Marketplace Software: What does your business need?
Successful marketplace startups are about more than their marketplace technology. In fact, we would recommend focusing more on developing the business side rather than your platform itself when you're starting with a marketplace idea.
However, building the actual marketplace website is bound to be on the agenda at one point. Sooner than later, you'll have to start looking into a marketplace platform with the crucial 2-sided functionality and features that make your business possible.
How you build your platform will soon become one of the most crucial decisions you'll make for your business. It will determine your launch time, your workload (the talent you'll need), your budget, and your feature set. The scale for each of these variables is different. You'll have to make certain trade-offs based on your biggest constraint.
When building an online marketplace platform, you can choose to:
- Code it from scratch (or hire a firm to do it)
- Build it using an eCommerce builder or generic website and marketplace plugins, extensions, or themes
- Build on top of open-source marketplace software (self-hosted)
- Build it using a dedicated no-code marketplace software solution (SaaS)
- Build it combining various no-code toolsDevelop over an API-based marketplace solution
Custom development is suitable when you want
- better quality and flexibility
- to raise investment
- to build something unique
- to build a long-term project
- to be in control of your project
- more features
- a scalable solution
- integration with external APIs and services
- a custom UI/UX
However, developing a marketplace from scratch requires bigger investments. You can pitch your MVP to investors to raise money for product development after first getting traction on the MVP.
Off-the-shelf solutions are suitable when you
- Want to test your idea
- Want a quick and easy solution
- don't mind low functionality
- have a small budget
Factors to consider when choosing how to develop a marketplace:
You can always find an off-the-shelf solution that is low-budget, and you can start with limited functionality. Also, consider starting with a tech pitch deck and a discovery phase if you plan to pitch your idea to investors. We recommend that you consider custom outsourcing if you have a reasonable budget. Custom development would probably serve you better in the long run as you can introduce unique features to the market.
Time to market
Are you looking to launch an MVP in under a month? You should probably go with SaaS or PaaS.
Are you targeting a market size of over 100,000 users? Then SaaS or PaaS is most likely off the table. Custom development is the best choice here.
The biggest advantage of custom development is personalization. You will be able to design it exactly the way you want it to be by building a marketplace from scratch. If you chose to outsource, with a competent firm taking care of the building, you get to focus on the business side of the marketplace, which is no small benefit.
Our underlying recommendation is to find a solution that is scalable and gets your idea out into the world the fastest. Launching fast allows you to find product-market fit, start validating your idea quickly and understand what your users need. When it's time to upgrade, you have solid feedback to help you prioritize the most important features. Depending on the path chosen, a quick MVP can mean thousands of dollars and months shaved off your build budget.