Cost of Building a Marketplace Website [Full Estimate]

The marketplace notion represents the e-commerce platform, an online store that delivers data regarding the product or service of third parties.

On the whole, the marketplace is a streamlined online platform for the provision of goods and services. The same item can often be offered by numerous sellers, which makes the price highly variable.

Due to the fact that online marketplaces aggregate goods from a great diversity of purveyors, the selection of these products is wider, and the availability is higher than in specialized physical spots. Since 2014, the number of marketplaces on the global Internet has grown rapidly following the growth of their demand.

The concept of each marketplace is diverse, yet there are some mandatory requirements that they must comply with in order to be named that way.

• There is a primary structure that manages all the operations performed on the website.
• The marketplace offers the products of other vendors and has an elaborate algorithm due to which they begin trading.
• Terms and conditions of cooperation are well-defined and clear for all the parties: commission, requirements for delivered goods and quality of service, etc.

The necessity of making online purchases has risen substantially since the global pandemic has drastically changed the life of society. Statista's analysis indicates that online sales have taken a highly vital point in retailing. In 2021, the e-commerce industry was calculated to take over 19.6% of global retail sales as a whole. It is projected that by 2025, the Internet platforms for shopping will comprise approximately the fourth part of entire retail sales worldwide.

Besides, according to recent insights, world-famous Amazon and eBay are nowadays the most viewed marketplaces on the Internet.

Apart from this, the market cap of the first e-commerce sector leader is equal to $1,735 billion. Due to June 2021 insights, one more enormous online shopping platform has overtaken Alibaba, Pinduoduo, and JD.com. For the same time gap, Alibaba's market cap is estimated to be $614.8 billion.

Therefore, despite the pretty strong competition, the modern world's conditions can't do without the two clicks, easy purchasing, and order placement.

Before we jump right into the costs, let’s see what marketplaces are.

There are three types of e-marketplace:

• Vertical that occupies one area or niche.
• Horizontal that offers goods from a few categories with a secondary character in common
• Global that offers items or services from a wide range of categories

Let’s take a more detailed look at them.

They offer goods from multiple sellers but the type of items is the same. Vertical marketplaces are exclusive suppliers that offer specific goods and have topnotch sellers. For instance, on Zillow, it’s free to list a home for sale or rent. The platform works with many owners and agents/brokers, but their services incorporate purchasing, renting, or selling apartments.

Another bright illustration of the vertical marketplace is ThredUp. According to 2021 statistics, the number of its engaged buyers is 1.24 million, and the number of active sellers is about 428 million. Document Thredup distribution center has over 100 million items processed. The number of offered brands is 35 thousand by 2021.

Horizontal e-marketplaces sell goods or services in several categories but with a single common characteristic.

For example, Couchsurfing works with and for travels, Etsy sells handmade items in eight categories. DogVacay offers different services but only to people with pets.

One more instance of horizontal marketplaces is a widely-used platform Poshmark. Forbes states that it is striving to market with a valuation of over $3 billion. The number of registered users is 70 million, and the total sum of purchased items from the moment of establishment is $4 billion.

Global marketplace offers a great diversity of goods – books, furniture, grocery, apparel, toys, software, appliances, and a whole lot more. They consolidate lots of market segments to satisfy more consumers. This type of online marketplaces is focused on customers whose priority is high speed and lowest price. There are many categories of goods, and sellers’ price offers are competitive. Amazon is a great illustration. Yep, it became famous for selling books, but today you can buy literally anything on Amazon. eBay works in a similar way.

Everyone knows an incredibly popular instance of the global marketplace, which is AliExpress.

AliExpress is expected to raise its cross-border clientage to 30 million by 2030. In January 2021, there were 528 million visitors on this platform. AliExpress direct traffic was 60% for the same period of time. In January 2021, there were 528 million visitors on this platform. AliExpress direct traffic was 60% for the same period of time. AliExpress is worth $3.63 billion as of February 2021.

We can also categorize marketplaces by target audience:

• B2B (business-to-business) — websites that sell various products from one business establishment to another. Multiple wholesalers are allowed to connect to purchasers to provide them with products/ services in bulks.
• B2C (business-to-customer) — business provides products/services directly to customers.
• P2P (peer-to-peer), sometimes called C2C (customer-to-customer) — websites are intermediaries between product owners and sellers interested in it.

The approach to profit generation should be particularly carefully selected in case you are planning to launch an online marketplace - the Internet platform where consumers can purchase and order goods or services from a range of suppliers. Let's list what options you have to make your business fruitful.

One of the most widely-applied methods to monetize an online marketplace is to set a fee per each financial operation. There are three ways to integrate this type: the commission is requested from the supplier, the purchaser, or both parties to the transaction.

This type of monetization is highly appreciated by the sellers who place their products. This is due to the fact that when operating under these terms, they are not charged by the online platform until they generate their first revenue. For the owner of the marketplace, this is also convenient since all cash flows are performed and processed by the web solution. Put it in practice, eBay requires a commission on sales.

The point of primary significance for the marketplace owner is to architect a unique and handy platform so that the parties in the financial operation do not try to work around the intermediary. For buyers, not only are original items and a huge assortment is essential, but also the security of the payment completion. Suppliers, in their turn, appreciate a solid regular income and a stable flow of customers from the marketplace.

This model assumes that specific (or all) users of the marketplace are obliged to stably be charged for a set amount of financial resources to have access to the platform and the opportunity to attract a new audience or providers.

In contrast to the first mentioned approach, this type is excellent for an online platform that offers expensive products or services. Talking about clients, a commission for subscription is suitable in case they are planning to frequently apply the opportunities of the particular marketplace.

Online stores that aggregate a vast number of ads are described by a pay-per-placement monetization type. Its concept is similar to the posting of paid ads. This model is a brilliant choice when the supplier would like to cover the capability to engage an extended client base, and the platform is able to ensure a sufficient audience. The ad-fee business model is pretty beneficial for the B2B segment as well.

Fees for ads can be used in combination with other business models, as the Etsy marketplace does. Along with popular items that are successfully sold every day, there are many that never have once interested buyers. Using only sales commissions, the marketplace would not be able to generate income from the huge array of participants. And listing fees allow you to make money by listing items that are not very marketable and may never be sold.

Paying the owner for contacting the customer or lead generating is a popular business model commonly implemented in many modern marketplace platforms. Their users leave requests and wait for offers and responses from appropriate vendors. The marketplace takes money to connect a performer with a potential client who is interested in its services. This option does not always guarantee a successful deal. But compared to placing ads, the probability of a positive outcome here is substantially increased.

The essence of this monetization model is that the consumer can benefit from the basic functions of the service for free and pay for advanced features if desired.

Also called freemium, this type differs from the trial version, where the user gets free access for a certain period of time. This model allows you to use the essential functionality of the site without any restrictions. Paid services are a kind of reserve, which the client may demand to receive an enhanced convenience or security.

Featuring is an opportunity for vendors to reserve a more beneficial placement for their product or service. This model is similar to advertising. Yet, in this case, as a rule, ads are placed on the site for free, and vendors can pay the marketplace to get their listing in a higher and more viewed position on the website: on the home page or on the top positions of certain categories.

Choosing this business model, it is worth bearing in mind that users are prone to have more negative and irritable reactions to advertising. Therefore, this monetization model works more effectively in more narrow niche projects, where sellers place ads and offers that match the single general topic of the website and the interests of the audience.

It is worth mentioning that in case you would like to architect the platform for digital objects trading, the aforementioned business models still remain relevant.

To find out how much does it cost to build an online marketplace in 2022 you should come up with the essential features and proceed to MVP development services. It’s a good chance, the product creation will require to implement in-app search (technology: Elastic Search), payments (Braintree, Stripe), and online chat (Firebase). And here are some other technologies we use for the e-commerce and retail software development.

Front-end is a client-side part of the website. It incorporates the whole interface, buttons, and menus that users interact with directly. You can find an example of the front-end web app development services solution stack below:

• Angular
• JavaScript
• WebStorm

Back-end is a server-side of a platform, invisible to the user. It accumulates, settles, and provides all the essential data from the data access layer on request and is necessary to make all features from the user side operate well. Here’s the tech stack example for back-end development :

• Node.js
• EC2
• MySQL
• Swagger
• Express 4
• Sequelize

To implement the solutions into the product we usually use third-party services. An API integration allows developers to connect multiple applications. APIs provide data exchange among their systems and this way enables them to implement various tools into the product. Here are some of the tools mentioned above:

• S3
• PayPal
• Stripe
• Amazon SES
• Twilio

Creating MVP helps to answer the question "how much does it cost to build a marketplace website". It is determined by the set of essential features your project requires. Starting a website architecture with an MVP version is a common practice. MVP comes only with the much-needed features, and you can add more sophisticated ones on the way. After all, the faster you launch the marketplace, the quicker you start getting feedback. And figure out what to add or improve. Let’s use Etsy as an example to show the features of an MVP marketplace.

Before we start, we’ll split the feature list into two categories:

• Customer’s side
• Seller’s side

Time to check them.

Registration

To get access to all the opportunities of the marketplace, users must complete the signing-up process. To do this, they have to provide their personal info like name, email and set a password. What is more, customers should agree on Terms and Conditions. Another primary feature for clients is the opportunity to share feedback and ask questions through a Help Screen.

Here’s how the registration goes on a horizontal marketplace, Etsy.

The marketplace asks for the first name, email, and password. They offer social sign up via Google or Facebook, and the links to Etsy’s terms of use and privacy policy are right there.

User Profile

Authorized users will need to enter and edit their profile details. To illustrate, it may be adding or changing a delivery address, subscription plan, payment method, email, or password. Furthermore, they should be able to check their current/ previous order history.

Homepage

The landing page is a calling card of the platform. The best way to develop the interface is to make it intuitive and user-friendly.

Needless to say that the laconic sophisticated UI/UX design also plays an integral part here. Add the last watched product section and relevant suggestions to your homepage. It is extremely convenient for users. Another idea is to add a list of popular products to the homepage. That should help users make a choice (or add something extra to the cart).

Advanced Filtering

To find the suitable goods faster, customers should be able to apply a system of filters (location, price range, conditions, etc.).

Product Page

This page should comprise a detailed description of the product, some photos, videos, and price.

Chat implementation

Customers are able to reach out to suppliers with the help of messaging to bargain, discuss shipping details, or request extra information.

Shopping Cart

The list of products should be displayed here. Users may edit its quantity or remove them from their cart. Users can check the price details, fees or discounts, promocodes, delivery and payment options, and add comments. The next stage is proceeding to the payment method. When it comes to MVP, a credit card or PayPal is sufficient.

Administrating Tools

Clients are allowed to manage vendors by the following actions:

• Searching
• Filtering
• Deleting
• Blocking

Feedback

The clients are allowed to leave a review and briefly tell about the cooperation experience with a particular vendor.

Registration

The seller completes the registration process or signs in with existing social media accounts. After that, the supplier is required to provide personal data:

• Company name
• Phone number
• Address
• Links to social media
• Ratings/reviews
• Testimonials

Some types of e-commerce marketplaces offer to change the account type from a buyer to a vendor in the profile. We’re going to discuss this feature later on.

Ads

To publish an ad, a supplier should categorize the item and provide an essential detailed description that may incorporate current condition, price, delivery methods, available quantity, existing colors, size range, etc.

Chat implementation

Vendors can communicate with clients via online chat to clarify the deal details.

Payments

Your MVP marketplace must allow sellers to withdraw their income utilizing various payment methods. Sellers need to view payout details (like the amount earned) and have an option to add or change the payout method.

Reviews

A section where the supplier is able to overview personal rating,comments and feedback left by the customers.

Changing the Account Type

It’s time to talk about the buyer-seller switch I’ve mentioned. What if an authorized user decides to become a seller? Do they need to create a second account? Many marketplaces offer a direct switch from the buyer to the seller within the user’s account. It’s usually done for free, but platforms charge a selling fee (Etsy charges $0.20 for listing).

Or they use the Amazon-like approach, offering a professional sellers’ account (Amazon charges $39.99/month for that) + additional selling fee. So, users can change their account type in profile and start managing their shops – pick a name, add items, set up billing, and so on.

Administrating Tools

Admin panel allows the seller to adjust settings for various purchasers categories, such as delivery/ payment methods and price and manage goods. A standard MVP marketplace admin panel offers:

• User management. The list of users, the details screen, edit user option, delete or block user, create an account manually, users search.
• Messages. Getting and answering messages from 'Contact us' form.
• Product management. Same as for sellers.

We’ve discussed a very basic list of much-needed e-commerce website features. Note that we did not include integrations with payment systems like Apple Pay/Google Pay, favorites, or personalized push notifications. These points should be discussed with your software solution provider.

So, let’s finally proceed to the cost of building a marketplace website estimation.

How did we get this number? It’s simple: the more hours devs spend on website development, the more it costs. Our business analyst estimated how many hours it will take to develop a web marketplace (including the sellers’ part, backend, and admin panel). Then to find out the cost of how to build a marketplace we've multiplied the number of hours by $50. And here’s where these numbers come from.

One more thing: in 2021, 72.9% of all purchases will be done from mobile devices. That’s why we suggest adding an adaptive design that makes web pages render well on different devices, including smartphones. We approximately estimated it as 30% of the frontend part, not including the admin panel.

So in our case, adaptive web design cost is around 100-120h ($5000-$6000). Total: 688h features + 136h admin panel + 100-120h adaptive design = 924-944 hours or $46,200-$47,200.It’s hard to tell the cost of creating an online marketplace without any project details. That's why the numbers above are approximate. In general, a marketplace website may cost from $41,000 to $280,000 and up. It all depends on its complexity, features, and region where you hire developers.

Besides, the chosen hiring option is a cost-determining factor as well. There are the three main hiring options you are able to choose from:

The product development is a responsible and complex project, which requires lots of attention and conditions of various aspects. However, cost to build online marketplace can always be optimized, provided that you apply to credible, reliable, and trustworthy partners with excellent portfolios and reviews which will speak for themselves.

To give you an idea, here’s how much the marketplace website costs in 2022 in different regions (rates are taken from Clutch):

• Central Europe — $41,200 (based on $50/h)
• Eastern and Western Europe — $82,400 (based on $100/h)
• USA — $123,600 (based on $150/h)
• Australia — $82,400 (based on $100/h)

In order to find out the most accurate cost for the online marketplace architecture, you should apply to a certified software development company. A team of professionals will prepare you an estimate based on your requests, as well as complete consultation concerning the final product and the development flow.

Cleveroad is a software development company with headquarters in Central Europe, Estonia experienced in a wide range of domains, such as Healthcare, FinTech, and Streaming. We’ve completed over 170 successful projects delivering full-fledged softwares to startups and businesses of all sizes since 2011.

Cleveroad is a trustworthy partner who can offer a wide range of IT-related services and digital products created from scratch according to your requirements. They optimize workflow efficiency, help overcoming different business issues, and comprise many competitive advantages.

We eagerly help startups, SMBs, and enterprises fulfill their goals and implement all ideas of our clients into real products.

To maximize the collaboration efficiency with Cleveroad for our clients, we offer a row of adjustable cooperation models:

• Time and Material. With this model you pay exceptionally for the work accomplished and the time required for this. This model is efficient for large-scale projects with undefined or dynamic requirements.
• Fixed Price. Cleveroad specialists will calculate the total cost of the project development prior to starting the work, so the client will know the agreed final price which will remain the same till the cooperation finish. Such conditions suit the projects with defined deadlines and requirements as well as the fixed budget.
• Dedicated Team. By working with the dedicated team, you get top-class developers with a comprehensive experience in the industry you need. You can expand your team with additional specialists, gather an agile-oriented team for a new project or maintain and update the existing one.

Cleveroad is highly experienced in web and mobile app development services for B2B, B2C, and C2C marketplaces of any complexity and focus. We develop e-commerce software that help SMBs and well-known brands to reach business goals and increase their value.

And we’d like to tell you about our P2P marketplace we’ve built for our client.

Meet AYIO, a P2P marketplace that helps you find specialists in different fields – from travel to plumbing.

This platform comes with a complex search system, a custom payment account (so users get their pays faster), and real-time activity tracking of income and expenses.

Want to learn more? Check our case study and look through the portfolio page.