Starting an Online Marketplace: 10 Tips for Launching an Online Marketplace

The time is especially right for an online marketplace startup, as such a platform enables peer-to-peer contracts, various services, B2B networks, stock trading, and all kinds of sales. In an era where any type of business or service can be conducted via the internet or mobile apps, companies like Uber, Lyft, Upwork, or Airbnb are coming to the forefront. Anyone wishing to play in this arena should position themselves now before it’s too late.

The Essentials in Brief

How Do I Launch My Own Online Marketplace?

Launching an online marketplace includes the conceptualization, technical development, marketing, and maintenance of the marketplace. The first step is choosing a suitable technical infrastructure – the options being a CMS system, a ready-made solution, or a custom programming.

Characteristics of a Successful Online Marketplace

These interesting facts should be considered by a user before starting the planning for their own online marketplace.

Liquidity

Does the online marketplace have enough customers and buyers after launch, and does the entire concept work as intended?

If an online marketplace—much like Uber—suddenly finds itself without the necessary drivers, customers will very quickly lose their trust in the service and look elsewhere.

Price

Anyone looking to launch an online marketplace should be clear from the start that it must be priced as competitively as possible compared to the competition, since most buyers or customers opt for the offer with the lowest price. However, the price must remain low while still being profitable for the operator. Companies like eBay, Airbnb, Uber, Expedia, and similar offer products as well as services at lower prices than their competitors. They achieve this by eliminating intermediaries, thus enabling more efficient pricing calculations.

Speed

Can you obtain a product or access to a limited-time offer? If your marketplace is to be successful, the response time to activities must be kept as short as possible. Any kind of delay is counterproductive.

Diversification

The best marketplaces boast numerous buyers and sellers who accumulate on the platform after launch. For instance, if you start with only a few large sellers, the online marketplace will have less value. Moreover, it makes the operator vulnerable, because the few sellers can leave immediately if they are dissatisfied with the fee structure of the platform. Instead of promoting only a few major providers, the operator should focus on a broadly diversified clientele, since many smaller shops depend on positioning themselves alongside the large providers on the platform. The more diverse the selection of sellers, the less vulnerable and susceptible the operator becomes after launch.

Enhanced Experience

After launch, the business should use the latest technology to offer extensive experiences. Uber allows its customers to order a taxi with a single click, thereby avoiding the need to pay with cash.

Uber allows its customers to order a taxi with a single click, thereby avoiding the need to pay with cash.

Trust

If you want to connect different target groups when launching your online marketplace, you should find a way for these parties to trust each other effortlessly—similar to Airbnb. Therefore, many online marketplaces include a section where members can share their experiences.

Network Effect

Unfortunately, a large online marketplace will quickly exhibit the same effect as a vast network after launch. The larger the marketplace becomes post-launch, the greater its value is for everyone involved. Moreover, it becomes increasingly difficult for competitors to break in or regain market share. The broader the range of products and services, the more customers become permanently tied to the online marketplace.

Amazon has become a market leader in several niches due to network effects. The provider is so firmly established in the market that competitors have lagged behind for several years.

Development of Empathy

When launching, the operator should already possess empathy for the target group. Ideally, they also utilize interviews, observation, and market research to address problems. At launch, the operator must commit to both sides of the marketplace.

A Concierge Service

At launch, developers often overlook that the greatest risk to the business is that operators do not exactly know what needs to be done due to a lack of expertise. They want to be involved at launch in hopes of mitigating the risk. However, modern technology demands continuous engagement and constant updating of knowledge. This also reduces the risk of designing the wrong product or the failure of the online marketplace.

Starting with a Pocket Full of Liquidity

Even at the launch of an online marketplace, liquidity is essential—not only financial liquidity, but also ensuring that demand and buyers within the target group are secured. This is achieved by finding the right niche. For Amazon, it was the book market that helped them get their foot in the door.

Establishing Supply and Demand at Launch

In our business ventures, we have learned that it is much easier to identify and prove demand before buyers become aware of it. The buyer must see evidence that they simply cannot do without the product. Although demand can be generated for most business models, this usually occurs through costly advertising. This requires activating advertising networks such as Facebook, Google, or local networks and strategies—ideally right from the launch. These customers are then directed to a specific product that relies on a concierge service with many manual steps, serving both sides.

The Lure

Both Lexoo and Appearhere effectively use a lure to attract new customers to the platform. By bringing inquiries to the online marketplace and offering high quality, both sides will benefit from favorable conditions.

Advertising

To attract enough listings after launch, the operator should initially waive their commission so that the online marketplace can quickly generate customers and sellers. Additionally, these can be added through subsidiaries or networks. Moreover, suppliers tend to invest less if an irregular demand emerges shortly after launch. As an operator, you must stimulate and drive up this demand in order to establish a lucrative commission structure, which is ultimately the goal for the online marketplace.

Free Tools

Launching an online marketplace is more worthwhile if customers, suppliers, and sellers feel that they, too, benefit from the collaboration. Therefore, it should be clear from the start that the path to the market must be fought for relentlessly, and compromises on profit during the launch are normal. It takes time. Free tools send a strong signal to customers that the online marketplace understands and respects the need for profit for both parties.

Prelaunch

Plan a Soft Launch

A soft launch of the online marketplace is without exception the best strategy. An online marketplace has two main components: customers and providers. You are building a community that, among other things, is based on trust. Providers usually have a stronger incentive to establish themselves on a new online marketplace after launch, as they depend on a profit margin.

The marketplace Etsy pursued a targeted strategy to secure the so-called critical mass in the early phases of its launch.

Attract Customers at Launch

A strong online marketplace requires a soft launch, with the focus on rapid dissemination during launch. The goal is to make the quality and relevant services appealing to future providers, sellers, as well as customers.

Influence Trendsetters

Anyone who wants to launch a successful online marketplace also needs a few influencers on their side who can recommend the platform to the broader public. This indirect advertising has a significant impact on public perception. Therefore, even at launch, you should keep an eye out for suitable trendsetters, so that they can often provide the right recommendations in exchange for payment.

Offer Surprises Potential Users

Launching with a memorable show element that no one soon forgets gets every online marketplace off to an energetic start. Surprises will attract significant attention and excitement to the marketplace. It is one of the easiest ways for people to remember who you are and what you are willing to do to satisfy your customers.

Registration

Decide which legal form your online marketplace should take. Most companies choose either an entrepreneurial company (Unternehmergesellschaft) or a GmbH. However, regardless of the form, it should absolutely match the structure of the online marketplace. You can inquire with local authorities to find out which legal form is best for your online marketplace.

Conclusion

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