Online Marketplace Feature Set:
25 functionalities for a successful online marketplace

If you want to create a new online marketplace, it is an extensive process that requires thorough planning at every stage of development. Important details include setting up a budget and defining all the necessary or desired functionalities that an online marketplace should offer its users. Ultimately, all functionalities depend on the type of business model, the size of your budget, and the focus of the online marketplace.

Since we have gained extensive experience in this field over the past years by creating new marketplaces, we can confidently advise marketplace operators to initially focus on the core functionalities. This way, you avoid unnecessary expenses or save time and effort, while the future direction of the marketplace is already apparent. In doing so, the biggest challenges that could undermine success quickly become evident and must therefore be resolved.

We have provided you with some valuable tips and guidance on how to professionally develop both the core functionalities and the additional desired features for your marketplace.

Which Online Marketplace Do You Want to Create?

Core Functionalities for an Online Marketplace

User Groups

While an online shop is used for the direct sale of goods or products, an online marketplace primarily facilitates the connection between buyers and sellers. It is meant to be a place where buyers and sellers can meet without obligation, communicate, and purchase from one another. Anyone looking to create an online marketplace thereby establishes a platform connecting two different parties that might never meet elsewhere.

The target audiences of an online marketplace are:

Sitemap

For good navigation, a sitemap is required and is usually found in the header menu of an online marketplace. If a sitemap is available, the question arises which subpages should be included. The most important subpages are:

You should ensure that all crucial categories for both buyers and sellers are designed to be user-friendly and clearly organized. No user spends time on a website they do not understand or that does not appeal to them. Therefore, you must place special emphasis on good usability in the online marketplace, which will simultaneously increase user satisfaction and lead to higher revenues for the marketplace providers.

Homepage

The homepage always makes the first, and therefore the most important, impression, as it is here that a customer decides whether to stay or click on to the next provider. With the vast range of offerings, high quality standards have become the norm, and customers need special incentives to make a purchase. The task of a homepage is to convert a visitor into a customer within 3 seconds.

Therefore, a good structure of the homepage is necessary, with particular attention to the “above the fold” area – the part a visitor sees first – to boost conversion rates. For this purpose, a CTA (Call to Action) or another incentive is recommended to encourage the user to explore further on the site.

The following elements can be chosen as CTAs.

A good example of an online marketplace is the deliberate use of “above the fold” sections. Here, dynamic promotional images can highlight current special offers or discount campaigns, or introduce innovative products or categories.

Process

How does a user experience a visit to your online marketplace? It is important that you focus on how a buyer or seller perceives the marketplace in order to optimize it.

We will show you this process from the perspective of both the provider and the customer:

Categories

For an online marketplace, defining product categories is also important, as they determine the business model. There are marketplaces that focus on electronic goods and therefore have hundreds of subcategories. Marketplaces for digital products, on the other hand, use far fewer categories and therefore require significantly less resources and effort on the online marketplace.

Post Listing

One of the fundamental components of any online marketplace is the creation of a listing to attract both buyers and sellers. This creation process should be as convenient and intuitive as possible to ensure that every provider is capable of posting a listing on the online marketplace.

This also includes the selection of input fields or attributes as well as the entire input process. Here you can see how the publication of a listing would take place:

Example for listing publication:

Search

Every online marketplace requires a search function, because without a search box, neither buyers nor sellers can find what they are looking for. A well-functioning search feature requires attention on the online marketplace and is one of the essential functionalities to ensure that a searcher finds the desired product. Various filters are particularly helpful in this regard.

Product Detail Page

A good product detail page provides a wealth of information for a buyer, such as:

If you provide users with a wealth of information, both buyers and sellers will feel well-informed about a product, and this optimizes conversion rates as a purchase becomes more likely. A well-known example of the effectiveness of this approach is Amazon, which offers extensive information on its product pages and leverages it to its advantage. However, you should avoid overwhelming potential buyers with too much information. A healthy balance, on the other hand, promotes sales.

Provider / Buyer

When a user can access all functionalities of both the provider and the buyer with one account, it offers advantages in some business models. This makes it easier for providers and buyers to get in touch when necessary. However, there is also the possibility that a user can act as both seller and buyer. In other business models, dual access is unnecessary. There are the following options:

1. Option: Shared Account for Provider/Customer
2. Option: Separate Account for Provider and Customer

Profile

The following functionalities should definitely be included in the profiles of both sellers and buyers:

Design

The branding of the online marketplace is also influenced by its design, which is why the design must be chosen very carefully. Unfortunately, there is fierce competition in the e-commerce market, and users are increasingly demonstrating their digital affinity. All future customers use similar criteria, ranging from design and technical performance to usability.

You should invest the available resources in developing a unique design rather than using pre-made templates. However, a big mistake is to completely copy the design of well-known marketplaces without being an identical replica.

If you have not yet decided on a logo for your online marketplace, you should at least have a concept or even a draft for it. This way, customers can associate your brand with your logo.

UX

The abbreviation UX stands for User Experience Design, which means user experience. UX is one of the most important variables that influence the conversion rate on your online marketplace. To ensure that you are on the right track when creating an online marketplace, you should put yourself in the shoes of the buyer or seller who is seeing your marketplace for the first time. If you can comfortably navigate the marketplace through their eyes and are satisfied with the experience, you are on the right path.

Payment Methods

With an online marketplace, you must also decide which payment methods you want to offer on your platform. The most well-known payment methods include PayPal, credit card, instant transfer, direct debit, and invoice. However, the more payment options you offer a buyer, the greater the chance of a purchase. A limited selection of payment methods can lead to high drop-off rates at checkout and reduced sales.

However, you must definitely keep the security aspect in mind, as user trust is important. We recommend relying on proven payment methods such as PayPal or credit cards on your online marketplace, which are known worldwide and are considered particularly reliable for both parties. PayPal also has the advantage of not storing unnecessary bank data. This way, users can be assured that even in the event of a hacker attack, neither credit card information nor other transaction details will fall into the wrong hands.

Monetization

One of the central aspects of an online marketplace is determining how the payment flow should work. There are two possibilities for this:

1. Option:
The customer pays the price to the marketplace operator, from which you, as the operator, retain a commission and forward the remaining amount to the seller. This is how Amazon operates, where it matters little to the buyer who receives the payment, as long as the goods are delivered.

2. Option:

The buyer pays the seller directly. In this case, your marketplace serves only as a platform connecting the two parties.

Additional Functionalities

The following functionalities do not necessarily have to be implemented at the launch of an online marketplace, but they are often recommended and appreciated by users.

Messaging

A chat functionality enables casual communication between buyers and sellers and is considered user-friendly.

Favorites

An online marketplace also includes a favorites functionality, which many users find practical. When a listing from a favored provider is published, the user immediately receives a notification and can view the offer. This increases sales for certain products.

Reviews

A review functionality allows a user to rate the service, which in turn contributes to customer retention. Buyers are generally willing to give a simple rating using a 1 to 5 star system to share their opinion. Customer reviews are becoming an increasingly important criterion in the purchase decision.

Interactive Map

In some cases, such as the auction of second-hand goods on eBay, an interactive map can be very helpful for users. This allows users to check the distance in case they need to pick up an item from the seller. An interactive map can also be useful for other types of businesses where cash is frequently used. Additionally, this functionality facilitates sustained contact between customers and sellers.

Invoices

In some online marketplaces, invoices are required for customers, so this aspect should also be incorporated when creating an online marketplace. Invoices help maintain clarity between the buyer and seller regarding payments.

Calendar

Occasionally, a calendar function can also be useful on an online marketplace. For instance, it is useful for scheduling appointments.

Blog

A blog is an excellent way to support your own content marketing strategy. A content marketing strategy is as useful as it is cost-effective for an online marketplace. With high-quality content, you can go viral and tap into enormous potential.

Conclusion

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