How to Create an Online Marketplace like Etsy

“Uber, the world’s largest taxi company, owns no vehicles. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

© Reality

Starting an online marketplace looks like an attractive idea for entrepreneurs mainly because they would not have to handle inventory activities such as warehouse organization, storage, tracking stock, etc.

Starting an Etsy-like marketplace looks even more attractive—the way Etsy became a wildly successful eCommerce site through word-of-mouth inspires all of us.

In this post, we will cover why it is worth to venture in building your own marketplace and how you can adapt Etsy’s best practices to your business.

What’s trending now?

The trend to shop for personalized items is blooming. The market has become over-saturated with mass-produced goods and especially the “Made in China” ones. For this reason, it makes good business sense to switch the focus to selling specialized products. Besides, you eliminate the worry of competition when you sell unique items, like hand-crafted products.

How to be original

Big or small, a business will be a success only if it solves a community problem. Proper market research is essential for any business ideas, however, today we are sharing a couple pieces of insight to get you started on finding an original solution with your new marketplace:

Support local community

In some communities across the globe handicraft is more than a tradition—it’s the only means of income for many families but lack of technology is the major obstacle to access large marketplaces. This is the case in rural areas of Africa. Women in Africa produce 60 to 80 percent of the continent’s goods but have limited opportunity to display their African pride.

Let’s not limit ourselves to artisan products. Shopping for groceries, especially fruits, can be a real issue in other areas. For this reason, grocery delivery marketplaces can be a long-awaited solution for the residents.

One of our clients, a CS-Cart marketplace owner, addressed the most painful problem in his country, Egypt. In Egypt, it is not safe to buy dental medical equipment and materials, there is a high risk to buy fake. So he saw an opportunity there and built a marketplace for medical suppliers to sell original dental materials.

Solve work-profit imbalance

Large marketplaces like Amazon offer great exposure but take large cuts out of vendors’ profits. That is the key factor why vendors are leaving large platforms and seek better business opportunities. Here you can find your business opportunity by creating a marketplace with more attractive vendor packages and fair fees.

For example, Etsy charges vendors an additional fee to list their products on the website while you can have no listing fees. Or, Amazon has referral fees based on the category vendors sell in. The fee for selling accessories is 17%, for gift cards—20%.

That is a too high commission for art products made in small batches. You can offer better fee schemes for vendors and move toward more of a “we don’t make money until you do” approach. That would be a sure way to instantly attract a large number of vendors to your marketplace.

How to build a marketplace?

Every project needs a structure. We recommend you use the following phased approach for your eCommerce project. Break your project down into three phases:

Fundamentals

If the fundamentals aren’t down, the rest is just built on quicksand.

On this initial stage of the project, you choose the platform where you are going to set up your marketplace and a hosting provider where to host it. Currently, CS-Cart offers three editions of Multi-Vendor marketplace platform and four plans for cloud hosting solutions to fit the needs of a business project of any size and budget.

Minimum Viable Product (MVP)

We recommend that you start the development of a marketplace from a minimum viable product (MVP). Bringing your product to the market quickly means you can get early feedback so you can fix issues or add features. Moreover, early feedback allows you to validate your product hypotheses and your value proposition as soon as possible and attract new users to your service.

Let’s define the core functionality of MVP for an online marketplace:

Orders. Your customers should have the ability to create orders. The process of creating an order should be flawless.

Payment methods. Your customers should be able to pay for orders. Consider payment methods that are essential for your business (customer locations, local regulations might be key factors for making a choice).

Logistics. Your customers should be able to receive their orders. Establish your shipping strategy: shipping methods, carriers, costs, etc.

The mentioned functionalities should be usable and totally reliable. The default functionality of CS-Cart will cover the needs of your MVP.

Further development

Test the initial marketplace version with early adopters—a small segment of your target audience. After a short period of usage, they’ll provide feedback about the necessary improvements that you need to polish for a bigger crowd to come.

Etsy-like features

Why not borrow best practices of Etsy and develop additional customization to your marketplace, especially if they have proven effective in driving sales.

Simplified admin panel

It’s not the eye-catching design of Etsy we are going to mention first but the admin panel for vendors it provides. You want to make the admin panel for vendors as simple as possible and super user-friendly. A lot of settings can be configured by default, but if help is needed, contact us for customization.

Right style

If you want to launch strong, piece together a strong storefront design. Create the impression of ‘Shopping special”:

Keep the style fresh and light, without any “flashy” design elements. White background.

Focus on featuring products, remove any distractions. 

Take a look at the way the products are displayed below—crisp and clear:

On our marketplace, we have a number of themes that can serve the purpose of keeping your storefront neat and clean, for example, Rome Theme. However, depending on your specific business needs, you can request further theme customization.

Communication

The biggest reason online marketplaces are becoming more mainstream is that shoppers are more willing to trust online marketplace platforms rather than individual stores to protect them from fraudulent merchants.

Generate a sense of community where both merchants and consumers can support one another in niche markets that are important to them:

  • Add customer-to-vendor communication feature,
  • Add reviews under the product image.
Etsy allows adding customer reviews right under the product image

Etsy allows adding customer reviews right under the product image

Tips for customization quote:

Each marketplace project is unique and we offer custom development services on a case-by-case basis. If you are starting a marketplace and/or need custom features, use these tips for requesting a quote:

  • Give us your project summary (B2B or B2C, number of storefronts and number of vendors, product type, the geography of distribution),
  • Tell us about the profit scheme (how you are going to monetize the idea),
  • Let us know about your business-specific needs – specific payment gateways, third-party system integrations, etc.

Screenshots are helpful and do not hesitate to share links to the examples from other businesses that inspire you.

The more input information we have about your project, the quicker together we will take you to the desired outcome – running a profitable marketplace.

Katerina Kopylova Katerina Kopylova is a Content Marketer at Simtech Development. She writes research-driven articles on eCommerce business solutions. Educated in Business Studies, bitten with a literature bug. Katerina is also a photography enthusiast. When she is not writing eCommerce articles, she is outside, equipped with her favorite 50mm lens, seeking photo opportunities.