7 Steps to Build a Profitable Marketplace App (Cost Estimation Included)

But how to get started? We will teach you in 7 simple steps. By the end, you would get a rough estimate of how much budget you need for investment.

How to Build a Marketplace App?

Before you begin searching for a marketplace app development company, it’s important to get clarity on a few things like niche and platform type. 

1. Find a Niche

Defining a niche is very important to target the right audience. It also helps you measure the profit you would make.

E-commerce is a widely popular niche. However, with giants like Amazon and AliExpress ruling the market, it is difficult to create a safe space in the same niche.

Luckily, there are other profitable niches to start with:

• NFT market
• Home office equipment
• Gym and fitness equipment
• Eco-friendly products
• Education and learning

Deciding on the specific niche will also help you decide on different key features in your marketplace application.

2. Pick the Right Type

Marketplace comes in different types based on the structure they have, the purpose they serve, and the audience. Here are the common ones you should know for choosing the right type of marketplace:

• Horizontal: Serves a broad audience and covers a wide range of products.
• Vertical: Focus on a specific industry.
• Service: Connect users and service providers.
• B2B: Connect businesses with businesses for goods and services.
• B2C: Connect businesses and customers.
• C2C: Connect individual buyers and sellers.
• P2P: Individuals can buy from and sell to each other directly without intermediaries.

3. Research the Audience

The third and most important step to building a marketplace app is knowing your audience well. The type of audience, their needs, and buying habits will majorly depend on the type of marketplace you choose.

4. Choose the Right Platform

The type of platform you choose also matters. It could be either an Android or iOS mobile app or a web app. If you are confused about which platform is profitable, the pros and cons of each will help you decide.

Pros of Mobile app

1. Easy to access as most online buyers prefer smartphones for shopping.
2. Offer a smooth experience as the device’s features and functionalities are used.

Cons of Mobile App

1. Maintenance is costly as each platform and app version requires an update.
2. App visibility may be hurt by changes in app store policies or algorithms.
3. Users may hesitate to download apps if it's bulky.

Pros of Web App

1. Works on any device.
2. Easy to access even without the internet.
3. No need to download web-based marketplace apps.
4. Developing, maintaining, and updating is cheap as you don’t have to comply with app store standards or policies.

Cons of Web App

1. Limited reach as most users prefer mobile apps for shopping especially if your marketplace app is B2C.
2. Compatibility issues as web apps may not work the same on every browser.
3. May not be secure and have performance issues.

Also Read: Android vs iOS Development: Which is More Profitable for My Business?

5. Find the Ideal Partner

Finding a marketplace app development partner who is not only an expert but also understands your needs is a big task.

Whether your marketplace app will make a difference, attract customers, or generate a good amount of revenue, a lot depends on who you choose.

Therefore, it is a big decision. To help you finalize the right partner, you need to work on these factors:

1. Have they developed a marketplace app before?
2. How many years of experience they have?
3. What is their experience with the key technologies for marketplace app development?
4. What impact their clients have gained from taking their services?
5. Will they only develop the app or offer post-development support?

The right one will tick all the checkboxes.

6. Decide Key Features

For the first version, you need to exhaustively think about the features. Although you have to do it later, developing a prototype or MVP is best to begin with. It saves the cost of marketplace app development while helping you understand how the final version would perform.

Basic Features of Marketplace App

• Account and user profile (sign in, email verification, delete account, upload profile feature, social logins, etc.)
• Product and service listing (product titles, description, price, update, delete, listing based on geolocation, etc.)
• Search and discovery by location, keyword, filters, categories, and availability.
• Shopping cart with the option to add to cart, edit, delete, or save items for later.
• Payment and transaction (payment gateways, cancellation policy, notifications and alerts, e-invoicing, refund, etc. )
• Booking and availability (calendar integration, stock management, filters, etc.)
• Admin panel to manage user accounts, transactions, sales data, and more.

While these basic features are must-haves, you must add advanced features to make your marketplace app unique.

Advanced Features

• Autocomplete search
• Voice-based search
• Product recommendation
• AI chatbot for customer support
• Virtual try-on feature

7. Choose a Monetization Model

How to earn money through a marketplace app? There are various monetization models you can opt for to generate revenue from this platform.

Commission: In this model, you get a commission for every transaction that happens on the platform. However, the amount will depend on the type of product sold and the buyers’ location. For example, Amazon charges 2% on every referral and sale.

Subscription: It generates revenue on a weekly, monthly, and yearly basis depending on the type of subscription you offer. You have to carefully decide the features for each model as it would impact the revenue.

Advertising: Here you charge a profitable amount for each advertisement on your platform.

Listing Fee: It is beneficial for the service marketplace. The revenue comes from each list and post on the platform.

Pay per Lead: LinkedIn works on this model where it earns money from every interaction the users have with their prospects.

Freemium: You can keep some features of your marketplace app for free while charging a fixed amount for the advanced version.

Also Read: The Complete Guide to E-wallet App Development: Types, Benefits, and Key Features

What is the Cost of Marketplace App Development?

Each step of the marketplace app development process is important to evaluate the final budget. For instance, if the app has advanced features the overall cost will be more than for an app with basic features.

Here are the other factors that influence the final price tag:

• Platform choice
• Location of your development partner
• Type of frameworks, tools, and technologies used in the development process
• Fees of app store
• Hosting and maintenance cost

A simple MVP of a marketplace app may cost you between $15,000 and $50,000 whereas a prototype will cost $4,000 to $8,000. Remember it is not the actual or final price. Every marketplace app is different with different goals, therefore the actual cost can either be less or more than this ballpark figure.

What Are You Waiting For?

By following the seven simple steps outlined in this blog, you can create a stunning online marketplace. However, the journey of marketplace app development from concept to launch is a marathon, not a sprint. You will face obstacles, technical and non-technical, learn from them, and use the user feedback to refine your marketplace app.