How does marketplace MVP development increase your project success chances?

Online marketplace development is a time-consuming process that requires investment. To launch a marketplace, a software engineering firm has to create at least three modules—that can be considered as separate apps—to fulfill the needs of vendors, customers, and platform owners.

Thus, it is important to conduct competitor analysis, research the target audience’s pain points, and prioritize features. By implementing only the key functionality necessary to address user issues, an organization can get a working solution in less than six months while significantly increasing project success chances.

This article considers the main advantages of building an online marketplace MVP. We have also described a few success stories of world-famous companies that start out by making a minimum viable product. Take a look.

What is a minimum viable product?

A minimum viable product is a software solution that contains the minimum functionality necessary to address end-user challenges.

Agile Alliance describes an MVP as “the smallest set of features or requirements to deliver value to stakeholders and satisfy early adopters in the shortest time possible. It focuses on core features sufficient to deploy and deliver stakeholder value and no more.”

The MVP approach to software engineering became popular after the publication of “The Lean Startup” book written by Eric Ries. The author defines an MVP as “a version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort”.

Marketplace MVP development consists of three stages:

• Build — Software experts create an online marketplace containing the key features to attract early users, test hypotheses, and showcase the app to stakeholders, for example, investors.
• Measure — The organization collects user feedback through polls, surveys, comments, testimonials, and/or other sources.
• Learn — After conducting research, the company finds out how to improve a digital marketplace platform and customizes it to the expectations of vendors and consumers.

Therefore, the underlying idea behind an online marketplace MVP is to deliver a minimum set of features to gather user feedback and keep fine-tuning a software solution to meet end-user preferences.

Why should you start marketplace development with an MVP?

Analysts at CB Insights revealed that a software product that doesn’t meet market needs is the primary reason for startup failure (42%).

Running out of cash (29%), high competition (19%), cost issues (18%), user-unfriendly solutions (17%), ignoring customer feedback (14%) are other common reasons for project collapse, according to CB Insights. However, MVP development allows for preventing these issues.

The creation of an online marketplace MVP offers the following advantages:

• reduced expenses
• faster time to market
• learning from the audience feedback and introducing prompt customizations
• hypotheses tested in action
• solution concept showcased to stakeholders

Thanks to the MVP approach, an organization receives the first app version in 3-6 months depending on system size and complexity. At Arateg , for instance, our designers and engineers need 3,000-3600 hours to create an online marketplace MVP.

This is much faster in comparison with making a fully-fledged platform, which generally takes 9-12 months. Therefore, it is possible to improve time to market by more than 2-3 times while reducing costs.

By building an MVP, you avoid the risk of implementing functionality that end-users do not actually need. For example, a chatbot may be a great feature for request automation and 24/7 customer support but in your case, a few consultants or managers may be enough to swiftly answer questions and provide the required assistance online.

Through validated learning, you explore end-user suggestions and proposals, this way getting an understanding of how to meet market demand. An MVP is also used to showcase the product concept to investors and raise funds.

It is worth noting that many globally renowned organizations started out by implementing the key online marketplace functionality only, for example, Amazon, Uber, and Airbnb.

What are the key marketplace MVP features?

A digital marketplace platform aims to enable consumers to make purchases from multiple providers. Vendors, in their turn, add goods and services to the system, accept and track payments, analyze sales reports, and receive customer feedback.

Marketplace owners should have the possibility to verify the identity and banking details of sellers, change pricing, as well as manage listings. Therefore, it is crucial to implement online marketplace functionality that will satisfy the needs of each party.

1. Registration and authorization

To create the profiles of consumers and organizations or individual experts, MVP marketplace developers need to provide the possibility to sign in and sign up. After collecting the feedback of end-users, you will be able to deliver various authorization methods according to their preferences, for example, via social networks like Facebook, Twitter, Instagram, LinkedIn.

2. Profiles

Vendor profiles generally include information like company address, open hours, contacts, description, terms of delivery. Customer profiles contain data such as name, age, payment, shipping, and billing details.

3. Catalogs

Businesses should be able to add their goods or services to a marketplace website or application, upload images, create product descriptions, and edit information.

4. Search

When building a marketplace website or application, it is crucial to incorporate various filters and categories to facilitate search. Designers should organize content in such a way that users can find the information they need with a few clicks.

5. Order placement and tracking

To make purchases, consumers have to make orders that will be further processed by a digital marketplace platform. Additionally, it will be reasonable to enable order tracking, so that buyers can monitor its status at any stage of delivery.

6. Online payments

This is an essential marketplace MVP feature that allows for carrying out online transactions without leaving the system. By integrating a gateway solution, software engineers can enable various payment options instead of developing this marketplace functionality from scratch.

Acting as an analog of a digital terminal, a payment gateway serves for verifying customer identity and processing transactions, as well as protecting merchants from fraud. PayPal, Stripe, Square, Braintree are examples of popular gateways.

7. Reviews and ratings

By collecting customer feedback, providers will be able to access user satisfaction and identify the existing issues. Consumers, in their turn, will make more informed purchasing decisions based on ratings and testimonials.

8. Notifications

With this marketplace app feature, vendors can inform buyers about delivery status, special offers, discounts, product availability, etc. by sending in-app messages, emails, or smartphone messages. At Arateg, we employ an API to implement this MVP functionality instead of building it from scratch, which contributes to faster time to market.

Check out with which third-party services —for instance, for order/inventory management, online payments, data analytics—you can integrate a marketplace platform.

9. An admin panel for marketplace owners

Serving as a separate application, an administrator panel can allow marketplace owners to manage content, users, and payments, change pricing plans, generate sales reports, track order statuses, as well as set up push notifications. When developing this marketplace functionality, engineers can tailor it to your business-specific requirements.

Check out an ultimate guideline to building an online marketplace MVP , including project cost and timeline.

Famous companies that created an online marketplace MVP first

1. Amazon

Amazon was founded by Jeff Bezos in 1994 as a marketplace website for selling books. When an order was placed, employees purchased the necessary books from distributors and delivered them to the buyer. In 1996, Amazon managed to raise $8 million and in 2001 — $100 million.

The startup decided to extend the assortment of its products to 17 categories and 143 subcategories in 1998, this way attracting more customers. Then, software developers at Amazon enabled one-click checkout that allowed for automating the online shopping process. In 2005, the organization added Prime membership that provided consumers with faster shipping for a certain price.

At the moment, the number of Prime members exceeds 200 million. By now, Amazon has transformed from an online marketplace MVP to the US leading digital retailer with net sales of more than $386 billion in 2020.

2. Uber

Uber was founded as UberCab by Garrett Camp and Travis Kalanick. In 2009, Camp, the CEO of StumbleUpon and a software engineer, started out by creating a mobile app prototype. Soon, his friend Kalanick—who sold his startup for $19 million—joined the project that was launched in 2010. The solution was tested employing three cars before the official release in San Francisco.

The initial version of UberCab allowed users to connect with drivers and make payments. Customers were able to order a ride by just tapping a button on their smartphones, the system identified their location using GPS and automatically charged the trip cost from credit cards. UberCab also asked either passengers or riders to rate each other. Thanks to this simplicity, a marketplace application rapidly gained popularity.

In 2011, the firm changed its name to Uber. In the same year, Uber raised $11 million in Series A and $37 million in Series B. In addition, Uber expanded its influence beyond the USA by going live in Paris. In 2013, the startup invited investments of $258 million in Series C.

To meet user needs, Uber continued fine-tuning a software solution by gradually adding new features. For example, software developers provided the possibility to choose a ride based on style and budget (e.g., taxi, black, lux) and invite friends to split the flare.

Today, Uber is a worldwide leading provider of services that involve ride-hailing, package delivery, food delivery through Uber Eats, and freight transportation. As of 2020, the revenue of Uber was nearly $11.14 billion. According to Statista, the Uber app served 93 million users on a monthly basis in the fourth quarter of 2020. By now, the company has raised a total of $25.2 billion over 31 funding rounds.