Is It Worth Developing an eCommerce Marketplace from Scratch?

Is It Worth Developing an eCommerce Marketplace from Scratch?

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Introduction: eCommerce in 2024

In just three decades, eCommerce transformed every aspect of retail globally, across industries―and continues to do so further. So, as more consumers prefer to shop online, brick-and-mortar retailers are pushing to add online channels to their sales. The eCommerce industry is progressing even faster than anticipated earlier. 

Given the lucrative opportunity, more eCommerce marketplace launches happen globally. According to USAToday, there are 26.3 million eCommerce websites globally. Also with increased market maturity, these platforms continue to add to their capabilities. Moreover, symbiotically, the support infrastructure of payments, logistics, marketing, and other operational ecosystems is also growing.

Due to this progression of the industry, eCommerce marketplaces are now a complex mix of capabilities. Just notice the continuous increase in the file size of popular eCommerce apps on your devices. So, if you want to start an eCommerce business, will it be worth developing an eCommerce marketplace from scratch? Three decades ago the answer would have been a straightforward yes. But things change in such a long time, right? Read ahead to find out more.

What are the Components of an eCommerce marketplace?

An eCommerce marketplace appears to be a single unit. However, it is made up of certain key components. These include the look and feel of the website, its functionalities, and more. Let’s understand in detail below.

1. Front End of the Marketplace

It is the user-facing part of the eCommerce website. It further included the following elements:

User Interface or UI: This includes how the website appears to the users visually, including the logo, colors, fonts, and other design elements.

User Experience or UX: This is how users interact with the website including navigation, ease of use, design of buttons, page load speeds, and more.

Client-Side Scripting: All actions occur in the users’ web browser itself, without needing the server to get involved. (Javascript frameworks like React.js are used here)

2. Back End of the Marketplace

What do you think happens when a user clicks the buy button on an eCommerce marketplace? There is a functionality that takes the user through the checkout page. The backend of the platform initiates the checkout process. It validates the users’ session, confirms inventory availability, applies for applicable discounts/promotions, adds applicable taxes, and more. This is the platform backend at work.

In short, the backend carries out the functions of an eCommerce marketplace. It also includes managing the data and the business logic.

3. User Control Panels

For better functioning of the eCommerce marketplace, all users need to control and manage their activities on the platform. Established eCommerce platforms like Amazon offer dedicated user panels for all the platform participants. These include the Admin, sellers, buyers, affiliates, advertisers, and others.

4. Features and Modules

Features are the capabilities of the eCommerce platform. For instance, the search bar allows the users to search for the desired products/services. Similarly, eCommerce features cover business functions like marketing, promotions, sales, onboarding, analytics, inventory management, and more. Some features are essential like the search bar, and are needed across eCommerce platforms. However, some of these features vary according to the type of eCommerce marketplace platform.

5. Integrating Business APIs

Some business processes can be outsourced to other third-party solutions. For instance, shipping management, tax, accounting, and others. The API of these solutions has to be integrated into the eCommerce platform. In simpler terms, this creates a channel via which information flows between the platform and the third-party solutions, leading to automation. These API integrations vary according to the business needs. Similarly, payment gateways also need to be integrated.

6. Adherence to Security Protocols

Modern eCommerce websites have to be built to withstand attacks of malicious intent like hacking. Since user data is involved, the eCommerce marketplace platform must comply with regulatory requirements like GDPR. Moreover, it should restrict SQL injections, cross-site scripting, and other forms of forgery.

7. Sustained High Performance and Scalability

A future-ready marketplace platform should be built to perform well under increased user traffic, and the number of SKUs (listed products). This includes caching, database optimization, load balancing, and other considerations.

These are some of the major components of an eCommerce marketplace platform.

Launch an eCommerce marketplace with all the features you need

Stages of eCommerce marketplace development

These were the components of the eCommerce marketplace. However, your next consideration is knowing how the platform development will take place. While there is more than one way to develop a platform, let’s just know about the basic steps.

1. Planning: At this stage, the planning of the project is done including the scope and goals.

2. Requirement analysis: Collecting information from users, experts, and clients.

3. Design: Building the framework.

4. Coding: Writing the code according to the design.

5. Testing: Testing the code to identify and iron out bugs.

6. Deployment: Taking the software to the production phase, preparing documentation, and providing training to the users.

With this information, you know the components of the eCommerce marketplace and the process of developing them. Let’s address the elephant in the room, How much does eCommerce marketplace development cost?

Cost of Custom eCommerce marketplace development

Straight off the bat, there is no direct answer to this question. The figure can range drastically from $20,000 to $500,000, or even beyond. The reason why there is such a significant gap is because of multiple variables at play.

1. The scope of the project: Most eCommerce websites are fundamentally similar. However, if a business idea is unique, it takes longer.

2. The scale of the website: For instance the number of webpages.

3. Internal Integration: If there is a need for integrating ERPs, CRMs, and others.

4. A specific technology stack: Projects developed on popular technology stacks are more cost-efficient.

5. Choice of development: A team of developers can be hired, or the entire project can be outsourced.

6. Time Frame of the project: The deadlines shared by the client can affect price quotations.

7. Location of the development team: For instance, teams in countries like India or Vietnam have lower quotes than those in the US.

Consider these variables, the 7 components of the eCommerce marketplace, and the stages of development that were discussed in the sections above. Naturally, with so much at play, the time to develop ranges from a few months to more than a year. You will be billed hourly for the entire development process. Hence there is significant variation in the cost to develop an eCommerce marketplace.

Now that you know about eCommerce marketplace development, learn more about the practical aspect of this process.

Pros and Cons of Custom eCommerce marketplace development

For what it’s worth, there are benefits and disadvantages to adopting this approach. This means that the process lacks universal relevance. To know whether it’s the right process for you, read about its pros and cons.

The main advantage of custom eCommerce marketplace development is the capability to cover distinct use cases. Some of these are as follows:

  • Cover complex workflows. For instance, if you need to execute a complex sales process. 
  • Digital Transformation of internal processes: Enterprises unwilling to change existing websites, internal CRMs, or ERPs, will need a custom marketplace developed around these solutions. 
  • Specific tech stack: A tech stack is a set of technologies used to develop an eCommerce marketplace. The need for a specific tech stack generally arises from the above-shared use case, where the platform has to be developed around existing digital infrastructure. 
  • Some industry verticals can need complex additional functionality in the marketplace. For instance, if you plan to build an online automobile marketplace, you may need to offer a virtual test drive experience. 
  • That said, there are some disadvantages to custom eCommerce marketplace development. Some of these are as follows:
  • The need for extensive resources: As discussed above, developing an eCommerce marketplace costs more and can reach high figures. 
  • Extended time: The time to custom develop an eCommerce marketplace is higher. 
  • Startups unaware of a proven template for success, will have to depend on the research done by their development partners. 

So is custom eCommerce development right for your business?

How does custom eCommerce development fit into your business plans? There are both advantages and disadvantages, but how do you put a personal perspective on that? All of these decisions will be part of your go-to-market strategy. Let’s add context from the perspective of an online business.

Evaluate the costs of an entire eCommerce business:

The total capital investment for a multivendor marketplace includes more than the marketplace development costs. Consider the following:

  • Marketplace development costs. 
  • Set up fees/subscription fees for payment gateways and third-party business apps. 
  • Mobile apps, if they are needed in addition to the eCommerce platform. 
  • Hosting services or IT infrastructure. 
  • Physical assets like office spaces, warehouses, and others (if required) 
  • Manpower for day-to-day maintenance and Admin duties. 
  • Startup consultation services, if required. 
  • Marketing, Advertising, and Brand Building. 
  • Legal and compliances 
  • Other misc operational costs. 

In short, your eCommerce marketplace development costs are just one of the multiple investments you need for the business. Many businesses find it difficult after stretching their budget for a few of these activities over others. Especially if you are bootstrapping for the project. Account for all these activities, and then prudently take a decision.

The importance of time to market:

The time to market will be a crucial component for your business. In the dynamic eCommerce industry, the time from when the idea for the business is conceived to the time actual sales happen from the platform can be pivotal. Competitor activity for one, can be essential to your decision. If your idea is unique, you need to be careful about any other market launch. Similarly, if there is existing competition, then their activity will be the cornerstone of your time-to-market strategy.

Additionally, there is an aspect of funds. If investors are also stakeholders, they can initiate urgency depending on the market scenarios. If you are bootstrapping the funds, you are blocking your assets till you reach the break-even point. So quick movement is again, essential. So the time taken for custom eCommerce development has to be gauged carefully. If the development time delays the ideal time-to-market then a decision can be taken otherwise.

The alternative: Use turnkey solutions

Custom eCommerce development has a significant involvement of time and resources. If the business plan does not gain much from the advantages, there can be a risk of losing a competitive edge. So, what is the solution?

Since most eCommerce businesses are fundamentally similar, custom development can be rendered redundant. There are turnkey solutions available that allow you to build an eCommerce marketplace. These are pre-built solutions, developed to mimic popular eCommerce platforms like Amazon, Alibaba, or Etsy.

When compared to developing from scratch, these solutions come at a fraction of the total cost. You won’t have to cut corners with features/modules either. Depending upon your choice, turnkey solutions make multiple cutting-edge functionalities accessible on a low budget.

So essentially, you are not building the platform, you are buying it.

Choose a leading turnkey solution to power your eCommerce business

Build vs Buy in eCommerce: What are the differences?

Now that you have an understanding of custom eCommerce development, let’s compare build vs buy: which is the best eCommerce development approach for you.

Parameters Build Buy 
Cost to develop Higher Lower
Cost Estimation Can vary as per project More predictable
Deployment Slower Faster
Time to Market Slower Faster
Battle-tested No Yes
Features Availability Lesser in the budget More in the budget
Choice of Tech Stack Yes No
Distinct complex workflows Part of the process Additional Customization

Types of turnkey eCommerce marketplace solutions

On a broader level, turnkey solutions have the advantage of affordability and time. However, these solutions also vary among each other. While all of these will still have these advantages over bespoke development, that degree of advantage varies. Find out more about this variation below.

Open Source Solutions:

Pre-built solutions that cover some essential parts of eCommerce. However, these are not complete and will need customization. They can be downloaded and customized to get the final platform. This customization can be done from a custom development team that specializes in their customization. In a way, this is the middle ground between custom development and other types of readymade solutions.

Eg: Prestashop

Pros:

  • Flexibility 
  • Advantage of cost and time over custom development 

Cons:

  • Require extensive customization. 
  • Suitable for middle to large businesses. 

SaaS-Based Solutions:

These are pre-built solutions already hosted by the providers themselves. Business owners have to pay a rental (subscription) fee to get access. After subscribing, they get a username and login. This is valid only till they continue to pay the subscription fee. This approach is the other end of the spectrum, which offers very minimal control to the business owners to tailor the solution.

E.g. Sharetribe

Pros:

  • Minimal involvement is needed from business owners to launch the eCommerce platform. 
  • One of the easier approaches to test the MVP of the business idea. 

Cons:

  • No ownership of the solution or the user data. 
  • Recurring costs add long-term overheads for the business. 

Self-Hosted Solutions

These are readymade solutions that offer ownership of the software copy. Business owners can purchase the license for use, get a copy, and install it on a server of their choice. So, these are complete solutions like SaaS-based and give flexibility like open source.

E.g. Yo!Kart

Pros:

  • Complete control with software ownership and user data ownership. 
  • Some self-hosted solution licenses are offered with just a one-time payment. 

Cons:

  • Hosting has to be managed by the business itself. 

Why self-hosted solutions are popular

While all types of turnkey solutions have pros and areas of application, self-hosted ones dominate the market with more holistic benefits and wider areas of application. There is a need for initial installation services. However, once that is managed, self-hosted solutions give businesses complete control over their online platform. They offer benefits like the following:

  • Customization advantage: In the scenario of the platform needing personalization, self-hosted solutions give you the advantage of lifetime ownership of the hours invested. 
  • Competitive advantage: Businesses planning to enter a congested eCommerce niche have the freedom to stand out in the crowd with unique functionalities. 
  • Integration with existing infrastructure: With capabilities to alter the source code, businesses or enterprises with existing infrastructure have more opportunities with self-hosted solutions. 
  • Audit Capabilities: With the availability of source code, self-hosted solutions also give the benefit of auditing the code to determine platform health.
  • Price Advantage: eCommerce today is competitive and consumers expect the best prices. Self-hosted solutions can come with lesser overheads, allowing online businesses to push for a competitive pricing strategy. 

Yo!Kart: Leading Self-Hosted Marketplace Solution

Yo!Kart is a leading self-hosted eCommerce marketplace solution. Powering 5500+ marketplaces, Yo!Kart is used by startups and Fortune 500 companies, across multiple industries, and covering all continents. These are some of the highlights of Yo!Kart:

  • A range of eCommerce features OOTB. 
  • Pre-integrated business APIs and payment gateways. 
  • Lifetime license is available with a one-time payment. 
  • Supports downloadable digital goods and has a dedicated online B2B marketplace solution. 
  • Availability of native mobile apps. 
  • Source code is available.

Case studies of websites built with turnkey solution Yo!Kart

Yo!Kart is a versatile eCommerce marketplace solution. It has ready-made capabilities to power an eCommerce marketplace platform right out of the box. However, it is also customizable, making it equally suited for personalized eCommerce platforms. Moreover, it is tested to offer high performance under load, for high-traffic websites. Some examples of these use cases are shared below:

UNI Diamonds – Custom Yo!Kart-powered platform with industry-specific functionality

By default, Yo!Kart is a turnkey solution to build an eCommerce marketplace like Amazon. However, it was customized to build the world’s first diamond trading platform: UNI Diamonds. To make this happen, Yo!Kart was customized to add features for the industry.

Procurenet – Custom Yo!Kart-powered platform with high-scale

Procurement is a B2B eCommerce platform for the pharma sector. Since the project required to be made live in a shorter time frame. The customization was done within the stipulated time. Moreover, Procurement currently hosts over 2 million SKUs, capable of hosting even more.

A1 Vendor – Vanilla Yo!Kart-powered platform

A1 Vendor is an eCommerce platform based out of Jamaica. Like many other eCommerce marketplace platforms around the world, it leverages out-of-the-box functionalities of Yo!Kart to make a market impact.

Start the next big eCommerce business with a power-packed solution

Conclusion

So in 2024, while custom eCommerce marketplace development can potentially help you in curating complex workflows/tasks. However, it comes with significant costs, time investment, and risks. For the majority of businesses, especially those looking to enter the market quickly, turnkey solutions like Yo!Kart provide an attractive alternative. These platforms offer a balance between flexibility and affordability, allowing businesses to launch their marketplace with a solid foundation while still catering to industry-specific needs.

The case studies of UNI Diamonds, Procurenet, and A1 Vendor demonstrate the adaptability and scalability of Yo!Kart. They demonstrate its ability to cater to a wide range of requirements, whether you need a fully customized or ready-to-launch eCommerce marketplace platform. While the final decision will depend on your business goals, resources, and timeline, for most entrepreneurs and enterprises, the comprehensive features, scalability, and cost-effectiveness of Yo!Kart makes it a compelling choice for launching a successful eCommerce marketplace platform.

FAQ

Q 1. When do I need custom eCommerce marketplace development?

Ans: The variations are mostly about specific requirements. For example, if an enterprise has legacy software for internal communication. The eCommerce marketplace has to be developed around it. Or if the business wants to use a specific technology stack for the development. Another example can be the needs of a specific industry. But all of these are very subjective to the needs of the business.

Q 2. What are the main challenges of developing an eCommerce marketplace from scratch?

Ans: Developing an eCommerce marketplace platform from scratch can be a time-consuming and resource-intensive process. Moreover, there is a need for extensive technical expertise, knowledge of the industry, longer development timelines, and a higher overall project cost.

Q 3. What is the cost to develop a custom eCommerce marketplace?

Ans: The cost of developing a custom eCommerce marketplace can vary widely depending on several factors like the complexity of the features needed, the technology stack you opt for, project urgency, the development team’s location & quoted hourly rates, and more. Costs can range from $20,000 to about $500,000.

Q 4. Should you build or buy your eCommerce marketplace?

Ans: The choice to build or buy your eCommerce marketplace depends upon your business requirements. Building the eCommerce marketplace gives you control over aspects such as the technology stack, integrating legacy processes, and others. However, buying the eCommerce marketplace gives you a competitive edge with faster time to market, less resource utilization, and capabilities to get more for the available resources.

Q 5. What are the benefits of self hosted turnkey eCommerce solutions?

Ans: Turnkey self-hosted solutions like Yo!Kart offers a faster time-to-market, lower initial one-time cost, and built-in eCommerce features. They also provide scalability, flexibility, and the ability to customize the platform to suit specific business needs. Furthermore, such solutions offer complete user data ownership and the need for higher security.

Q 6. Can Yo!Kart be customized to fit industry-specific requirements?

Ans: Yes, Yo!Kart is a highly customizable eCommerce marketplace solution. It can be tailored to meet industry-specific needs, as in the case studies of UNI Diamonds, Procurenet, and others where the solution was customized for unique business functionalities.

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