Last Updated: October 03, 2023
In today’s digitally-enabled world, a wide majority of service industry professionals operate offline. They are fragmented at a level where it is arduous for them to reach new customers, eventually clipping off many growth opportunities. As a result, their services stay limited to hyperlocal despite having an impressive work portfolio and the potential to grow. Online services marketplaces solve this problem for service providers by providing a platform dedicated to helping them find more work and recognition.
Also referred to by various terms – such as a handyman marketplace, gigs marketplace and freelancers marketplace on the internet, an online services marketplace is a platform that allows multiple service providers to register themselves and sell their services online. These services can range from blue-collar jobs, such as plumbing, carpentry, electrician, and gardening to white-collar or common freelancing jobs such as digital marketing, graphic designing, branding and content writing.
Key perks of online services marketplace for service providers include access to a wider audience, increased online presence, payment security, and flexibility in terms of deciding their own rates and schedules. Some services marketplaces also have a reverse search option where customers upload a task and service providers place their bids for getting the job. These marketplaces add the benefit of autonomy for service providers who get more freedom in job selection.
In this article, we have shared more insights to help you start an online service marketplace. After reading this article, you will understand the operational model of online service marketplaces and the best method to develop one.
As per statistics, the handyman services market alone is expected to grow at a CAGR of 17.2% in the period 2022-2032. In terms of digits, this amounts to a growth of $1.31 billion over the previously recorded $339 million, totalling $1.65 billion. The growth rate for the freelancing platforms market is equally impressive. At an estimated figure of a whopping $18.3 billion by 2031, the freelancers platform market is growing at a CAGR of 15.1% in the forecast period 2023-2031.
While the growth rate for both the handyman and freelancing industries is vividly astonishing, a wider aspect is required to understand the business potential in the overall online services industry. For instance, let’s take an overview of the primary growth factors that back the aforementioned growth statistics:
The online services industry is still in its nascent stages and is yet to see exponential growth. However, there already exist well-established businesses that have captured enormous market size. Entrepreneurs interested in launching an online service marketplace can take reference from these businesses to develop their platform.
|Apps||Launch Year||Estimated Revenue|
Launching a digital venture encompasses more than having a digital touchpoint or platform to conduct operations. It further extends to having access to the right set of digital tools at your disposal to help you manage and streamline operations in time. Likewise, having a well-designed platform also cannot be overlooked. A user-intuitive and aesthetic platform incentivizes visitors to engage more and is more likely to convert. Based on this information, entrepreneurs are required to understand the operational model of an online services marketplace along with the key elements needed to launch one.
The following operational model is only for exemplary purposes. The actual model can vary from business to business and you may also need to customize the operational model as per your business preferences.
Alternatively, some online service marketplaces also allow customers to create jobs that service providers can search and place bids. The rest of the model remains the same.
Having three user-types, which are the admin (marketplace owner), service provider and customer, an online services marketplace requires a separate set of features for all these user-types.
|Order management (view and edit orders)||Social media login and sign-up options||Social media login and sign-up options|
|User management (view, edit, block and remove user profiles)||Profile management (create, view, edit and remove profile)||Appointment scheduling calendar|
|Payment gateway management||Portfolio management (upload, view and edit portfolio)||Profile management (create, view, edit and remove profile)|
|Portal management (create, edit and remove web pages)||Order management (accept, reject, view and mark orders)||Job/task management (create, view, edit and accept bid)|
|Commission management (set and edit commission rates)||eWallet (view and withdraw earnings)||Alerts and notifications|
|SEO management (image alt tags, page URLs, meta descriptions, and more)||Bidding management (view jobs, place bids and review bids||Chat module|
|Discounts and promotions||GPS routing||Multiple payment options|
|Data analytics and reports||Chat module||Rate and review service providers|
|Alerts and notifications||Rate and review customers|
|Ratings and reviews management||Alerts and notifications|
Being an online platform, an online services marketplace owner can diversify income from various revenue streams:
To start your online services marketplace and conduct full-fledged operations, entrepreneurs are required to set up the following webpages:
You can bookmark this article to save the features and webpages list. After having a complete idea of primary requirements, entrepreneurs can decide to build their online services marketplace or buy readymade software for the same.
The first approach to build an online services marketplace is to rely on the traditional Software Development Lifecycle (SDLC) framework. This framework defines the various processes and stages of software development including design, development, testing, implementation and maintenance. SDLC helps software developers in identifying key requirements, organizing source code, eliminating low-quality code and maintaining the development budget.
The waterfall development methodology follows a linear approach to development where each and every phase of the methodology depends on the outcome of the precious phase. Meaning, at one time, developers can only work with a predefined set of requirements. To fulfill any additional requirement or introduce changes in the initial requirements, the software development team will have to restart the entire development process. As returning to a previously closed phase is not possible in the waterfall methodology, entrepreneurs and business analysts are required to carefully prepare BRD, SRS and FRS documents.
The agile development methodology reduces the delivery timeline of the software by breaking the software into multiple development sprints. In contrast to waterfall development, agile also does not require a complete set of requirements to begin. Instead, the project starts with bare minimum requirements or with the development of an MVP software and then more features are added based on early adopter feedback. This process of improving the software based on early-adopter feedback in multiple repetitions is also known as iterative development.
As new features can be introduced between two different sprints of the project, there’s no need to have a predefined set of features and entrepreneurs with just a vision can opt for agile development.
|Waterfall Development||Agile Development|
|Develops the entire software in one go||Software development is divided into multiple sprints|
|Introducing new changes is not possible in the software||New changes can be introduced after each and every sprint|
|Cost and time effective||Not so cost effective in the long run, but highly time effective because of multiple sprints|
|Software developed in not up-to-date||Software developed is up-to-date with all latest features|
|Requires predefined features||A set of predefined features is not required|
|Cannot be used to test new business ideas and markets||Can be used to test new business ideas and markets|
|More suitable for small-sized businesses||More suitable for medium-to-large size businesses|
Both waterfall and agile development approaches are useful software development methods. However, in today’s time, using readymade solutions is more reliable because of multiple reasons that we have discussed below.
The second approach emphasizes saving both time and capital by investing in an off-the-shelf, readymade online services marketplace software. Such type of software comes with all necessary features right out of the box. Additionally, these features are already tried and tested in various markets to ensure business feasibility and performance. In comparison to building a service marketplace from scratch, using a ready-made software is more cost effective and time-saving. Even in the readymade software category, there are two popular types of software:
These software are hosted on the business owner’s own choice of server. Meaning, the server can be both on-premise or a third-party hosting service. The key benefit of using self-hosted software is that entrepreneurs can select a more secure or faster server for themselves. Their selected server can be a shared or private server as well, giving them complete control over the software.
You can also start an online services marketplace with the help of SaaS software. The term SaaS refers to Software-as-a-Service. In this type of readymade software, the online platform is hosted on the software provider’s server and provided to the business owner as a monthly service. As the server is not owned by the business owner, he does not get complete control over the software and has to adhere to the software provider’s terms and conditions.
|Self-Hosted Software||SaaS Software|
|Hosted on the business owner’s choice of server||Hosted on the software provider’s own servers|
|One time cost||Monthly recurring costs|
|Come with all features fully unlocked||Features are divided into multiple subscription packages. Only the most premium package gives access to full features|
|No cap on users, transactions and listings||Number of users, transactions and listings can be limited|
|Highly cost-effective in the long term||Only cost-effective in the short term. Costs tend to add up with time and business growth|
For launching a services marketplace, our recommended readymade software is Yo!Gigs. It is a full-fledged self-hosted service marketplace solution that comes with three different dashboards for streamlining operations:
Through Yo!Gigs, business owners can connect hundreds of service providers at one place and launch a one-stop destination for finding handyman professionals. Some other reasons to invest in Yo!Gigs service marketplace software are:
Based on the aforementioned information, we can come to the conclusion that both building and buying a services marketplace have their own benefits. Still, considering the huge cost difference between the two approaches and the easy availability of advanced technological solutions, buying a tried and tested ready-made on-demand services marketplace solution makes more sense. On the contrary, bespoke development is practical in situations where entrepreneurs have very unique requirements or want their service marketplace platform to be built on a very specific technology.
Any business idea only reaps results when adequate efforts are put in the right direction. While an online service marketplace is an asset-light business idea, it will still require efforts on two important fronts, which are technology and management. While powerful technology will help you simplify operations for both customers and service providers, appropriate management will drive you toward your overarching goals. In the initial stages, you may also need to invest money and time in marketing but once you onboard service providers, it’d be easier to grow your services marketplace business.
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