Starting an eCommerce business is not that hard. Before creating a better online marketplace, you have to check more things in detail. Each eCommerce business comes up with unique challenges.
If you are planning to start online marketplaces like Amazon, Etsy, eBay, etc then you are in the right place. Here you will learn about how to start an eCommerce business.
What is an Online Marketplace?
It is an online eCommerce store where you can sell goods and services to customers. Some of the online marketplaces are Amazon, Etsy, eBay, etc.
The Challenges of Starting an Online Marketplace
- Convincing merchants and customers
- Investing a lot of time to build
- Solving the real-time problem of both merchants and customers
- Existing competition in the market
- Ensure your online marketplace is sustainable
- Research your Target
The most important step you have to do at the beginning is ‘research’. We know that there is no business that works for everyone. Before you decide what to sell, you need to learn about the available business models, try to understand the target market, needs of your users and solutions they look for.
Know the size and volume of the business model that you have in mind. The more you understand the market, the more attractive niche you will choose. Whatever be your industry, competition must be there. So, you have to find who all are your competitors.
If the marketplace you are building is for users, then you have to figure out who are your users. Unless you find, the problems will be hard to solve efficiently.
2. Choose your right business model
Building a valuable product is not enough. You have to keep it profitable. The way your marketplace makes money depends on many things. Here are some of the online marketplace business models that you can consider.
It will be great to add a sign-up fee, that will charge the sellers to sign-up on your marketplace. Before that, you have to ensure your platform is worth to charge. You can use any payment gateway to collect the sign-up fees. The drawback is signup fees cannot be scale. Because of the scalability issues its hard to see the big market players.
3. Plan your marketplace operations
Creating a marketplace website and managing a marketplace website is completely different. Marketplace operations are more difficult than two-sided platforms. Sometimes regular eCommerce business gets complex because of the stuff you have to deal on a regular basis.
As sellers are the cornerstone, you will be going to deal with them a lot. This includes acquiring the new sellers, helping them to keep the existing sellers happy. Convince your sellers and join them to your platform. Create landing pages of your marketplace that explains how it works and why sellers need to join you. The major operations you have to plan are:
- Managing Products
- Payment Processing
- Logistics and Shipping Configuration
- Order Management
- Marketing and Content Management
- Seller and Customer Relationship Management
4. Outline the essential marketplace features
We may have seen marketplace projects that spent too much in development to either never launch or find users with a need for different features a week after launch. We also have seen marketplace platforms that launch within weeks. The main thing an entrepreneur needs to do is start with the essentials and launch MVP as early as possible. And later you can improve as the business grows. Some of the essential marketplace features are:
- Seller Feature
- Buyer Feature
- Marketplace Platform Feature
5. Choose a Marketplace Payment Solution
If your marketplace is unable to process payments safely and securely then it is not sustainable. While considering the payment processing there are few challenges for marketplace business compared with an eCommerce business.
As a marketplace platform owner, the different payment types that you will be processing are:
- From customers (those who purchase products)
- From sellers (signup, promotions, etc)
- To Sellers (payouts)
- Third-party advertisers
The biggest challenge of marketplace owners is customer payment processing that involves buyer, seller, and platform. The ways that a marketplace can process payments from customers to sellers are direct Payments, Aggregated Payments, Parallel Payments.
6. Select the right marketplace software
A marketplace platform software can be divided into three groups,
- Cloud or hosted platform
- Standalone Solutions
- Multi-Vendor CMS extensions
If you are new to the field of marketing business then you have to consider a popular SaaS marketplace. If you have no technical knowledge then Cloud is the better solution to get started. However, most of the platforms offer free trials, try to use most of them and find which one fits your requirements.
7. Assemble a New Team
To run an online marketplace business the skills you needed are:
- Development and Design skill
- Marketing and Sales skills
- Operations Skills
If you have any idea of creating a new online eCommerce marketplace of your own please contact us at (312) 423-6728 for any help.
If you are new to the eCommerce industry try to know about the examples of Multi-vendor shopping carts.
We have an open-source script for the online eCommerce marketplace which is iScripts Multicart.