarketingIt works both ways - the owner of the marketplace supports its sellers, while they advertise their stores, promoting the entire platform.The seller must take care of generating and caring for leads themself.
InventoryThey don't keep inventory.They support inventory
Time-to-launchIt requires a longer development process, so more time is needed to implement the platform.When choosing a ready-made hosting platform solution, you do not need to code the store from scratch, which shortens the time-to-launch.
Technical aspectsIt should offer an efficient API, be cloud-based software, and have a scalable database designed for use in multiple markets. Modern market solutions support Omni-channel technology; the assimilation of physical stores, networks, and even social channels in a single platform.Currently, there are many tools available on the market for building an e-commerce website, such as Magento. The most popular way, however, is shops based on SaaS platforms.

How does digital marketplace work?

Simply put, digital marketplaces connect buyer and seller. They act as intermediaries for the successful conduct of transactions. Buyers have a choice of what they want to buy, and sellers have a variety of customers to sell to. They offer an extremely convenient solution for many sectors of the economy or service. Using digital marketplaces often enables sellers to reach more customers, which, combined with their availability and relatively low cost, is extremely beneficial for their businesses. However, by focusing on potential owners of digital marketplaces, they have several methods of earning money on their platforms. Depending on the goal, the appropriate business model should be selected so that it is not draining for users, and thus generates only profits.

Business models

Building a sustainable, successful and profitable platform requires the right business strategy. So you need to find a revenue model that will finance your digital marketplace. In most cases, except, for example, non-profit projects, funding will ultimately come from platform users. The selected model must be well selected and scalable to ensure long-term stability. The models to choose from are:

Commission Model

By far, the most popular business model of modern digital marketplaces, which consists in charging a commission for each transaction. When the customer pays the supplier, the platform facilitates the payment and charges a percentage or a fixed fee. The platform operator takes care of payment and logistics, while the seller focuses on offering the products. The key is that anyone can create an account on the platform for free, and providers are not charged any fees before they get some value from the market. It is the model chosen by the most famous platforms of this type, such as eBay, Etsy, Airbnb, etc. The biggest challenge with the commission model is the valuation of how large the commission should be. Therefore, choosing this model requires developing a strategy for collecting debts from sellers. You need to consider product types, transaction sizes, product quantity and many other factors. Nevertheless, it is a good model as a major source of income.

Subscription Model

This option, also known as membership, is a revenue model in which sellers, or both sellers and buyers, are charged a recurring fee to access the platform. In this case, suppliers get help from the platform in finding new clients. Customers are encouraged by great experience and cost savings. The membership fee is a good choice if you are offering excellent value that will engage your users. The membership fee can also be a good start-up business model for B2C markets that ultimately want to charge a commission but don’t yet have the tools to facilitate transactions in their niche. The challenge with this model is to find the first users. You need to have enough users on the platform to be of value to both suppliers and customers. A popular platform that uses this model is LinkedIn, which charges companies a subscription fee to access their talent pool.

Freemium Model

The freemium model means that the basic offer is free, but some extra features are unlocked for users at an additional cost. Of course, these paid services need to be attractive enough to entice a significant proportion of users, which is a challenge. If there are only a few interested parties and everyone else uses the free option, it probably won’t be enough for a sustainable business model. It can be very difficult to come up with a premium service that is interesting to a broad enough audience. For this reason, many platforms use premium services as additional revenue streams.

Listing Model

In this model, sellers are charged for each bid submitted to the platform. It is typically used when sellers are listing items of much higher value, such as cars or houses. As resources are limited, retailers benefit from having more of them on the list. Besides, the purchase transaction often does not take place on the platform, but after meeting the seller and seeing the listed item. The biggest advantage of the model list is the high traffic that sellers bring to the platform. The challenge is, on the other hand, the proper pricing of the offer fee.

Featured Ad Placement

It is a model that is mainly an addition to the other options mentioned above. In this case, the seller may choose to pay an additional fee to keep his listing displayed in front of others. Here, too, the main challenge is attracting enough website visitors for the sellers to be willing to pay for these ads.


Why start a digital marketplace in 2020/2021?

As you may know, there are tons of opportunities and ideas for an online business. However, you are probably looking for an answer whether it pays to create a digital marketplace shortly. Considering that even 93% of online consumers have shopped on a marketplace, this means one thing – marketplaces are an inherent element of the economy and consumers cannot imagine their lives without them. Especially now, in 2020, which is extremely demanding for all industries due to the pandemic that has prevailed for almost a year, it is worth considering transferring or starting your business on the Internet.

Why bet on the digital marketplace in 2020/2021?

Recent months have shown how important modern technologies and online services are for society and the economy. The Covid-19 pandemic proved that if it were not for the progress and digital transformation of many areas of the traditional market, the entire world would be in an even worse crisis now. Therefore, we are entering a new phase in the evolution of online marketplaces models. The predictions are that the next generation of marketplaces can play a huge role in solving some of society’s most urgent issues.

Due to this situation, marketplaces ideas appear by themselves. Now every sector of the economy, but also healthcare, education and jobs, must offer online services for easy access. Moreover, the biggest consumer categories are still largely non digitised. Building a digital marketplace in 2020/2021, hence, seems to be a business not only profitable but also modern and responding to the strong need of society.

Digitization of services - lessons learned

Digital transformation is rapidly accelerating, and although everything was already moving online, now it’s happening even quicker. No wonder, as we mentioned, this is what our pandemic reality requires of us. And so, due to lockdown, there was almost a decade of progress in just a few weeks. Therefore, we can also make some conclusions – online services and digitalization is our inevitable future. Now literally everything is sold and purchased online because of convenience, speed, wide selection and safety. Online transactions have become the default for most people, and what’s more, people have formed new habits in new sectors like education, healthcare and groceries. There’s no way back, but it’s for good.

Benefits of the future and digital transformation

We can see many advantages of digital transformation for both consumers and entrepreneurs.
Here they are:

  • Convenience – everything is available at your fingertips, without leaving your home. This is great facilitation only in times of a pandemic, but also for the elderly or ill;
  • Better availability of goods and services – ethe Internet has for some time already made it possible to buy almost anything from every corner of the world, now that many services also appear online, the possibilities are even greater. This also applies to easier access to education and healthcare;
  • A chance for a successful business – going with the times and running an online business will now bring bigger profits in many sectors of the economy than the traditional market;
  • Economic growth – the emergence of newer and newer marketplaces affects more frequent online transactions, and thus huge revenues from this market for global economies;

COVID / post-COVID - is it a good time to develop a digital marketplace?

Given the above considerations, you probably already know the answer. Digital marketplaces may in many cases be a chance for business survival, but also the only option for success. They are a safer business idea, especially if you give consumers the convenience of making transactions and unique solutions to satisfy their needs. The mechanisms that we will develop during the Covid-19 era will stay with us for longer, maybe even forever, so the marketplace will be a good investment.


Types of marketplaces

When it comes to the types of digital marketplaces, there are many possibilities to distinguish them. It all depends on what we take as a determinant. We can divide them by core focus, type of audience, destination industry, and more.

Marketplaces by the target audience


B2B means business to business. In the B2B market, wholesalers sell their products or services in bulk to buyers. This type of market is usually operated by a third party, which allows companies to take advantage of it on favourable terms. Using a trading platform allows sellers to distribute products and services to more customers, so they don’t have to create their e-commerce store. By registering, they can immediately start selling on extensive sales channels, and no huge upfront investment is required from them. The concept of ​​the online B2B market is to automate the sales and buying process, provide excellent customer service and improve the transparency of financial transactions.

Challenges of building a B2B marketplace

  • Lack of recognition and confidence in the quality of the brand – this is a challenge every newcomer has to face. However, all the marketplaces that have appeared some time ago also had to face it. Many experts in the field of marketplace development believe that the key to success is focusing all attention on the users. Defining your target audience, finding their problems and creating a solution for them will help in this. Even if the platform is new, its effectiveness and great user experience will make it win fans and regular users.
  • Lack of trust – new B2B marketplaces need to put a lot of effort into winning users’ trust. The scale of orders on the B2B e-commerce market reaches even millions of dollars. Consequently, many traders wonder if this particular market is a safe place to sell and buy. Therefore, users should be thoroughly verified during registration and even require legal documents and licenses from suppliers. It also comes down to introducing convenient shipping and return policies and creating a review and rating system to select only the most reliable suppliers.


The B2C market model focuses on two types of users: business and customers. In this model, companies sell their products and services directly to customers, not to other economic entities, as in the case of B2B. This model is currently the most popular one, and the number of B2C-based digital marketplaces continues to grow. Many B2C markets are one-stop shops where customers can buy a variety of goods online. A good example of a powerhouse in this sector is Aliexpress, which has thousands of sellers offering a wide range of products. B2C marketplaces usually generate huge traffic and have a repeat customer base.

Challenges of building a B2C marketplace

  • Big competition – the B2C market is full of giants like eBay or Booking that are hard to compete with. These companies have been holding their positions for many years, and it is difficult for new marketplaces to gain a competitive advantage. Therefore, it is worth considering focusing on one specific niche. By examining the needs of consumers in this area, you can achieve much greater success.
  • Pricing – many B2C markets struggle to find prices that are good for both sellers and customers. This is one of the most important buying factors, so it’s important to create the right pricing system.

C2C or P2P

C2C means consumer to consumer and are equal to P2P, peer-to-peer marketplaces. This kind of marketplaces provides a modern way of enabling customers to interact with each other. This type of marketplace allows people to sell new or used items, as well as services directly to another person. The Marketplace acts as a sales brokerage platform to help you complete your transaction. A typical example is an online auction where the consumer puts the item up for sale, and other consumers make an offer to buy. The third party usually charges a fixed fee or commission. An example of such a platform is the global advertising site OLX.

Challenges of building a C2C marketplace

  • Too wide range of offers – a frequent problem of C2C marketplaces is having a wide selection of products and services. When creating a market from scratch, it is better to start by targeting a vertical market in a specific area. It is easier to test an idea in a niche, the more local it is before you move to the global market.
  • Lack of originality and failure to solve a specific problem – failure to examine the needs of users or not to specify the appropriate target group may fail. To encourage the use of your platform, it must solve a specific problem. It is also best to be unique to stand out on the market. Before launching your marketplace, conduct thorough market research, define your target audience and their needs and verify your business idea.

Marketplaces by focus

Horizontal marketplaces

The horizontal marketplaces offer products and services from various industries to different customers. Very often they are available worldwide, like eBay or Aliexpress. This type of marketplace, meeting different customer needs in one place, is considered a one-stop service. Here we would also allocate B2B, B2C and C2C marketplaces.

Vertical marketplaces

These marketplaces focus on a specific area or niche. Contrary to horizontal marketplaces, they offer a narrow segment of services and goods. Having such a website dedicated to a specific niche allows standing out from the competition, offers higher quality products and services, and increases personalization. The vertical marketplace model is getting more common when it comes to launching new startups. Examples of such industry-specific platforms include Uber for transportation services, Booking for short-term rental brokerage, or Etsy for selling handmade and vintage items. The best part is that the nature of vertical markets offers endless opportunities. Countless industries can open marketplaces that serve their needs and support niche suppliers to deliver goods.

Challenges of building a C2C marketplace

focus on the broad categories that cross-industry boundariesdeveloped for niche industry to cater to a concrete group of customers
flexible can be used across a broad range of industries or businessesdedicated to use in one specific sector; limited or no use in any other area

The future of digital marketplaces

There is no doubt that the trends today are dictated by the pandemic and our problems caused by it. This has a huge impact on how marketplaces will look both in the near and long-distance future. The Covid-19 era is accelerating what would probably have happened a few or a dozen years later. We are starting to get used to the convenience offered by marketplaces and therefore, they will enter a higher and higher level.

What niches can benefit from digital transformation in the context of digital marketplaces?

The most promising industries continue to be evergreens like work, mobility and housing. The business will undoubtedly continue to flourish in these areas. However, there are new vertical markets which, especially now, are gaining great potential for development and the benefits of digital transformation will be especially prominent in their case. Given the current demand for online services, healthcare and education are still largely underutilized.


Healthcare is one of the least digitized industries. However, Covid-19 has forced huge changes. The ageing population, staff and financial shortages have led governments to adopt technology, making room for innovation. Artificial intelligence changing the principles of diagnosis and prevention is appreciated, and telemedicine and online appointment booking are changing the way healthcare works. More and more pharmacies also sell medications online. So it is an area that needs new marketplaces to meet growing needs.


Remote learning is now commonplace for many people. This brings lots of new challenges, and the need for platforms that will support students and teachers is enormous. There is a call to introduce new teaching methods adapted to the online approach, as well as build modern knowledge bases that can be used as part of teaching aids. These are only some of the ideas for the online education marketplace, there are many more. Without a doubt, the education sector will change a lot thanks to digitalisation, and it will be a very positive change.

How can new technologies change services?

Not without significance are the upcoming trends stating that AI and Machine Learning will modernize marketplaces.

Machine learning-based solutions are becoming more and more popular along with the growing possibilities of computing power in the cloud. What’s more, it begins to improve business processes in small and medium-sized enterprises. Machine learning is about training computer models to perform a specific task by providing enough data about the task.

There are 3 types of machine learning. The first is supervised learning, in which the model learns from previously marked data, and the entire process is supervised and adjusted to the goal. The second type is unsupervised learning, in which a machine learning model is given the task of examining a dataset, and a data scientist evaluates the results. The last type is reinforcement learning, which involves providing a model of the environment for interaction and a reward system for shaping the desired behaviour. The technique is expected to find interesting devices in robotics and building autonomous vehicles, but it is not yet that popular in business.

The use of machine learning models to take control of large data sets is sensible and currently the only possible way to maximize the outcome of your data. AI-based solutions are the fastest way to modernize databases. But artificial intelligence can also support the operation of the market in many other ways.

  • Fraud Detection – Machine learning models can analyze all traffic and transaction data to detect fraud;
  • Real-time optimization – Machine learning algorithms enable the delivery of fully optimized content and offers in real-time. Thanks to real-time tests, you will be able to provide a well-optimized version of the website;
  • Recommendation systems – this improves not only the quality of the order but also the overall experience of using the marketplace. Algorithms analyze users’ transactions to select the best offer, in line with their preferences;
  • Data analysis and segmentation – Machine learning-based algorithms can find hidden patterns in a data set. This forms the basis for further research in any direction as well as user needs and preferences.

Alternative digital marketplace management models

The number of digital marketplaces is growing noticeably, and so is the competition. No wonder then that new marketplaces management models are emerging, which are often aimed at differentiating themselves from those present on the market, and thus finding dedicated customers. A noticeable trend in this field is the mixing of the currently known models as well as a greater focus on delivering value and extraordinary experience to consumers.

Managed marketplace

The managed marketplace is not a strongly defined term for a marketplace model yet. What we can point here is that these marketplaces aim at fully curating, or even owning and organizing the supply side of the market and attempting to improve its customer experience by being more involved in the execution of transactions. This way, these marketplaces will eventually end up with managing production in-house and becoming D2C brands. This model is the most common in the food supply sector today, but it is also very rapidly moving into new areas. This is related to the formation of fixed regulations and more complicated processes that require the brand to have more and more experience and invest more and more capital.

How to prepare for the marketplace post COVID era?

Above all, attention must be focused on changing consumer behaviour. Many of them will require new or modified services and products. When preparing for the post-COVID-19 era, you need a proactive approach and understanding of consumer needs and knowledge of the market. This makes it easier to adapt to the increasing pace of change. Therefore, with your colleagues, develop an action plan and a possible modification of the business based on the collected information about the current needs of the consumer in your industry. Customer feedback will be extremely valuable, so please don’t hesitate to contact them directly. The current crisis requires more empathy, so your company’s policy should be focused on helping and reaching out to customers. Be also open to social media and build a strong community around your brand. Concentrate on delivering value and your revenues and profits will take care of themselves.

How to adapt your industry to the post-COVID era? Practical recommendations to transition your business

The new reality in which we live today is the best time to act. A daring and quick reaction can result in gaining market share and overcoming the crisis as market leaders. This often requires redesigning your business model and some investing. Here are a few practical tips:

  • Invest in digital marketing channels: during and after a pandemic, appropriate marketing messages should be posted, so direct your marketing spend to digital channels and media, not to external platforms. Focus on paid and organic marketing (SEO).
  • Take care of user experience: learn the path to buying your customers and provide them with a simple but unique user experience. Don’t forget about optimization for mobile devices. If you have physical stores, make sure they are connected to your digital marketplace.
  • Prepare your digital marketplace technologically: to prepare for the growing flow of consumers, test your marketplace in terms of load and extend the necessary capacity limits. Take the opportunity to invest in advanced analytical capabilities to provide automated customer interactions and recommendations.
  • Prepare your digital marketplace technologically: to prepare for the growing flow of consumers, test your marketplace in terms of load and extend the necessary capacity limits. Take the opportunity to invest in advanced analytical capabilities to provide automated customer interactions and recommendations.

How to start a digital marketplace

The growing number of digital marketplaces is rapidly expanding the sharing economy. This fact also increases competition, so if you want to be successful, you need to carefully plan your marketplace project. The good part is that you don’t have to start it from the very beginning. The digital marketplace is an extremely popular business model now, so there are lots of ready-to-use tools to build your own.

Where to start

To get started, you need an idea. When it comes to digital marketplaces, literally anyone can enter the market with something new and be successful. However, it is important to understand your vision and its potential, as well as some uniqueness. It’s good when there is a problem, perhaps even directly related to you, that you are trying to solve by building a marketplace. If it turns out that not only you but a large group of people are struggling with the same challenge, and your solution is fantastic, then you will be victorious. It is not about a complicated idea at all. The key is to discover this pain point and then create the best possible solution for both parties.


Unfortunately, not every marketplace can become an instant knockout earning millions. A lot of new businesses fail for a straightforward reason – no one needs them. According to CBInsights, 42% of startups fail for this reason. Launching an online marketplace without a clear understanding of your target market and user needs is a recipe for collapse. That’s why market research is so important to validate your idea. You can do it this way:

  • Estimate how many customers are there in your market category to understand better if the business model you are thinking about makes sense. Entering a smaller market may not always be profitable, although it seems easier;
  • Check if there are clearly defined niches in your target market and choose the most attractive one.
  • Research your competition and take a look at their marketing strategies and business models. This will help you identify their strengths and weaknesses and use them in your favour.
  • Research your competition and take a look at their marketing strategies and business models. This will help you identify their strengths and weaknesses and use them in your favour.

Identify your users

It is very important to focus on your users and their needs, after all, your platform is dedicated to them. Think about who your target users are and what are their main goals and challenges. With marketplaces, you will have at least two distinct user groups, your buyers and sellers with their own set of goals, problems and motivations. Make sure you understand both sides. Get to know where, why and from whom they are buying or selling, what their motivations are and what influences them. It will be easier for you to create several personas.

Choose the right business model

Above, we have described all their details, advantages and disadvantages. Compare them with your idea for a digital marketplace and choose the one that will bring you the most benefits, but will also be properly selected for your project.

How to approach the MVP?

MVP (Minimum Viable Product) is especially recommended for very complex, bold projects that may need an individual approach. The basic idea of ​​providing an MVP is to show and test the idea on a slightly smaller scale, but containing the most important functions for the platform to function. A good MVP combines vision with showing functionality, design, and the overall impression of the end product to be developed. It is often a verification whether it makes sense to build such a platform, or whether the idea should be rebuilt.

Having a specific vision, identified users and their expectations, as well as a business model, you need to consider what functions are necessary to build your marketplace’s MVP. For this type of platform, we can distinguish several such standard features:

  • A simplified version of the user profile, in which any additional segments with personal information and preferences will be expanded over time;
  • Supplier profile, but in this case, it’s better to show a fully functioning profile in your MVP. This is the provider’s opportunity to present their product or service and present it to potential customers;
  • Activity history both for the user, which allows access to the history of their activity and purchases and for the supplier;
  • A search function that allows users to easily and conveniently navigate the platform;
  • Payment system;
  • Review system, useful for both customers and sellers;
  • Supplier reporting and statistics system;
  • A messaging system that enables interaction between both user groups;

It’s important to see the visual representation of the platform and the user flow as well. The MVP should be a demo version that also shows the UI / UX of the platform and how users will be using it.

How to design a platform?

When designing a digital marketplace, you can quickly notice that it does not differ much from typical e-commerce. However, unlike it, the marketplace must also support a section for sellers. Such a panel allows the seller to place his offer without the need for support from the owner. Accordingly, you need to map the journey of the seller and the customer. Given the above, a standard marketplace consists of:

  • Products pages (with division into categories)
  • Offers’ pages
  • Cart and checkout
  • Customers profile
  • Seller panel

The general logic of the marketplaces is obvious and well-known. The design, on the other hand, should be focused on such things as:

  • Great UX – without taking care of a perfect, hassle-free user experience, you don’t have a chance for success. However, the previously conducted research on users will help you avoid mistakes, design the right UX and the user interface appropriately adapted to it. This strengthens the position of the marketplace and makes it easier to stay ahead of the competition;
  • Forcing good practices on users – requiring the addition of good-quality photos and prohibiting the publication of an offer without at least one photo is not a terrible requirement. It ensures good quality of offers on your platform, and thus its high level and quality. The same goes for product descriptions.

Which function to pay special attention to

Do you want your platform to provide the best user experience and keep the customers for longer? Don’t forget about these must-have features:

  • Secure user authentication – your platform needs a proper method of authenticating its users, which will prevent hacking into other users’ accounts, increasing security;
  • Rating and review system – ideally your marketplace should have a rating system for both suppliers and their products, and customers. Ratings and reviews are largely the driving force behind marketplaces and foster trust-building between contractors;
  • Messaging system – to allow you to ask questions about an offer, a specific order or a problem related to it, etc. you need a built-in chat / messaging system to facilitate communication between purchasing parties.
  • Notifications – Users expect a marketplace platform to have at least a basic notification system, but more advanced systems are appreciated. These are notifications informing, for example, about product availability, order status, etc. Usually, they are sent by email, however, SMS notifications are used more and more, and in the case of mobile applications, push notifications.

Your marketplace must absolutely process payments securely and reliably. Unfortunately, there are some challenges associated with this. In marketplaces, you need to consider several types of such payments, both from customers who buy the products and from sellers. The sellers have much more fees because they pay a subscription or some amount for placing an auction, registration or promotion fee, etc. You must also have a payment system from third party advertisers in place. That is why it is quite a demanding issue. Hopefully, there are dozens of payment processors around the world that handle payments on marketplaces. The most popular of them are Stripe Connect, PayPal and Mangopay.

The trading platform can process customer payments for orders in three ways.

Direct payments

For direct payments between buyer and seller, your platform is not involved in the transaction. Direct payments require the least amount of commitment on your part. However, direct payments will prevent you from buying products from many different sellers simultaneously and will require your customers to go through a payment process for each vendor. Your platform does not own the transaction, and you have limited options for charging transaction fees and handling returns and refunds, which is a big downside to this option. They are also less secure for both sides of the transaction and facilitate sales fraud.

Aggregated payments

These types of payments collect buyers’ funds through your platform to later pass them on to sellers as payouts. Payment aggregators are service providers that allow other businesses to accept credit cards without having to set up a merchant account. Aggregated payments allow one payment for purchases from different sellers, but place an additional burden on keeping track of sellers’ finances and regular payouts on the platform. What is the biggest challenge of this option? The increasing complexity of the payment flow in the marketplace. The new European payments law, PSD2, has introduced major changes that significantly impact multi-sided platforms or marketplace businesses.

Split and parallel payments

It’s a solution where the customer’s payment is immediately split at checkout and shared between all sellers and your platform by the payment processor. As a result, all hassles related to direct and collective payments are eliminated, and the responsibility for the transaction and its correctness is transferred to the payment processing company. The challenge is the complexity of implementing this solution.

When choosing the right payment processing method, you need to consider various factors such as the availability of a payment service provider in your region, cost, and the functionality you need. Consider how much flexibility and the future-proof solution you need for your platform. Also, remember the security and verification of the service supplier.

How to scale?

When creating a marketplace, in the long run, you want to build reach and high traffic, but most of all, grow as far as the market is possible. Depending on the type of market, business scaling can mean different processes. It may be a change of the basic activity or its significant extension, e.g. to a larger region to better match the market needs.

To scale successfully, you need to implement several processes on your platform:

  • Expand the platform – your ultimate goal is to provide a comprehensive solution to a common problem. Taking this into account, as the group of users and brand recognition grows, think about expanding the platform, looking for partners (also among your top sellers), or about expanding the services offered
  • Support outstanding sellers – on each platform there are the best suppliers who are worth rewarding because they support your marketplace with their work. This could be a special premium status or a “super seller” title to show users that they are trustworthy.
  • Take care of security – the biggest threat to marketplaces is a fraud, which is due to the nature of the services provided by the platform. That is why the verification of sellers is so important. Building trust between the buyer and the customer is key, and one of the most effective ways is to establish a rating system that allows the user to evaluate the seller or the item being offered.
  • Build a community around your brand – Invest in people-centred marketing and building a community around your brand. However, be authentic and focus on your salespeople, you can tell their success story on a blog (if your marketplace has one). This promotes a sense of trust in your brand.

Choosing the appropriate marketplace software and the design/development team

Getting closer to the implementation of your plan to build a digital marketplace will not do without choosing the technology in which it will be created. As a result, you also need to hire a subcontractor. It takes more work and good research, but don’t underestimate these choices.

How to choose the right software?

We can choose technological solutions for building a digital marketplace in two ways: by selecting a ready-made tool or by coding the platform from scratch. In both cases, support will be needed in the implementation of the platform, but in the latter case, a larger development team will be needed. From ready-made solutions available on the market, you can choose from CMS extensions, standalone marketplace software and cloud solutions.

Marketplace CMS

This solution is based on using a CMS, like WordPress or Magento, with added extensions from many vendors. It seems that this would bring benefits of a free, open-source CMS with simultaneous marketplace support. However, it is rarely a successful solution. CMS is designed for a different type of trading. Bilateral markets are inherently different and transforming a regular CMS into a marketplace platform is a complex, time-consuming and error-prone process.



This solution is based on using a CMS, like WordPress or Magento, with added extensions from many vendors. It seems that this would bring benefits of a free, open-source CMS with simultaneous marketplace support. However, it is rarely a successful solution. CMS is designed for a different type of trading. Bilateral markets are inherently different and transforming a regular CMS into a marketplace platform is a complex, time-consuming and error-prone process.


WooCommerce is a plugin that transforms your WordPress based site into an eCommerce store, but can also deliver a good base for the online marketplace. It’s user-friendly and easy-to-use, perfect for all sizes of the organization.


This is another famous e-commerce platform that also supports a suite of marketplace building solutions. It is not open source, however, but offers a verified and updated set of plugins, extensions and supports it with the customer support team.

Standalone marketplace software

These are software solutions designed specifically for marketplaces, so it seems to be best suited to them. Such software gives you more options for personalization and modification by accessing the source code. It also enables standalone platform hosting and full control.

Cloud solutions

Cloud solutions are also gaining more and more popularity in the digital marketplaces sector. They are easy to implement and offer free trials in most cases, so you can build and test the platform to make sure the solution meets your requirements. Cloud marketplaces used to be a simple directory of third-party apps. They’ve now evolved to sophisticated distribution platforms with a ton of functionality for users to discover, procure and deploy relevant applications. Today, they offer flexibility around deployment options. However, they are not as customizable and standalone.

The truth is that the possibilities are endless. When choosing software for your marketplace, you should consider what type you want to use. Consider the type of marketplace you are building, the features you need on your platform, and the available budget. Perhaps it will turn out that none of the ready-made solutions or tools fully meet your requirements. In this case, you should hire a company that will build your marketplace from start to finish.

How to choose a company to build a platform?

Unless you employ in-house developers, you need to think carefully about choosing specialists who will help you create a marketplace. What should you pay attention to when doing research?

  • PROPER KNOWLEDGE – the company you choose must have specialists in programming languages ​​and stacks in which marketplaces are built or specialists in implementing ready-made solutions mentioned above.
  • Offered services and previous projects – it is best if the company’s portfolio includes previously built marketplaces, which you will be able to see and say that you would like to achieve a similar effect. It will also be a sign that they already have experience in this field and can be entrusted with such a project.
  • Company reviews – it is worth taking a look at a platform such as Clutch.co and check whether the specialists you have selected are rated well by previous clients.
  • Holistic approach – the company offers services from A to Z, starting with consultations, examining customer needs, selecting software, cares about UX, quality code and tests? It is better to bet on a software house that will take care of every aspect of the developed software.

Which stack should I choose?

If you want to create a simple digital marketplace, you have a choice of many programming languages, and one of them will be enough. However, more extensive marketplaces tend to use several technologies. You have to take into account that your complex system will need to be coded:

  • Front-end – you need technology that will be responsible for the client-side of the platform, which is everything the user will see and interact with. In the case of marketplaces, various frameworks that are used for regular websites will work. These can be HTML + CSS – a very standard web design set, very popular JavaScript, or more advanced, also JavaScript-based React.js, Angular.js or vue.js.
  • Back-end – the back-end is in charge of inner operations invisible to the user. This kind of development relates to the application server-side and everything that communicates between the database and the browser. Technologies you can use here are wide, think about well-known Java, universal Ruby on Rails or Python.
  • Database system – databases make structured storage reliable and fast, and when it comes to marketplaces, they are essential. You can’t go wrong here with SQL databases like MySQL or PostgreSQL or MongoDB.
  • Tools – there are tons of tools that you can implement in your marketplaces, such as hosting, communication and monitoring. It all depends on the construction of your platform, and there are plenty of tools available, so by building the logic of your marketplace, you will know what you will use at this stage.
  • Integrations – the possibilities here are huge as well. In your marketplace, you can install a virtual assistant, translator module, but also integrate an appropriate payment system. Take a look at the platforms already on the market if you want to get inspired.

The selected solution must meet your requirements and business needs, the nature of the platform being built and its functionalities. However, you don’t have to choose the right stack alone. When you hire a company that will build your marketplace, you can count on their support, knowledge and advice.

Do you have an online marketplace idea?

If you’d like to learn more about how to develop your digital product do not hesitate to contact us.

Request a consultation