How do you build an online marketplace platform and how much does it cost?

The demand for online marketplace platforms is rapidly increasing. Although many people believe that marketplaces are only about e-commerce websites, they can comprise any business domain. The key idea is to connect product or service providers with customers in one place while enabling online payments.

E-learning, healthcare, insurance, online booking, freelancing, and other marketplaces have been witnessing fast growth over the past years, especially during the COVID-19 pandemic. According to Dealroom’s report for 2020, marketplaces have a combined value of $814 billion globally.

At Arateg, we have recently delivered several marketplaces to sectors such as food service and hospitality that now are helping companies generate revenues despite an economic crisis and lockdowns imposed by governments.

With in-depth expertise, we have prepared an ultimate guide on how to build an online marketplace, from the key functionality that should be implemented to a technology stack that should be used.

Furthermore, you will learn what budget you should have to create a marketplace. We have also indicated the average number of hours necessary to add each feature based on our experience in online marketplace development.

Table of contents

Creating UI/UX design of an online marketplace platform

After analyzing client requirements, a marketplace development company draws wireframes to visualize the structure of a future online marketplace platform. At this stage, it is crucial to work out an information architecture that includes content organization in such a way that users can easily find everything they may need. Then, a dynamic prototype is created to see an app or website in action.

When looking for a software engineering firm, it is important to take into account whether a potential partner has expertise in a user interface (UI) / user experience (UX) design. Following best design practices , UI/UX experts ensure a seamless UX, smooth navigation, and intuitiveness.

By making a responsive design, you will achieve consistency across all screens and devices. An IT service vendor also assists in implementing a unique branding style to make your product recognizable among competitors.

Time: 180 hours

The main features for online marketplace development

An online marketplace is a platform that serves different parties: vendors and consumers. Therefore, software engineers have to implement different functionality to meet the needs of all users. However, some features are required for both roles, for example, a user profile, registration, and authorization.

1. Registration and authorization

When building a marketplace platform, it is essential to enable customers to sign in and sign up in any convenient way, for instance, via e-mail, Google, and social networks (Instagram, Facebook, Twitter, etc.).

In addition, you should not oblige users to register on the marketplace in order to interact with it. This will disrupt user experience resulting in a decreased number of visitors and lower engagement.

Delivering this feature to vendors, you should allow them to submit their company details, including the required documents and certifications. It is not generally necessary for unmanaged marketplaces but is important for fully and lightly managed platforms.

Time: 60-80 hours

2. User and vendor profiles

A profile generally contains basic information about a customer such as a name, age, contacts, information about purchases that have been already made, as well as bonuses if an online marketplace platform implements a loyalty program. In case you incorporate a feature of adding goods to “Favorites”, a user should be able to view this list from a personal account. A vendor’s profile usually includes company details and relevant documents if needed.

Time: 100 hours

3. Search

The search for products, services, and vendors is an essential feature of an online marketplace platform. When creating a marketplace website or application, it is important to provide various filters, so that users can easily find everything they may ever need, from product description to supplier’s quality assurance certifications.

Time: 100-120 hours

4. Catalog

A catalog is a page containing goods or services offered by multiple vendors. When building an online marketplace, you should add as many categories and subcategories as possible to facilitate the search for customers.

It may not be necessary to create a separate product or service description page as you can make it a part of the catalog. Therefore, when users click on some product or service, they see a detailed description appearing on the same page.

Time: 120 hours

5. Online payments

To implement this functionality, you should integrate a payment gateway—e.g., PayPal, Square—that will perform the processing of online transactions. Serving as an intermediary between a customer and a merchant, it allows for validating card details, verifying the availability of funds, and committing a money transfer.

With this technology, you enable a variety of payment methods via credit and debit cards. For example, using PayPal, you get access to Visa, Mastercard, Union Pay, and American Express while Braintree also supports Venmo, Apple Pay, and Google Pay. Furthermore, vendors of payment gateways ensure security by employing data encryption, 3-D Secure, Secure Socket Layer, and Secure Electronic Transaction.

In our online marketplace development company , software engineers make integrations with popular payment gateways, such as Stripe, PayPal, Amazon Pay, Braintree, Square, 2Checkout, and Authorize.net.

Time: 120 hours

6. Reviews and ratings

Reviews and ratings are a crucial feature providing customers with the possibility to check out user feedback for goods, products, delivery, and service quality. Thanks to this, an online marketplace platform will offer a higher level of trust.

Additionally, you can allow users to ask questions about goods and services. When vendors reply to them, answers will become visible to all visitors, contributing to improved user engagement.

Time: 120 hours

7. Notifications

A notification system is another important feature of an online marketplace platform. With this functionality, vendors are able to send customers email, browser, or smartphone messages about special offers, proposals, changed delivery status, and important updates, for example, product availability in a wishlist.

It is noteworthy that software engineers don’t have to build this feature from scratch but use an API for integration, for instance, Firebase, this way saving you time and costs.

Time: 160-200 hours

8. Data analytics

Employing data analytics, providers can monitor and analyze user behavior, track online payments and the volume of sales, identify the key metrics that influence purchasing decisions, as well as generate various reports for different periods.

There are many tools for enabling this functionality, for instance, Google Analytics, Mixpanel, Brandwatch, Woopra. An online marketplace development company can integrate several solutions into the platform to meet the business-specific needs of vendors.

Time: 100 hours

9. Dashboard

A dashboard is vital to data analysis. By implementing a data visualization dashboard, software developers allow vendors to view real-time reports on the number of users, sessions, lifetime value, and volume of sales.

Time: 200 hours

10. Admin panel (app inside a platform)

An administrator panel enables providers of goods and services to manage content, upload files (images, video, etc.), create new stores or companies, add, delete, and block users, as well as assign access permissions for employees.

A software engineering firm can make it possible to reply to customer reviews, questions, and comments from an admin panel. You can also manage vendors and connect them to an online marketplace platform after verifying their information.

Time: 2000-2500 hours

How much time does it take to build an online marketplace?

How much does it cost to build an online marketplace?

The final cost of making a marketplace platform is based on the time software experts need for project implementation, as well as their salaries that may significantly vary from region to region.

For instance, the average hourly rates of software engineers in the US and UK firms are $50-$150 per hour while in Western Europe they charge $40-$100. However, the hourly wages of software developers in Belarusian companies are $20-$50. Let’s see what budget you should have to build an online marketplace depending on the country.

Minimum and maximum costs of making a marketplace:

• USA, UK — $163,000-$576,000
• Western Europe — $130,400-$384,000
• Belarus — $65,200-$192,000

Therefore, thanks to outsourcing marketplace creation to Belarus, it is possible to reduce expenses by 2.5-3 times whilst cooperating with an experienced IT service provider.

To find out why Belarus is a great IT outsourcing destination, read the interview with Andrew Volchek, CEO and Co-founder at Arateg.

Prioritizing features of an online marketplace platform

The list of must-have features largely depends on industry specifics the target audience operates in. For instance, a shopping cart and product comparison are critical functionality for an online e-commerce marketplace like Amazon but are not required for a B2C healthcare marketplace serving online consultations from medical experts.

A dashboard and data analytics are essential features of an e-learning platform similar to Coursera and Udemy as they enable providers—instructors, universities, etc.—to monitor student performance and course attendance, as well as identify the best trainees. However, a typical marketplace dashboard only allows for visualizing data such as the number of users and purchases.

To prioritize features properly, it is crucial to turn to an experienced marketplace development company that will analyze your business objectives and assist you in identifying the key functionality.

An IT service vendor can also help you choose a technology stack that will contribute to a system's high availability, scalability, maintainability, and improved time-to-market as well. Let’s consider what advanced technologies can be employed to build an online marketplace.

Technology stack for building a marketplace platform

Before creating an online marketplace, it is essential to choose a technology stack properly. For this purpose, you should define the business needs a software platform has to address. Examples are attracting a million users, ensuring zero-time infrastructure maintenance and system capability to provide stable performance in any conditions. Scalability is vital to maintaining a growing number of users while high availability allows sustaining heavy loads.

By employing advanced technologies, it is possible to resolve these issues. For instance, Golang, or Go, assists engineers in enabling software scalability. Packed with thousands of functionality packages, Python contributes to improved software development speed. By building a microservices architecture on cloud platforms like AWS or Microsoft Azure, engineers can achieve fault tolerance and reduce infrastructure costs.

If you aim to release a mobile application as fast as possible, say, to showcase a working solution to investors, you should consider React Native, a cross-platform framework to write one codebase for iOS and Android. Kotlin is a relatively new programming language that allows developers to build native smartphone apps faster in comparison with Java.

To create a marketplace website or mobile app, you can use the following technologies:

• Frontend: TypeScript, JavaScript, HTML5, CSS3, React, Angular, Vuex, Vue.js, MobX, Redux, Redux-Saga, Storybook
• Backend: Python, Go, Django, Flask, Node.js, Express, Redis, Memcached, PostgreSQL, MongoDB
• Mobile: Swift (iOS), Java, Kotlin (Android), React Native (Cross-platform)
• DevOps: Amazon Web Services, Google Cloud Platform, Microsoft Azure, Docker, Kubernetes, DigitalOcean, RabbitMQ, Jenkins

It is worth noting that the technology stack you use also includes application programming interfaces (APIs) of third-party services you integrate an online marketplace with. For example, Stripe and Braintree provide APIs for enabling secure online payments while Disqus offers integration with its commenting platform to let users leave their feedback and ask questions.

Thanks to the use of APIs, a marketplace development company doesn’t have to implement certain functionality from scratch. As a consequence, you reduce costs and time-to-market. Check out a list of multiple integrations you can implement in your project.

Our experience in online marketplace development

At Arateg, we have already delivered dozens of marketplaces to sectors such as healthcare, e-commerce, food service, and hospitality. Recently, our team has built a web platform that connects medical providers with patients for online appointment scheduling and consultations.

The website allows users to search doctors by symptoms and communicate with clinicians in chats. This online healthcare marketplace also supports video and audio conferencing. Read how we created this platform and what challenges were addressed during the project.

Another solution we developed is an e-commerce marketplace for a Russian startup that was featured among the top five startups in the country. When building this marketplace, our engineers enabled efficient processing of massive arrays of data and achieved resilience to high loads. Aiming to deliver this system under tight deadlines for testing its market feasibility and raising funds, we started by making a minimum viable product (MVP).

To help restaurants generate profit during an economic recession caused by COVID-19, Arateg delivered RequiSit , a marketplace platform for online table booking and payments. At the moment, the system serves customers in the USA and Ireland.