The eCommerce industry is predominantly ruled by marketplace giants like Amazon, AliExpress, Etsy, and more. According to Forrestor, marketplaces also account for 63.5% of all online sales, with almost 66% of B2C sales happening only on these marketplaces. In comparison, the figures of standalone eCommerce websites look quite gloomy for a mention. With a 10.6% CAGR in the projection period 2025-2030, online marketplaces will outperform standalone eCommerce websites in all projected years.
However, despite the high market saturation and the existence of various players, the opportunity to enter the industry with your own marketplace and gain relevance is still there. With timely capitalization, solid branding, and competitive value propositions, it is possible to shake off the influence of existing players in certain regions and grab market share. For doing so, you will require strategic efforts, starting right from development to deployment.
In this article, we have focused on the various methods of developing an eCommerce marketplace from scratch. The blog will also focus on the types of marketplaces, their examples, and the primary difference between single-vendor eCommerce websites and multi-vendor marketplaces.
A marketplace is an online platform that allows multiple vendors, such as sellers, distributors, manufacturers, service providers, and individual owners, to sign up, list, and sell their diverse services and products. With a huge product catalog accumulated from multiple vendors, an online marketplace offers a wide offerings, including a variety of options, and attracts a large customer base.
At its core, the marketplace also provides the infrastructure to manage listings, inventory, and transactions. It comes with a checkout option so that customers can easily place and track online orders. On the other hand, the registered vendors can manage shipping, delivery, and returns easily. They can also withdraw their earnings from the marketplaces to their bank account.
Thus, what looks like another eCommerce platform on the front-end is a complex network of sellers and service providers, with a vast technological infrastructure providing hundreds of features for diverse use cases.
How Does a Marketplace Differ from an eCommerce Website?
An online marketplace, undoubtedly, is another eCommerce website. However, not all eCommerce websites are marketplaces. Let us understand with the help of a table.
eCommerce Website
Marketplace Website
Only a single vendor sells their products and services.
Multiple vendors can sign up and list their products and services.
The website owner needs to invest in inventory and warehousing.
Multi-vendor marketplaces are asset-light. The marketplace owner (admin) is not required to manage inventory and warehousing, and thus, no investment is required.
Not cost-effective in comparison to a marketplace. The website owner needs to manage inventory, warehousing, utility bills, marketing, and online technology as well.
More cost-effective. The website owner only needs to manage the technological architecture and marketing.
Not so cost-effective for independent business owners who want to come online.
Cost-effective option for independent businesses. They only need to list their products and services on an already existing platform. They don’t need to invest in any technology separately.
Revenue generation is primarily done from sales revenue.
Revenue generation is done from sales commission and other methods, such as display ads, subscription packages, and more.
Limited catalog because of a single seller.
The catalog is wide and diverse, giving more options to the target audience and attracting a larger customer base.
Types of Online Marketplaces
There are multiple types of online marketplaces you can select. As launching a marketplace is asset-light and does not require you to own any inventory, you can select any of the following marketplace types.
Based on Business Models
1. B2B Marketplaces
These marketplaces usually offer Business-to-Business products and services, such as raw materials and industry supplies, wholesale goods, manufacturing services, and other services such as digital marketing and web development. B2B marketplaces often acquire big-ticket clients, but launching one requires some pre-exposure and understanding of B2B industries.
Examples: Amazon Business, AliExpress, Thomasnet, Faire
2. B2C Marketplaces
On these marketplaces, vendors sell their products and services to the general public. These mostly include daily life essentials, such as food items, groceries, consumer-packaged goods, clothes, books, furniture, etc. While a ticket size on B2C marketplaces may be small, the sheer volume of customers is incredibly high. Entering into the B2C market is also comparatively easier than entering the B2B market.
On P2P marketplaces, different peers sign up to sell their personally owned products. They are mainly different from both B2C and B2B marketplaces, but can offer their goods to both businesses and general consumers. An important thing to note is that vendors are not businesses but general consumers. Instead of having a diverse product catalog, peers only have a few pre-loved products to list on the marketplace.
Examples: AirBnb, Turo, Ebay, Poshmark, Etsy
Vertical vs Horizontal
4. Vertical Marketplaces
Vertical marketplaces refer to those platforms that onboard vendors belonging to a specific industry or market. Instead of having broad product categories, they have narrow and nested product categories, aimed at fulfilling even the smallest requirements of consumers. Vertical marketplaces gain traction quicker than horizontal marketplaces and require less marketing effort.
Examples: StockX (sneakers/streetwear), Houzz (home design and furniture), 1stDibs (luxury art and antiques), Reverb (musical instruments)
5. Horizontal Marketplaces
Horizontal marketplaces are multi-category marketplaces, targeting diverse industries and have a huge range of services and products to offer. The product catalog on these marketplaces is broad enough to attract a huge number of visitors. For exploring new products, horizontal marketplaces are the first choice of customers. Nevertheless, you will require more experts to help you set up a multi-category horizontal marketplace, and marketing costs will be higher. Depending on the categories, you may need to invest in additional licenses to sell certain products.
Apart from the aforementioned marketplaces, you can launch niche-specific marketplaces as well. These marketplaces usually belong to specific niches and go very narrow in their offerings. Moreover, niche-specific marketplaces can also cater to the various requirements of the rental and service markets.
6. Rental Marketplaces
Online marketplaces where vendors can rent out their products. Rental marketplaces can also have sub-niches, with the biggest ones being the holiday rental niche, equipment rental niche, and automobile rental niche. Other niches include fashion, furniture, outdoor gear, sports gear, audio-video supplies, HVAC supplies, and more. As rental workflows are vastly different from sales workflows, and include steps such as entering rental dates and submitting rental security, their development is also more complex.
Examples: AirBnb, United Rentals, Budget Car Rental, Outdoorsy
7. Service Marketplaces
On a service marketplace, usually, two types of operational workflows are possible: direct hiring and job posting. The job posting marketplace also has a bidding module. These types of marketplaces connect diverse service professionals with service seekers, for example, programmers, digital marketers, business analysts, and even plumbers, electricians, roofers, and house movers, covering both blue-collar and white collar professionals.
These types of marketplaces offer quick commerce solutions by offering faster deliveries within a few minutes to a few hours. On hyperlocal delivery marketplaces, such as grocery delivery and liquor delivery, multiple warehouses are scattered across a city to ensure shorter delivery times.
Examples: Instacart, GrubHub, Dunzo, Postmates
9. Food Delivery Marketplaces
Food delivery marketplaces are also hyperlocal delivery marketplaces with different user types. Instead of sellers and distributors, it is professional checks, restaurants, home kitchens, and cloud kitchens that register on the marketplace and upload their food menu. Customers can easily view the menu and get hot food delivered right to their doorsteps.
Examples: Uber Eats, DoorDash, Caviar
10. Meal Kit Delivery
The meal kit delivery model is quite new in comparison to the aforementioned models. Instead of pre-cooked food, vendors send carefully packed raw ingredients in the pre-decided quantities suitable to cook a particular dish. The key benefit of such a model is that people aren’t required to go grocery shopping. They can simply unpack the kit and cook the meal with fresh ingredients. Meal kit marketplaces can also be of several types, including meal subscription marketplaces, healthy food marketplaces, and dietitian marketplaces.
Examples: HelloFresh, Blue Apron, Green Chef, Home Chef
11. Online Tutoring Marketplaces
On these marketplaces, tutors can sign up and offer one-on-one learning sessions and group sessions to students and independent learners. Usually, educational institutions rely on these marketplaces to deliver online lessons. Marked with features such as homework sharing, screen sharing, internal messaging, and a whiteboard, online tutoring marketplaces are developed to simulate classroom learning. Tutoring marketplaces can also belong to certain niches, such as skill learning, language learning, fitness marketplaces, etc.
Instead of live online tutoring, teachers and universities can create and upload different course materials on these marketplaces. Learners can browse the course they want to study and find pre-added study material on the marketplace. With the help of the material, they can study at their own pace.
Examples: Udemy, Coursera, Edx, LinkedIn Learning
13. Ride Hailing Marketplaces
On these marketplaces, customers can hail cabs and bike taxis for varying distances. Apart from this, some ride-hailing app companies also used to provide a cab-sharing option. The ride-hailing marketplace model is suitable for both inter-city mobility and long-distance travel. Different cab service providers and independent cab owners can sign up on these marketplaces to offer services.
Examples: Uber, Lyft, Gett, Bolt, Grab
14. Digital Products Marketplaces
In the digital era, where digital products, such as eBooks, games, songs, movies, and other digital products are highly relevant, entrepreneurs can capitalize on a digital products marketplace as well. On these marketplaces, no inventory will be required. Independent artists and producers can sign up and upload a copy of their digital products, and users can pay and download them. The marketplace owner primarily earns through a commission.
Examples: Google Play Store, App Store, Steam, Envato, Shutterstock
15. Classifieds Marketplaces
On classifieds marketplaces, different businesses and product owners can sign up and place their ads. Having the checkout option is not necessary on a classifieds marketplace, as viewers can directly reach out to product owners after viewing their ads. Thus, the marketplace owner can earn through commission charges (if the checkout option is available) or charge for a subscription package that allows owners to upload classified ads.
If you have figured out a marketplace idea, the next step would be its implementation, which is inclusive of research, development, deployment, and maintenance. Back in those days, there weren’t many sources available to learn about all these stages, and entrepreneurs mostly had to learn everything through trial and error. However, one thing that has remained certain is that even after the emergence of newer development methods, the custom development approach still remains the most suited for developing powerful, resilient, and highly responsive marketplaces that truly meet your business vision.
Step 1: Market Research and Business Planning
Jumping right into development is a risky approach. After figuring out a marketplace idea, it is advised to do and rely on your market research. The research will be inclusive of your target audience, the consumer behavior, the competition, and the willingness to spend on your services.
For your research, several models such as PESTLE (Political, Economic, Social, Technological, Environmental, and Legal), SWOT (Strengths, Weaknesses, Opportunities, and Threats), and Porter’s 5 Ps (Political, Economic, Social, Technological, Environmental, and Legal) can be helpful. These will help you figure out the competitiveness and business dynamics of the target region.
Research journals and popular market research websites, such as Statista, Gartner, and Nielsen, can be used to figure out the market size. Nevertheless, the more appropriate approach is to do on-field research and find out the market size yourself. For this, you can conduct an on-field survey asking prospective customers about their willingness and the amount of money they would spend on your marketplace platform.
Survey a small number of people, asking how much they are willing to spend, and multiply the average by the number of customers facing the problem you aim to solve. Here, you get a better estimate of the market size.
Estimated Market Size = Amount of Money Customers are Willing to Spend x Number of Customers Facing the Problem
The number of customers facing the same problem can also be derived from demographic factors like age, gender, region, occupation, etc. After completing the market research, use the following Business Model Canvas to visualize your entire business plan:
Step 2: Identify the Feature Set
In the next step, you will need to figure out the features required in your MVP for market validation purposes. The features need to augment the business model, be it B2C/B2B sales, rental, tutoring, cab booking, or a service marketplace. The feature analysis can be done in two ways.
In this first approach, you can conduct a manual competitive analysis, visiting the competitor marketplaces and testing them out yourself. Create an account on the marketplaces, place an order, and inspect other areas very well. Check out the post-delivery options available to you and the workflows. Check if there’s a return window for the sales order or if the platform allows you to upload product conditions in case of rental marketplaces.
In the second approach, you can take the help of a business analyst. The features on a marketplace can be in the thousands and vary from one business model to another. If you don’t have a technical background, it can be difficult for you to come up with Business Requirement Documents and SRS (Software Requirements Specification Sheet). Business analysts’ expertise in this area. They understand certain markets very well and have exceptional research skills. With their experts, you can figure out a practical and reliable feature set for your marketplace MVP.
You can either hire an independent business analyst for consultation or share your idea with a reliable marketplace development company that can help.
Step 3: Select a Tech Stack
The term tech stack refers to the technological framework you will be using to develop your marketplace. Selecting the right tech stack is important for several reasons:
Scalability: Selecting the right tech stack ensures long-term scalability of the marketplace. It can ensure that you will be able to keep up with market trends and roll out new features as required over time, adding an extra layer of resilience to your marketplace operations.
Performance: The tech stack can also affect the overall performance of your marketplace. From loading speed to the responsiveness of design elements, especially under load, too many performance aspects are controlled by the selected tech stack.
Security: Marketplaces handle sensitive data like payments and personal information. To ensure proper security of the marketplace, you will need to use a reliable tech stack compatible with robust security protocols such as PCI DSS, 2FA, 3D Secure, tokenization, SSL encryption, anti-SQL injection, and more.
Development Speed and Costs: Certain tech stacks are very costly because of the shortage of talent, fewer libraries, and the cost of infrastructure required to support their apps. And some tech stacks are very complex with longer structures and syntaxes. Both these factors immensely affect the development speed and costs.
Maintenance: The post-launch maintenance depends on various factors, including the tech stack. The community support available, the clean architecture, and available talent make bug fixes and feature updates easier and cost-effective.
Top Tech Stacks for Custom Marketplace Development
LAMP (Linux, Apache, MySQL, PHP with Laravel)
The LAMP stack is the most budget-friendly tech stack on our list. It has been in the market for a long time and has a proven track record of developing resilient web apps. Using the Laravel framework also makes LAMP highly secure. In terms of speed and performance, LAMP can be easily relied on. Furthermore, experienced talent for the LAMP tech stack is easily available because of its longevity.
MERN (MongoDB, Express.js, React.js, Node.js)
A newer tech stack in the market, but highly reliable for speedy development and providing a modern UI/UX. MERN stack uses JavaScript for both frontend and backend, which immensely helps reduce the development timeframe and the support required. Complemented with the React JavaScript framework, MERN is also able to provide dynamic interfaces. Despite using JavaScript on the frontend and backend, MERN development is costlier because of the high cost of developers.
MEAN (MongoDB, Express.js, Angular, Node.js)
The MEAN stack is similar to the MERN stack but provides strong structure and maintainability with the help of Angular. It is recommended for enterprise-level applications and SPAs as well. In terms of security, the MEAN stack is considered to be more secure than MERN, but it is slightly heavier. Because of a shortage of talent, MEAN development can be costlier, but it still remains the most secure option for enterprise-level development.
JAMstack (JavaScript, APIs, Markup)
JAMstack makes use of JavaScript libraries, APIs, and different markup languages to create state-of-the-art frontends. These are mostly decoupled from the backend and can be used as headless marketplace management systems with the help of APIs. JAMstack provides the most flexibility but relies too much on third-party APIs, compromising the security of the marketplace.
Step 4: Select a Marketplace Development Partner
After doing the market research and figuring out the business model, features, and tech stack, you can reach out to marketplace development companies or hire an in-house team of developers to work on your project.
To find a reliable development partner, look for the following criteria:
Trustworthiness: Check out the reviews and ratings of the company on popular critic websites such as Clutch and TrustPilot. Also, read their client testimonials and see what their clients have to say about them.
Expertise: Look for custom software development companies that have expertise in developing marketplaces for various business models. Such companies will truly understand your requirements and, with their industrial knowledge, would be able to deliver the best.
Portfolio: Explore the previous marketplaces developed by the company. If not available, look for their previous work and other projects in their portfolio. However, it is highly recommended to opt for a company that has worked on marketplace projects before.
Support and Maintenance: Verify the support and maintenance a company provides after development. Most companies offer 6 to 12 months of support. The support should cover all technical issues in the source code and shall include in-depth documentation as well.
Cost: Reach out to every shortlisted marketplace development company and request a quote. You can compare the expertise, offerings, and price quotes of companies with each other to find a reliable technology partner for your project.
Hire Marketplace Development Experts with Over Two Decades of Experience.
Your selected partner will rely on the Software Development Life Cycle (SDLC) process to execute your project. The SDLC process refers to the standardized framework of software and application development, which ensures time and cost-effective maintenance while maintaining the integrity and quality of the source code. Companies that adhere to the SDLC process deliver satisfying results with minimal cost overheads.
The SDLC Process is Inclusive of 7 Phases
Planning: In the planning phase, the marketplace development company understands the project’s scope and feasibility with the help of activities such as budgeting, scheduling, resource availability, and feasibility study.
Analysis: The analysis phase focuses on analyzing the provided feature set and checking the practicality, feasibility, and development approach to every feature. The business analyst team of the development company prepares a formal SRS sheet, which includes all the features they will work on during the project.
Design: The architectural design and UI/UX wireframing begin in this phase. With cross-communication with the client, the marketplace development team finalizes what the marketplace will look like in the first phase.
Development: The actual coding takes place. The development team works on the source code and implements the UI/UX design along with the features listed in the SRS.
Testing: The initial build goes under rigorous rounds of testing to ensure every feature is working as described in the SRS and in unity with other features as well. Load testing is also done in this phase.
Deployment: The marketplace is finally deployed on your server. You can start adding data to the marketplace and configure primary pages such as the homepage, about us page, set up logo, other brand trademarks, payment details, social media handles, and more.
Maintenance: Performance monitoring and bug fixes take place in the last phase of the SDLC. Usually, marketplace development companies provide free of cost bug fixing if identified early or within the agreed-upon support period.
SDLC Methodologies for Custom Marketplace Development
The SDLC methodologies that you can rely on for marketplace development are:
Waterfall Development Methodology
Under this methodology, a linear, straightforward approach is taken for marketplace development. This model strictly adheres to the SDLC process and develops the entire project as a whole instead of creating and iterating on an MVP. For waterfall development, the feature requirements must be clearly defined from the beginning. After the development process starts, no new features can be introduced without starting the entire development process from scratch.
Follows a linear approach to development
Feature requirements must be clearly defined from the beginning
Introducing new features requires everything to be started from scratch
Develops the entire project as a whole instead of iterating from the MVP
Suitable for smaller marketplaces where requirements are well-known
Agile Development Methodology
The agile development approach builds the marketplace from an MVP through iterative development. It starts with the traditional phases of SDLC and includes feedback collection in the process. After receiving feedback from the early adopters, the development team improves the marketplace in multiple sprints. Each and every sprint or iteration lasts 1-2 weeks and enrolls 2-4 new features. Thus, new features can be easily introduced in agile development without restarting the entire process.
Follows iterative development
Features can be introduced at a later stage after receiving early adopter feedback
No need to restart the entire process for introducing new features
Works on an MVP and gradually builds the final project
Highly suitable for marketplaces where competition is high. An initial build can be released into the market for business operations and improved as you collect user feedback
Suitable for large-scale or enterprise-level marketplace development projects
Adds resilience to the project by enabling you to keep up with the changing market demands
Launch your Custom Marketplace with an Agile Development Company.
Developing a marketplace can be very costly in Western countries. However, with the right planning, the development cost can also be managed. Here we share a cost estimate for your marketplace project along with the various variables to consider to help you plan your development budget.
By Project Size
1. For Small-Scale Projects
Small-sized marketplaces only have 5-20 landing pages, including the homepage, listing page, vendor sign-up page, about us page, contact us page, help, blog, etc. They also have 2 backend dashboards at maximum, one for the marketplace owner or the admin, and another one for the vendor. Note that such small marketplaces will not be accommodated with mobile apps.
Despite their small size, the number of features, especially for admin operations, can be high. These features mainly contribute to the overall costs.
Estimated Development Cost: $10,000 – $50,000
2. For Mid-Scale Projects
Medium-sized projects can have 20-50 pages, depending on the various requirements of the marketplace model and workflows. Usually, these projects also include mobile apps, which require separate development. In terms of the dashboard, a driver app can be added in mid-size marketplaces, such as those required in grocery delivery or food delivery operations. The marketplace owner may also install a few plugins or APIs in the project.
Estimated Development Cost: $50,000 – $200,000
3. Large Scale or Enterprise Level Projects
Enterprise-level marketplace development projects are accompanied by complex requirements with proper workflow and feasibility planning. Agile methodology is also used to materialize these projects, which includes continuous development. The overall project lasts for years, accompanied by ongoing development and maintenance. The number of integrations, payment gateways, dashboards, user interfaces, and features can also be very high, further surging the cost of development.
Get a dedicated team of experts working only on your project. You get a fixed number of web & mobile developers, UX/UI designers, quality analysts, and a project manager who carefully execute your project without interruptions from the projects of other clients. Dedicated teams ensure fast development and are suitable for all project sizes.
The overall cost of development is fixed under this model, and the team executes the project at a fast pace.
5. Staff Augmentation
Under the staff augmentation model, you can personally interview and hire every single team member for your project. You can hire as many designers or developers as you want and let them collaborate with your in-house team of experts or developers from other companies.
The cost remains flexible as you only augment staff members. Instead of hiring the entire team from a single company, the model focuses on collaboration and augmentation instead.
6. Hourly Development
Under the hourly development model, the marketplace development company works and charges for your project on an hourly basis. Designers, developers, managers, and quality analysts can all have varying hourly rates. This method is highly suited for agile development, where the actual timeline of the project or features required is not clearly defined, and payments are broken into multiple sprints.
The overall cost of development depends on the collective hours consumed by the project.
By Country
The hourly development rate also varies from country to country due to the industry’s reputation, the availability of the talent pool, and the cost of living.
Country
Hourly Development Rate
USA
$50-$100
Canada
$50-$75
India
$20-$40
UK
$50-$75
Poland
$45-$70
Singapore
$40-$70
Philippines
$20-$40
Ukraine
$40-$70
France
$40-$70
Brazil
$30-$55
Argentina
$30-$55
Romania
$25-$50
Mexico
$30-$60
Custom Marketplace Development vs Using Readymade Software
In the past few years, readymade marketplace solutions have also gained prominence. They offer quick and cost-effective deployment, and thus have gained immense popularity amongst business owners. However, there still exist some areas where readymade solutions have failed to compete with the traditional custom development approach. Despite requiring no programming to launch your marketplace platform, readymade solutions often overwhelm users with their complex interfaces and limitations that entrepreneurs eventually have to shift to custom marketplace development.
Below, we have pitted custom marketplace development against readymade marketplace software to help you determine which approach is more suitable for your requirements.
Aspect
Custom Marketplace Development
Readymade Marketplace Software
Time to Launch
Longer timeline due to development from scratch
Faster setup with pre-built components
Customization
Fully customizable to match exact business needs
Limited customization options. Only a handful readymade solutions are customizable
Feature Set
Build only what you need; features tailored to your model
Comes with a generic set of features, may or may not be sufficient for your business
Ownership & Control
Full ownership of source code and architecture
Limited control depending on license terms, especially in SaaS, whose license is revoked when you stop the recurring payments
Scalability
Highly scalable when built with a long-term vision
Scalable within the bounds of the software’s design
Maintenance
Requires dedicated resources for updates and bug fixes
Mostly dependent on the in-built security features
Technical Expertise
Requires a strong technical team or vendor
Minimal technical knowledge is required to get started
Third-Party Integration
Fully flexible; integrates with any external system or API
Limited to supported integrations only
Security
Security can be built to match business and compliance needs
Comes with standard security protocols and best practices
Time to MVP
Slower, but more tailored to your goals. Properly tried and tested
Quick MVP launch, but not tailored for the specific needs. Post-deployment customizations can be costly and will be handled by a third-party developer
Ideal For
Unique business models, large enterprises, and long-term projects
Startups, SMEs, and those testing new ideas
Our Recommendation:
Selecting a method between custom development and readymade solutions can be difficult. Both these methods have some benefits and shortcomings. Thus, after classifying your requirements into the following three categories, you can select the appropriate method.
For Enterprise Level Development with Longer Timeframe: Go for custom marketplace development services. In this scenario, you have the time required to do the market research and study consumer behavior to build a solid marketplace that truly fulfills consumer expectations. You can also opt for agile development and begin with an MVP while ensuring constant support for many years to come.
For Enterprise Level Development with Shorter Timeframe: The best approach is to combine readymade software with custom development. Select a fully customizable marketplace solution as your base and carry out the required customization to launch your marketplace. In this approach, you don’t have to start from scratch, get the benefits of a tailored marketplace, ensure a quicker launch, and also reduce the overall development costs.
For Budget-Friendly Development: Opt for a readymade solution if you are low on budget. Self-hosted solutions are available at a one-time cost and will cost you anywhere from $1000-$3000 for a lifetime. Some also have an extensive feature set so that you can easily conduct numerous types of marketplace operations.
Customize FATbit Solutions for Faster, Tailored, and Cost-Effective Development.
Be it cab booking, food delivery, B2B rentals, P2P marketplaces, or online tutoring platforms, the digital age is characterized by the convenience of these marketplaces. From finding a helping hand to selecting a product from thousands of options has become the reality today. As online shopping increases, it is expected to surge with a whopping CAGR of 15.80% in the projection period 2025-2030, marking an astonishing jump of approximately $11 trillion in growth.
Thus, stepping into the eCommerce industry with your own marketplace sounds like the right step. With increased preference towards marketplaces, favorable funding options, and multiple revenue generation streams, launching a marketplace is a highly lucrative business idea. The correct execution of your marketplace idea will also require proper planning and analysis. Doing competitive research will help you figure out the brand offerings, workflows, and key attraction points of the customers.
When it comes to development, preparing a clear list of features and drafting a simple and effective workflow will help. You can also create the SRS sheet with the help of a business analyst or opt for MVP development first to iteratively improve the marketplace based on customer feedback. Another option is to opt for a self-hosted marketplace solution and customize it to get the benefits of both custom marketplace development and readymade software.
FAQs
1. How much does it cost to build a marketplace?
The cost of marketplace development depends on various factors, including the country of development, method of development (agile vs waterfall), engagement model (fixed price and hourly), project size (small, medium, and large), and the selected tech stack.
In Asian countries, such as India, the Philippines, and Singapore, marketplace development can cost anywhere between $20-$80 per hour and $100,000 – $200,000 for a medium-sized project.
In Western countries, such as the USA, UK, Canada, France, Poland, etc., the same will cost you between $40-$120 per hour and $300,000 – $500,000 for medium-sized marketplace development.
2. Are eCommerce marketplaces profitable?
Yes, eCommerce marketplaces are profitable. Their market size was $580.31 billion in 2024 and is expected to cross the $1 trillion mark in the next 5 years, marking a CAGR of 10.6% in the forecast period 2025-2030.
Apart from this, the following is the revenue generation report of the world’s most popular eCommerce marketplaces.
Marketplace
2025 Revenue
Amazon
≈ $700 billion (projected full-year)
Alibaba (incl. Taobao & Tmall)
≈ ¥941 billion (~$130 billion USD) FY2024
Walmart Marketplace & eCommerce
FY 2025 total revenue: $681 billion (includes all segments)
eBay
$10.31 billion TTM (ending Mar 31, 2025)
Rakuten
$14.31 billion TTM (as of June 2025)
3. Can you bootstrap a marketplace?
Yes, it is possible to bootstrap a marketplace from your personal savings by selecting the right development method and engagement model. For this purpose, both readymade software and agile development are suited. Readymade marketplace solutions will cost you between $1,000-$3,000 for a lifetime, while agile development only requires you to invest the bare minimum for MVP development. The rest can be paid post-launch or with the addition of features in parts, instead of paying the entire marketplace development cost as a whole.
4. What are the benefits of custom marketplace development?
Custom marketplace development has various advantages, including flexibility in development and the choice of tech stack. Custom-developed marketplaces are highly tailored to market needs, more secure, give better performance, and come with custom workflows. With development methods, such as agile development, they are also very cost-effective.
Key Benefits of Custom Marketplace Development
Highly tailored for your target audience
Provide the choice of tech stack
Provide the choice of a hosting server
Are fully customizable
Can be used for market validation
Are highly secure
5. Is the agile model suitable for marketplace development?
Yes, the agile model is suitable for marketplace development, especially enterprise-level development. The agile development framework lets you validate the marketplace with an MVP and iterate on the same in smaller sprints. This helps you ensure a faster time to market while also providing the option to keep improving the software as per market needs, providing maximum resilience than all other development methods.
6. Which is the best marketplace development company?
It is difficult to call any particular company the best, as all companies have different expertise and price points. While one company may be the best for your requirements, another may fit some other entrepreneurs’ requirements much better.
Verify Expertise: Figure out the number of marketplaces a company has developed and for which business model.
Portfolio: Explore their past portfolio and get first-hand experience on their previous works
Reviews and Testimonials: Check out their ratings and reviews on popular websites such as Clutch, G2, and SoftwareSuggest.
Get Consultation: Book a one-on-one call and compare their offerings
Price Quotes: Get a price quote, and you have everything you require to do a reliable comparison and find the best team of developers for your project.
7. How can I onboard vendors on my marketplace platform?
On a marketplace, the chicken and the egg problem exists. Meaning, the number of vendors is directly proportional to the number of customers and vice versa. Without adding vendors, it is difficult to attract customers, and without customers, it is difficult to attract vendors.
However, there are still certain ways to help you onboard vendors:
Incentivize them with lower commission charges and free featured listings
Use social media marketing to spread word of mouth about your business
Send personalized invites to vendors
Set up a landing page for organic rankings
Run paid ads on relevant targets
Check out this blog to learn more approaches to add vendors to your marketplace.
8. How to monetize my marketplace?
There are multiple ways to monetize your marketplace, including sales commission, vendor subscription, paid listings, and display ads.
Sales Commission: Charge a small percentage fee on every transaction as admin commission
Vendor Subscriptions: Sell multi-tiered subscription packages for vendors with each having varying benefits, such as lower commission rates and a free feature in the marketplace banner.
Paid Listings: Charge vendors for displaying their listings in the most viewed sections of your marketplace.
Display Ads: Join ad networks and display third-party ads on your website. You can generate additional revenue via CPM and CPC.
Sell Add-ons: On platforms like rental marketplaces and service-based marketplaces, you can sell add-on products to generate revenue.
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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Abhishek Kataria is a business consultant at FATbit Technologies. He assists entrepreneurs and business owners in developing viable digital touchpoints and marketplaces. Abhishek is curious about exploring and analyzing new business trends and has a keen eye for the latest developments in the eCommerce sector. Apart from consulting, you can find him practicing French and exploring his creativity in Photoshop.
![How to Build a Custom Marketplace Platform From Scratch [2025]](https://www.fatbit.com/fab/wp-content/uploads/2025/07/Build-a-Custom-Marketplace-Platform-From-Scratch-1.png "How to Build a Custom Marketplace Platform From Scratch [2025]")
