Last Updated: 24th September, 2024
Since the onset of the digital age, slowly and steadily, physical products around us have been turning into digital consumables, reaching users on multiple devices. And as these devices become an inseparable part of human existence, so do such media. Given their significance, both their consumption and creation has spurred a digital products industry that continues to grow impressively at a CAGR of 10.61% riding on the widespread acceptance of its almost “godsend ally” – eCommerce.
Naturally, a digital products marketplace platform can give aspiring entrepreneurs realistic immediate gains in terms of revenue generation―while also allowing them to establish a brand that is ready for a future, brimming with the possibilities of accelerated digital goods consumption. In this blog, read all about how to build digital products marketplace with ease.
There are several reasons why launching a digital marketplace platform can be a viable business strategy. Here are a few of the potential benefits that a digital products marketplace can give entrepreneurs planning to start such a business.
Access to a growing market: Leveraging a low barrier to entry, a Digital Products marketplace gives entrepreneurs quick access to a promising market, that is growing at an accelerated pace.
Lower overhead costs: With no need for physical warehouses, and also backend retail processes like shipping, digital marketplace operations incur relatively low overhead costs.
Higher profit margins: With digital products, there are typically lesser production costs, resulting in higher profit margins. Moreover, it is easier to source exclusive products, that can attract higher prices.
A flexible eCommerce Business: A digital products marketplace can operate from anywhere with an internet connection. This can allow you to choose the location of the operations’ main office with greater flexibility.
Potential to scale and expand business operations globally: With lesser complexities, digital e-marketplaces are easier to scale.
There are some challenges in this business as well. These are discussed below:
Piracy: Products that you offer on your marketplace may be offered parallelly through illegal pirated channels.
Unauthorized Recirculation: Products available on your marketplace can be pirated further. Thus, intellectual property protection is a consideration.
The solution to these challenges can be met with adding purpose-built functionalities in your eCommerce marketplace platform for digital goods. This is discussed in detail later on in this article.
Founded by Collis Ta’eed, Cyan Ta’eed, and Jun Rung in 2006, Envato digital goods marketplace operates globally and is one of the largest players in this industry. It is popular because of its vast range of creative assets including templates, themes, graphics, and stock footage. Envato is known for its community of sellers and its subscription service, Envato Elements.
Headquarters: Melbourne, Australia
Total Revenue: Estimated $100+ million
Niche: Creative assets for designers, developers, and marketers
Founded in the year 2012, by Aaron Epstein, Chris Williams, and Darius A. Monsef Creative Market operates primarily in the US and caters to designers and creatives. It’s popularity has grown because of its user-friendly platform and wide selection of digital products such as fonts, graphics, and themes. Creative Market is a haven for independent creators by giving them a platform to sell their work.
Headquarters: San Francisco, USA
Revenue: Estimated $10 million
Niche: Design assets including fonts, graphics, and photos
Founded by Sahil Lavingia in 2011, Gumroad is another global digital goods marketplace. It offers an easy-to-use platform for creators to sell digital products directly to consumers. It is gained traction because of its simplicity, low fees, and support for a wide range of digital goods, from ebooks to software. Gumroad is particularly favored by independent creators and small businesses.
Headquarters: Remote-first (no central HQ)
Total Revenue: Estimated $15-20 million
Niche: Digital products like books, courses, software, and art
Etsy the popular eCommerce platform was founded by Rob Kalin, Chris Maguire, Haim Schoppik, and Jared Tarbell in 2005. Renowned all over the world for its unique operating space, it also has a strong presence in the US. It is gained its because of its marketplace where handmade and unique digital goods, such as downloadable art and design elements, are available. Etsy has built a strong community of independent sellers.
Headquarters: Brooklyn, New York, USA
Total Revenue: Over $2 billion (including physical goods)
Niche: Digital art, printables, and design files
Founded by Maris Dagis in 2011, Sellfy is helping creators and businesses all over the world, sell digital products through their own storefront. It is popular with the users because of its focus on simplicity, integration with social media platforms, and wide product support, from digital downloads to subscriptions. Sellfy is ideal for small to mid-sized creators.
Headquarters: Riga, Latvia
Total Revenue: Estimated $5 million
Niche: Digital products such as ebooks, music, and design assets
Before you proceed to build digital products marketplace, gain a deeper understanding of such a business. Let’s analyze the operations and revenue generation in digital goods online multi vendor platforms. Such a platform works like a multi-seller eCommerce website. At a primary level, the participants are Admin(s), Sellers, and the buyers. Following are the roles of each platform participant that make such a marketplace function smoothly.
Marketplace-owning authorities set up the digital marketplace platform infrastructure and assign Admin duties. The Admin manages backend operations in the marketplace. Here is the Admin role in detail:
Admin Workflow:
In a multi-seller digital marketplace platform, third-party sellers participate in offering their products to be offered on the platform. This can be exclusively or in addition to the marketplace owners themselves. Here is the workflow of the sellers:
Seller Workflow:
While these are seller roles at a basic level, of their operations, there is a lot more to marketplace operations for sellers – data-driven analysis, shop promotions, advertisements, and more also give sellers further opportunities to purpose-driven their business on the platform for both immediate and long-term goals.
Buyers on the digital goods marketplace engage at different stages during and after their purchase. Their workflow is outlined below:
Buyers’ Workflow:
While these are the primary participants in an eCommerce marketplace, more contributors can be connected to the platform at a secondary level, participating in business generation activities, and more. For instance, Affiliates.
As mentioned above, a digital products marketplace functions with 3 primary participants. The one thing that can vary, though, is the role of the sellers. Let’s see how.
B2C business model: On this platform, businesses sell to consumers. For products such as software, the marketplace sellers will be typically businesses. Such marketplace functions on the Business 2 Consumer model.
P2P Business Model: Conversely, for products such as creatives, a Peer 2 Peer business model is more suited, as sellers may include solopreneurs, freelancers, and other independent creators. Here, the transactions take place between one consumer to another.
The decision to opt for the business model depends upon the niche the marketplace operates.
Suggested Read: Exploring B2B, B2C, & C2C business models in multi-vendor marketplaces.
Robust revenue generation strategy will be key to your go-to-market. Before your build digital products marketplace, understand the revenue channels available with you. A multi-vendor setup allows for multiple revenue streams. Let’s understand how Digital products marketplaces generate revenue on the platform.
A commission fee can be charged for the sale of the products on the marketplace platform. This can further be done in two ways:
Products listed on the platform can also be levied a fee. This fee may be one-time or recurring and can be in lieu of or in addition to the sale commissions.
The platform may choose to offer a subscription fee to the users. Generally, these are exclusively for the sellers. For the buyers, the subscription is popularly termed a membership fee. It typically entails additional benefits to the buyers.
Another way to earn revenue in a Digital Goods marketplace is access passes. These work like prepaid vouchers that allow buyers access to products on the platform with preset conditions – tied to a specific number of days, downloads, download bandwidth and/or more. These can also be used to leverage events, festive season offers, webinars, or more.
The eCommerce website assets like banners and others can be offered to the sellers to display advertisements of their products/shop/brand. A certain advertisement fee can be charged in lieu of the advertisement opportunity offered to the sellers.
These were some of the various revenue generation opportunities available in a digital products eCommerce marketplace. The marketplace business can prudently strategize the revenue streams that work best for the platform. The decision criteria normally hinge on the platform’s USP, target market, and the nature of the digital products being offered.
eCommerce has come a long way since its inception – the likes of Amazon & co have raised the bar in providing users with a purpose-driven user experience. The users are now accustomed to getting more from their eCommerce shopping. In fact, each time there is an update from these popular platforms, there is palpable anticipation of what to expect.
In such scenarios, getting the features right for your business will be a key consideration to drive the success of your brand. Unmistakably, this is a key component to analyze when you build digital products marketplace. Let’s understand, which eCommerce features are key to purpose-drive positive results in a digital products platform:
In the current age, buyers like to make informed buying decisions. Product preview can help buyers to experience the product online, before making the purchase. The key to the long-term success of the business is satisfied customers, this is one step in ensuring that.
Offering existing customers product updates can go a long way in building brand reputation. For instance, a sequel or extended copy of a popular ebook to customers who have already purchased will help foster brand loyalty. Additionally, monetizing these updates can also be considered to add revenue for the business.
Digital product marketplaces can scale expeditiously due to low barrier entry for the sellers. Moreover, product definitions can be less precise for buyers to find, especially in P2P marketplaces. To navigate these challenges advanced search capabilities are a prerequisite for buyers to be able to find precisely what they are looking for.
A well designed UI and a UX with seamless workflows allows the users to get around their shopping in a well structured manner, leading to user satisfaction. This further fosters consumers’ loyalty to the brand.
In the current tech driven world, users demand a more curated and efficient ecosystem for their needs. Hence offering a dedicated user dashboard with organized menus leads to better user experience.
To effectively streamline your business in line with the products on offer, and market trends, you will need options for multiple revenue channels. This adds to flexibility, and leads to overall higher gross revenue. Moreover, based on user response, you can consider adding or removing revenue streams, whenever there is a need to do so.
To navigate competition, establishing the presence of the business, and building a distinct brand identity hinges on the effectiveness of a robust marketing campaign. These campaigns are fueled by effective content, outreach, SEO, and other strategies. If the capabilities of your digital products marketplace encapsulate result-driven marketing features, accordingly, the outcomes will be positive.
Digital Products can have lower development costs. Hence, there is are higher opportunities for businesses to offer more discounts coupons, or product bundles. Not only does this attract the buyers, it also leads to higher revenue for the company and the sellers.
In a digital marketplace business, there is no shipping involved, so it is not constrained by limits of your shipping fulfilment reach. Hence, farsight warrants the need for multilingual support that allows users to browse the website in their own language. Likewise, support for multiple currencies that lets them pay in their own currency.
Since digital products marketplaces can involve P2P operations, hence inculacating P2P features are important. So giving sellers capabilities to audition their products effectively, sell efficiently and hence build their brand on the marketplace is pivotal to success. This further allows the marketplace to onboard sellers easily. Features like separate seller storefronts, capabilities for detailed product listings, separate user panels and more allow sellers to achieve their desired objectives with a higher chance of success.
System security is a challenge not exclusive to digital marketplaces but to eCommerce in general. Still, the chances of attacks are even higher as products here are in a digital format. Hence, the security of the system, payments, user data, and others are all primary concerns. A robust platform will therefore be detrimental to the long-term success of the business.
With a brief understanding of the operations and basic platform functionalities, let’s proceed further with some steps that can help in launching your own digital products marketplace.
The following steps are brief of the process that needs to be followed. Each of these steps can methodically lead you to an action plan to launch a marketplace platform.
Every successful business endeavour is supported by precise planning. Likewise your digital goods marketplace launch needs robust planning. Here, an extensive market analysis can give the requisite insights to tailor your go-to-market strategy.. The following inclusions can be part of the market analysis.
All work done at this stage can prove to be a launchpad for the platform. Data-driven insights help in navigating uncertainties and help in formulating robust market strategies.
In the sections above, we discussed possible operative business models, revenue channels in a digital products marketplace. With the data gathered in the market analysis, you can chalk out a platform strategy that can work best for your business.
To make this decision your primary considerations will be the products on offer, target audience, competitive landscape, expected business overheads, and the scope of your project. It is recommended that a lean approach is adopted, balancing both short and long-term business objectives.
The features of your eCommerce marketplace platform are the capabilities to allow the users fulfill their objectives. Including the right set of features is key to the success of your brand. We discussed some of the key features that are required in a digital goods business. However, these features can vary depending on the niche you want to enter. Moreover, there are fundamental eCommerce features that are required as well. Depending upon the data accumulated in the step 1, i.e. market research, chalk out a list of must have eCommerce features needed for online digital products platform.
eCommerce is a complex mix of operations. Apart from just online sales, there are multiple business functions like strategies, taxation, accounting, marketing, and others. A digital products marketplace is no different. In this business, you will find multiple third party business solutions that facilitate or/and augment your eCommerce operations. All of these are connected with your eCommerce platforms via API integrations.
There are tools like MailChimp (email marketing), HotJar (Analytics), Twilio (messaging) payment gateways, and others. Moreover, depending on your business idea, a digital goods eCommerce marketplace can require further third party business solutions. Based on your market research, a list of best suited business solutions can be connected with the marketplace.
When you are about to build digital products eCommerce platform, you will come across a choice between two development approaches. The first one is straightforward. Employ, or hire a dedicated team, and build the platform from scratch. Alternatively, the whole process can be outsourced to a custom eCommerce development company.
While this can give more control over the development process, it can be more time-consuming and resource-intensive. This process gains significance if the outcome includes extensive distinct requirements. For instance, enterprises that are considering leveraging their internal systems with the digital marketplace platform. Unless that is the case, there is another way that gives you a way around higher costs and market time.
Like key functionalities, platform underpinnings can be predetermined, and are the same for contemporary digital marketplaces – pre-built solutions can be used instead of the traditional process of custom building the entire eCommerce platform.
This is where the second approach comes into the picture. Depending upon the choice of the solution, readymade eCommerce solutions for Digital Goods marketplace can be used to launch a digital products marketplace in a matter of days, and at a fraction of the cost! The best turnkey eCommerce solutions, are also customizable and scalable, and allow future platform additions, if needed.
Once your digital goods online marketplace is set up and functional, the next step is creating brand awareness and driving traffic to the eCommerce platform. This is where a well-planned digital marketing strategy comes into play. Digital marketing includes multiple tactics that help achieve this objective.
From optimizing your website for search engines to engaging target users through ads and social media campaigns, a well laid out digital marketing plan can position your eCommerce business for success. Each of these efforts ensure your marketplace brand reaches the right audience and drives conversions.
By following these steps, you can launch your eCommerce marketplace platform in the market.
FATbit Technologies is a leading software development company that leverages its extensive domain expertise in the eCommerce ecosystem to give end-to-end eCommerce solutions for businesses of all sizes. It offers a readymade eCommerce marketplace solution, Yo!Kart, that can let you launch a digital marketplace straight out of the box. Additionally, it offers Agile eCommerce development services for customization and extensive eCommerce development needs. Finally, there is a suite of eCommerce digital marketing services available for a purpose-driven market impact in the eCommerce industry.
Yo!Kart is an industry-leading self-hosted multi-vendor software that comes with a range of eCommerce functionalities that can power contemporary digital products marketplaces. Furthermore, it offers multiple pre-built API and payment gateway integrations, essential modules, and more. The customizable software is self-hosted and is offered in one-time payment packages. Yo!Kart has been used by clients globally to power platforms that include digital product marketplaces. You can launch your own digital products marketplace in a matter of just a few days using Yo!Kart. Let’s have a look at a digital products eCommerce marketplace built using the turnkey solution Yo!Kart.
Regake is a digital products marketplace for gaming products powered by Yo!Kart. It functions in multiple countries and offers gaming enthusiasts access to the best games, which also includes some rare titles. To achieve the goals, some customization was required to meet the client’s specific needs. Some additional enhancements were made to product handling, commission management, and more. The result is a global platform for gaming enthusiasts.
While this is just one example, Yo!Kart has powered 5500+ eCommerce marketplace platform, which includes many more digital products eCommerce marketplaces. Some utililize the default robust features of Yo!Kart while some have opted for customization. An overview of the Yo!Kart portfolio or its freely available demo can provide insights into the capabilities of Yo!Kart.
As technology continues to advance, digital products are likely to evolve further, drawing talented creators into the Digital Products ecosystem. Moreover, as technology continues to play an integral role in people’s lives, an increasing consumer base is added, giving better opportunities for marketplace businesses.
Hence, the digital product landscape continues to expand, offering boundless possibilities for innovation, convenience, and creative expression in our increasingly digital world. That said, starting with a digital products marketplace is a lucrative opportunity to start with an eCommerce business with a low-barrier entry niche. In this article we have covered your query of how to build digital products marketplace. Using a rich-featured readymade multi vendor marketplace solution like Yo!Kart, and following a data-driven methodical approach, you can set a launchpad for a sustainable market impact.
All innovation starts with an idea to solve real-world problems. At FATbit Technologies we are passionate about driving digital transformation to prepare businesses for a digital-first tomorrow. Let’s discuss your BIG idea NOW.
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Rohit Gulati is a Mechanical Engineer with an ardent passion for writing. With 14 years of entrepreneurship experience, he shares his valuable insights into business management through his write-ups. When not writing he loves to travel or listen to a number from U2
