How do you build an e-commerce marketplace like Amazon and how much does it cost?

According to Digital Commerce 360, the world’s leading marketplaces—including Tmall, Amazon, and Taobao— sold $2.67 trillion in 2020. Analysts found that the sales on marketplace websites such as Amazon and eBay accounted for 62% of global web sales in 2020.

The COVID-19 pandemic has accelerated the fast adoption of multi-vendor e-commerce marketplaces. Since retailers, wholesalers, and manufacturers were forced to digitize business processes, most of them began using online marketplaces.

This article considers how to build an e-commerce marketplace like Amazon and how much it costs. You will find out the average time and budget estimations from our software engineers.

Table of contents

Design of an e-commerce marketplace like Amazon

A user-friendly design is essential for any software system, especially for an online marketplace like Amazon targeting a wide audience. WebFX revealed that design has a 75% impact on customer credibility to the website.

Experts at SWEOR found that 88% of users will not revisit the website after having a poor experience. Therefore, it is important to focus on this project stage to create an engaging design and meet end-user preferences.

For this purpose, we recommend that you develop a custom design implementing a unique branding theme. While market-ready templates allow for reducing expenses, they have to be customized to business needs while achieving responsiveness.

In addition, as the number of e-commerce marketplace platforms is witnessing fast growth, the chances that your competitors will have practically the same design significantly increase.

When making a design, you should build an intuitive user interface and enable smooth navigation, so that people can find or do what they need without thinking. If you aim to launch a web solution, responsiveness should be a top priority.

Since today around 54.8% of web traffic comes from mobile devices—not counting tablets—it is crucial to provide consistency across all screens and operating systems. This will allow you to attract more users and improve their satisfaction.

To explore the top 7 principles of developing a user interface (UI) / experience (UX) design, read the article on this topic.

Time: 200 hours

The key features of an e-commerce marketplace like Amazon

An online marketplace like Amazon consists of two modules—serving vendors and customers—that contain certain functionality to meet the needs of both parties.

Features for vendors

1. Registration and authorization

To add their goods to a marketplace platform, manage orders, and accept payments, sellers have to register by filling out information such as name, address, company description, and terms of delivery. The registration process should also include verification of vendors, from their banking details to services they provide.

Time: 30-40 hours

2. Inventory management

Inventory management is an essential feature of e-commerce marketplace websites and applications that allows vendors to record each product arriving at or leaving their warehouses. As a result, marketers can easily control the availability of goods in stores with this information displayed in the catalog.

What’s more, you can enable sellers to track inventory history, manage listings and livestock, as well as automate price updates.

To deliver this functionality, an online marketplace development company can make platform integration with APIs of third-party services—for example, eBay Inventory API, Zoho Inventory API, or API2Cart—to save you time and costs.

Time: 120 hours

3. Order management

When building an online marketplace like Amazon, it is important to provide sellers with the possibility to track and process orders. Employing this functionality, vendors will not have to manually record each order, which may consume a lot of time and lead to human errors.

In addition, you need to design templates for order generation and replies to enable fast purchases. To ensure control over the order process, an e-commerce software development company can make system integration with a turnkey service, for instance, Salesforce Commerce Cloud Orders or BigCommerce Orders, this way reducing costs and release cycle.

Time: 200 hours

4. Data analytics and report generation

Data analytics allows marketers to make valuable insights into consumer behavior, involving the number of unique daily users, sessions, LTV, as well as audience by age, country, interests, etc. It is possible to customize this functionality to business-specific needs.

For example, you can enable providers to track online transactions in real time, generate sales reports for different periods, and identify products of the highest and lowest demand. As a consequence, it will be much easier for vendors to specify the key metrics that affect user purchasing decisions.

In order to implement this functionality, you can integrate an e-commerce marketplace platform with analytics programs such as Google Analytics, Firebase Analytics, Kissmetrics, Brandwatch, or Sprout Social. You can also employ a combination of several tools, so that sellers can get the most detailed statistical reports for making demand forecasts.

Time: 400 hours

5. Data visualization dashboard

By implementing a user dashboard for an e-commerce marketplace website or app, you will enable vendors to visualize data on customer behavior, sales volume, and various valuable metrics to analyze the performance of products.

Time: 200 hours

6. Admin panel (app inside an e-commerce marketplace)

An admin panel allows marketers to manage content: upload files (images, video ads, product overviews, etc.), add, edit, and delete information. Furthermore, it allows for assigning data access permissions, adding and blocking users. You can also enable vendors to reply to user comments and testimonials via an administrator panel.

Time: 2000-2500 hours

Features for consumers

1. Registration and authorization

Registration and authorization are must-have features of an e-commerce marketplace platform. When building a marketplace, it is crucial to provide users with the possibility to sign up in any convenient way, including mail, phone number, and social media (Facebook, Twitter, Instagram, etc.). With the view of enforcing data security, it is important to enable two-factor authentication.

Time: 40-80 hours

2. User profile

A profile contains basic customer information, involving name, age, contacts, as well as payment, billing, and shipping details. If you decide to implement a “Wishlist” feature to allow users to add products to the list of favorites, you should provide the possibility to view it from a personal account.

Time: 80 hours

3. Catalog of goods

A catalog is another crucial feature of e-commerce marketplace websites and applications. This page contains product listings, images, and descriptions, so that customers can take a closer look at goods they would like to buy.

Time: 200 hours

4. Search

When building an online marketplace like Amazon, it is essential to enable search for products and vendors across numerous filters and categories. Designers should organize content in such a way that users can easily find everything they may ever need. For the purpose of improving customer satisfaction, you should integrate an autocomplete feature to save the time of users.

As users can make mistakes when inputting a search request, an e-commerce marketplace still should provide search results. Find out how our engineers resolved this challenge when creating an e-commerce marketplace connecting pharmacies with consumers.

A few tips on how to create a great e-commerce marketplace:

• Enable consumers to specify a range of parameters, for instance, product name, color, size, price, name of the manufacturer, delivery details.
• Let customers compare goods belonging to the same category in a table. This will help users make more informed purchasing decisions while boosting their satisfaction.

Time: 100-120 hours

5. Shopping cart

A shopping cart is among the most important features of an online marketplace that allows users to make purchases from different vendors. When developing an e-commerce marketplace platform, you should set up automated calculations of the total price of products while enabling customers to change the number and quantity of goods. In addition, the cart has to provide information about available payment methods, delivery time and cost.

Time: 120 hours

6. Reviews and ratings

By implementing reviews and ratings, you will increase credibility to an e-commerce marketplace and vendors. Thanks to this feature, consumers can make more informed purchasing decisions based on user feedback. Therefore, this enables sellers to decrease product return rates and improve client service.

Time: 120 hours

7. Checkout

When building an e-commerce marketplace like Amazon, you should create a checkout page. Online consumers should be able to confirm that they have correctly filled out the required information, involving payment method, delivery and shipping details, order comments.

To ensure a seamless shopping experience, it is important to minimize the necessary fields, add clear call-to-actions, as well as allow users to make purchases without registration.

Time: 120 hours

8. Online payments

In order to increase customer loyalty and increase sales, it is essential to provide users with a variety of payment methods. For this purpose, you can integrate an e-commerce marketplace with a payment gateway.

For instance, Braintree enables consumers to make purchases using PayPal, credit and debit cards (Visa, Mastercard, American Express, etc.), Google Pay, Apple Pay, and Venmo. To gain a competitive advantage, you can offer support for digital and cryptocurrency wallets.

In our e-commerce marketplace development company, we make integrations with various payment gateways, including Stripe, PayPal, Braintree, Amazon Pay, Square, and others. Check out a list of integrations —from CRM and shipping and to geolocation functionality—that you can make into your e-commerce marketplace platform.

Time: 120 hours

How much time does it take to build an e-commerce marketplace?

How much does it cost to create an e-commerce marketplace?

The cost of making an e-commerce marketplace is based on the time necessary for implementation, as well as the wages of software experts. However, their salaries can significantly differ depending on the location of an IT service provider.

For example, the hourly rates of software developers in the US and UK companies are $50-$150, in Western Europe — $40-$100. To compare, the hourly wages of software engineers in Belarusian firms are $20-$50 for the same skill sets and knowledge.

The cost of building an e-commerce marketplace depending on the country:

• USA, UK — $202,500-$693,000
• Western Europe — $162,000-$462,000
• Belarus — $81,000-$231,000

Hence, the outsourcing of e-commerce marketplace development to Belarus can allow you to cut expenditures by 2.5-3 times while saving end-product quality.

Top 3 additional features to improve an e-commerce marketplace

1. Wishlist

Incorporating this feature in an e-commerce marketplace platform will enable consumers to save products they would like to purchase to the list of favorites. As long as users receive the possibility to monitor the availability of goods from their personal accounts, a wishlist helps vendors improve customer satisfaction and increase the conversion rate.

2. One-click ordering

One-click ordering is a game-changing feature of e-commerce marketplaces that contributes to increased customer engagement. To make purchases by just clicking on the order button, users need to enter the necessary payment and shipping information only once to make it default for the future. Saving consumers’ time, vendors manage to significantly improve the online shopping experience.

3. Personalized recommendations

Personalization is key to improving customer service and boosting sales. Adobe surveyed thousands of consumers and found that 54% of participants are likely to have a personalized shopping experience.

To offer personalized recommendations, Amazon employs machine learning algorithms that are trained to analyze large amounts of user historical data. By identifying items that have been frequently viewed, searched, and purchased by a certain user, the company provides tailored advice to meet the audience’s preferences.

The technology stack of an e-commerce marketplace like Amazon

Before building an e-commerce marketplace like Amazon, it is crucial to choose the technology stack that will help you address business-specific challenges such as zero downtime, platform capability to maintain a growing number of users, and enterprise-grade data security.

Amazon employs the following technologies to serve millions of users worldwide while ensuring a seamless shopping experience:

The company uses Amazon Kinesis to gather and process massive arrays of data to get valuable insights. Amazon Kinesis is a service that allows for ingesting real-time data, involving video, audio, and application logs. With Amazon Simple Notification Service (Amazon SNS), it is possible to send messages to millions of customers globally.

By retrieving data from low latency data stores and optimizing memory, Amazon ElastiCache contributes to improved performance of the system databases. Employing the Amazon CloudFront content delivery network, the organization ensures secure data delivery to users from hundreds of countries at high transfer speed.

Amazon Web Services offer many other tools to address various issues. For example, to safeguard sensitive information, you can use Amazon Cognito to implement role-based data access permissions. Additionally, this tool provides compliance with multiple security standards, for instance, ISO/IEC 27001:2013 and ISO/IEC 27017:2015.

Thanks to Amazon Detective, it is possible to explore potential security vulnerabilities while AWS Shield serves for protection against distributed denial of service attacks. In order to set up auto-scaling of resources depending on the load, software engineers can tweak Elastic Load Balancing.

It is worth noting that cloud platforms such as Microsoft Azure and Google Cloud Platform also have all the necessary tooling for achieving scalability, high availability, and fault tolerance of your e-commerce marketplace.

How does Amazon monetize its e-commerce marketplace?

Amazon is an international technology and e-commerce company that provides online retail, cloud computing, and digital streaming services. Being the worldwide leading electronic retailer in the USA, the organization had net sales of $386.06 billion last year, according to Statista.

It is noteworthy that net sales from third-party seller services increased by 53% year-on-year during the third quarter of 2020. Amazon reports that today an e-commerce marketplace is used by 9.6 million vendors.

To make a profit, Amazon implements a combination of monetization strategies for its online marketplace platform. At the moment, the main sources of income are e-retail sales, third-party seller revenues, and subscription services. Let’s take a closer look at monetization models employed by Amazon.

Monetization models of the Amazon e-commerce marketplace

1. Selling fees

Selling fees are among the primary revenue sources of the Amazon e-commerce marketplace. Now, this part of the company’s monetization model involves the following fees:

• Per-item fees — a commission is charged for each item sold via the platform.
• Referral fees — a fee is paid by providers on the product sold.
• Shipping fees — the amount of money collected and charged by Amazon depends on the type and category of goods.
• Closing fees — an online marketplace charges a commission for each media item sold, for example, a book, DVD, or computer game.

2. Listing fees

The company applies this monetization model to charge a small fee for each ASIN (Amazon Standard Identification Number) listed on the platform. Marketplace Pulse informs that currently, around 2.4 million vendors have a product listed for sale on the Amazon e-commerce marketplace.

3. Advertising

Amazon enabled third-party sellers to place their ads on the website. Thanks to this, vendors can attract more customers to their online stores and boost sales while the organization has an additional revenue stream.

4. Subscription fees

Implementing Amazon Prime, the retailer offers consumers the possibility to subscribe to the platform and receive plenty of advantages. For instance, users get access to special offers, free 2-day shipping for most of the products published on an e-commerce platform, and unlimited streaming of movies.

Consumer Intelligence Research Partners found that 65%—which is nearly 72.8 million—of marketplace customers are Amazon Prime Members. Digital Commerce 360 reports that 93% of these users renew their membership after one year.