The Anatomy of a Custom Marketplace App Development

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17 min readFeb 8, 2024
the anatomy of a custom marketplace app development

With global e-commerce behemoths like Amazon, Etsy, AliExpress, and eBay, the concept of a custom marketplace app is very familiar to many. The latest data shows that:

  • Amazon’s reaches 2.2–2.7 billion monthly visitors worldwide in 2023;
  • eBay scored 655 million visitors per month;
  • Etsy took third place with around 446 million monthly visitors.

In this article, we will begin by talking about promising avenues for developing your very own custom marketplace app. Then, we will look at marketplace development from two different perspectives. First, a more conventional business approach with compiling an exhaustive list of features. Second, an innovative Minimum Viable Product (MVP) methodology. Along the way, we’ll take a peak into the real of consumer research and how it informs the marketplace feature selection. Overall, we aim here to provide a panoramic view of the custom marketplace app development process.

The Playing Field: Arena for Online Marketplaces

The scenarios for their appearances are alike. A popular once-being e-commerce website opened its doors to sellers to offer even more products to the customers. With a marketplace like that:

  • Sellers benefit from the website’s existing customer base,
  • the website benefits from commissions from transactions, and
  • customers enjoy an even wider and ever-growing selection.

The chart below shows Amazon’s evolution from an online e-commerce website to an e-commerce marketplace. The data starts back in 2007 and shows how the share of third-party sellers increased up until 1st quarter of 2023. Now, 60% of all goods sold on Amazon come from its sellers rather than Amazon itself.

With numbers as high as theirs, it might seem like there is no space around those giants like Amazon or Walmart. And, like there is no leeway when it comes to obtaining sellers and customers. Those big marketplaces came from the times when very few companies were doing that kind of business. They had time to gain clientele and capitalize on it. The traffic of customers to their websites became a marketable asset. It is mainly how they grew and attracted so many sellers.

However, now the playing field is different. The Internet marketplace is changing in itself. There is plenty of room for specialized niche marketplaces. If you think of the whole Internet as a giant marketplace, it is growing in width and in-depth. More and more businesses move online with their unique offerings. Even more online businesses are being invented every day. In terms of marketplaces, there are still quite a few niches where there is a space to be filled.

Evolving Niche Sectors next year for Marketplaces

Let us start with a little aside. Covid is old news in many countries. Yet, Covid has become a revolutionary catalyst for the world of online business. Many people didn’t just start buying online on lockdown. They reassessed the risks and benefits of shopping and out-of-home activities. And not only for the duration of lockdown, but for long-term perspectives. The thinking behind it in the consumer’s mind is simple: viruses can mutate, and new ones can appear. So, what was once perceived as fun and safe — is not anymore. Thus, creating dependencies on offline providers is dangerous. Many saw their daily lives shattered. The big picture is that even if it is safe now, it might not be so in a couple of years.

Working, studying, communicating, creating, performing, traveling, and more promise to continue to evolve online. With that, online opportunities are boundless. And, when each new online entrepreneur decides to provide a nice new online offering, they make the world a better and safer place for their consumers.

On that note, let’s dive into the world of unexplored online niches for e-commerce marketplace development.

NFT and Digital Art

Analysts predict that the total value of digital art’s market will be close to $350 billion by the end of 2023. This market is expanding at an astonishing pace. Many people find the idea of creating digital art exciting and give it a go. Then, NFT grows with it. This concept represents digital ownership rights for the digital art. It also acts as proof of authenticity. All in all, it means more traction and recognition. With more and more sellers and buyers of NFTs and digital art out there, there is a need for an outlet for their interactions. As such, 2023 is a great year for creating an NFT marketplace.

If the technology sounds too new to you, read our article What is a web 3.0 marketplace? Let’s build the NFT marketplace.

Home Offices

In the media, it is often discussed how big companies are failing to lure their employees back in the office. Nobody wants to go back to the office, especially full-time. People are more than happy to work from home. More so, they are eager to set up their offices out of their pocket. Even more, it is somewhat of a trend to share your own home office setup on social media. People record videos of how they change their rooms, refurnish and refurbish, and then fill them with trendy supplies.

Considering this ongoing trend, the marketplace for home office goods is not a fleeting phenomenon. It is rather a trend that will persist for the foreseeable future. In addition, people get creative when it comes to setting up home offices. After all, it is a given that corporate offices are set up in a budget-conscious way. In contrast, individuals take a different approach. Considerations of their comfort overpower the cost considerations. Capitalizing on this opportunity would prove to be advantageous. So consider creating a specialized marketplace for home office setups.

Home Sports Facilities & Online Workouts

Projections indicate that the home fitness market is expected to reach an impressive value of $16.55 billion by the end of 2023. Its projected growth rate is 10.1% by 2027. Along with that, a lot of fitness services are moving online. So here two trends are merging together to create even more online marketplace opportunities. People get creative with workouts and equipment for those. More and more trainers move online. So you can create either a marketplace for equipment or to connect trainers and clients. Seizing the opportunity this year is highly recommended.

And more…

  • Many more niches grow along with those. More people are choosing to be at home — they naturally want to take better care of their home. So, you can look into the marketplace for connecting repair professionals and maintenance specialists with homeowners.
  • Plus, there are a whole bunch of craftsmen who can do custom things for homes like never before. So you can create a marketplace like Etsy but for hand-crafted and customized home stuff.
  • Online education is yet another blossoming area. People in search of online work opportunities realize the need to expand their skill set. And there are more and more people willing to teach. A marketplace to make these two meet is an excellent idea.
  • In addition, since people commute much less, they find time to learn something for hobbies. So it is not only a marketplace for professional courses that will be growing. But also a marketplace for arts and crafts which is a great idea to create.

Check out our Startup Services to get going with your very own custom marketplace app.

The Anatomy of Custom Marketplace App Development Process

Custom marketplace app development can be a costly and time-consuming endeavor. If you go a traditional route, it requires significant investment and carries a certain level of risk. However, there is a way to mitigate these risks and validate assumptions in a more affordable way — by following the Minimum Viable Product (MVP) route. You can also request Startup Services depending on your needs.

Traditional Comprehensive Way

Generally speaking, this way of doing business was considered a standard practice for a long while. It involves compiling a comprehensive list of features for the future marketplace. The process looks something like that:

  • Think of the perfect custom marketplace app in line with your business idea;
  • Research competitors and select the features they have;
  • Add features that will make your marketplace stand out;
  • Develop the marketplace.

This route operates on certain assumptions without first validating them. In turn, this means that investors and owners are risking time, money, and resources solely on these initial assumptions. What kind of assumptions, you might ask?

Assumption 1 On Market Demand

Developing a full-blown marketplace like that will take surely more than a year. Count 2 with planning. So, the question is:

  • How precisely can you project the demand for the specific product mix your marketplace will provide? Factor in the time. Factor changing trends and consumer preferences.

Note: the dynamic nature of the online shopping scene allows for predictions for no longer than 6 months or so.

Assumption 2 On Features Set

  • How sure are you that the features you’re thinking of adding for differentiation of your marketplace from the competition will actually do the job?

Note: expected user behavior doesn’t always align with the actual user behavior. Feature preferences and perceptions of those are not set in stone, unfortunately.

Assumption 3 On Monetization Strategy

  • Considering the evolving landscape of online commerce, can you determine from the start what would be the most effective monetization strategy?

Note: The effectiveness of monetization strategy hinges on a range of factors such as:

  • the perception gap between the actual value proposition and the perceived value;
  • Users’ willingness to pay
  • Purchasing frequency;
  • Users’ sensitivity to pricing structures;
  • Different user segments of your marketplace might require different pricing models.

Assumption 4 On User Acquisition and Retention

  • Do you have a clear idea of how to attract and retain users over the long term?

Note: even the channels of acquiring users change and evolve, the number of channels that you are expected to target changes, and so on.

So, the internet landscape has become extraordinarily fast-changing and volatile. These days it is just too risky and expensive to start a marketplace this way. Meanwhile, a custom marketplace app development using the MVP method involves taking incremental steps to validate ideas and assumptions most affordably and efficiently possible.

MVP Business Ways

An MVP marketplace app can help investors and owners avoid committing too many resources to a product that is not yet tested or proven in the market. It starts with researching the consumers. This process is key to identifying the core features of the app. When you focus on those, you can easily maximize the value proposition.

The second stage is releasing your MVP marketplace app. You should target a small user base of early adopters. This way you gather much-needed feedback. Feedback is mainly about the interest in the product and reflects the viability of the business idea.

By receiving feedback from early adopters, developers and owners can implement changes. It often includes modifications and updates to the marketplace app to improve its functionality and user experience. In this way, an MVP marketplace app allows for a more data-driven and cost-effective approach to market validation. In turn, it enables owners to make better-informed business decisions.

To sum up, there can’t be an idea so good that it will justify the risks of shooting for the perfect picture. No matter how good the business idea is, it is guaranteed that things will change. So even though you might feel brave enough to risk it all, the only viable option is to opt for an MVP route. An iterative data-driven approach is what wins these days.

Marketplace App Development: Comprehensive Feature Set VS MVP Set

Traditional business approaches typically involve creating a marketplace app by looking at existing competitors and replicating their features. In contrast, an MVP (Minimum Viable Product) approach takes a more streamlined, selective, and iterative approach. It focuses on key features that provide maximum value.

In an old business way, the focus would be on implementing a comprehensive set of standard features. This might include features such as

  • user profiles,
  • mandatory registration,
  • reviews,
  • search filters,
  • messaging systems, and
  • payment gateways.

The aim is to ensure that the app covers all the expected functionalities to compete with established market players. If you feel that this sounds clear, simple, and familiar, check out our article How to launch own bespoke custom marketplace app like Walmart.

However, in an MVP product, the emphasis is on prioritizing core features that align with the app’s unique value proposition and addressing the most critical user needs.

  • For example, instead of mandatory registration, the emphasis may be on creating a seamless and intuitive User Experience (UX) design. It will lower barriers for new users and encourage early traction.
  • Instead of internal messaging systems, social media integration could be included as a priority feature. It will facilitate easy marketing and onboarding of users.

In an MVP approach, the focus would be on continuous testing, gathering actionable feedback, and iterating based on user insights and preferences.

Don’t think that other features won’t be implemented at all. In an MVP marketplace app, features for sellers could be introduced in the early launch too. Sellers’ profiles and verification will enable trust and credibility within the marketplace. However, other features would be introduced strategically and prioritized based on user feedback and market demand. Some of the features like reviews, messaging, and customer profiles might not be introduced at all in the MVP product. They might have to wait for the release of the fully-fledged version.

Balancing Key Features VS Competitive Edge: The Winning Combination

What marketplace would it be without payment gateways? Yet surely, a payment gateway can’t be a feature to win over the competition. It is just a feature to provide basic functionality and it better be done up to industry standards. So, key features are those that ensure the basic functioning of your marketplace. Users won’t leave your marketplaces for competitors if everything functions as expected.

Then there are fancy uniquely implemented features. For example, an exciting onboarding process, or bits and pieces of AR technology. It really depends on creativity, market research, and technical capabilities. These features turn first-time visitors into loyal customers of your marketplace.

Key Features

1. Registration & Authentication

This feature allows sellers to:

– create an account,

– access their essential information,

– and verify their identity.

Authentication ensures a secure login process for sellers as their accounts will store sensitive data like payment information and information about their buyers.

2. Seller profiles

With seller profiles, sellers can showcase their information, such as

  • store description,
  • location,
  • contact details, and
  • ratings or reviews.

Customers’ profiles provide a personalized experience, enabling them to:

  • track their orders,
  • view their purchase history, and
  • save their preferences.

3. Product Search & Catalogue

A search functionality allows users to find specific products or browse through categories. The catalog must present a well-organized listing of products. It displays relevant information like images, descriptions, pricing, and ratings.

4. Product Page

The product page displays detailed information about a specific listing. It includes more images and videos of the product. It also provides product characteristics, specifications, variations (if applicable), customer reviews, and seller information. This page includes “Add to Cart” functionality and/or a “One-click purchase” option.

5. Shopping Cart

The shopping cart feature provides a summary of selected items, quantities, and total costs. Users can review, edit, and remove items before proceeding to checkout. It is also important that the shopping cart is accessible and visible throughout the user journey. If the customer adds something to the shopping cart from the catalog view, it should be highlighted. As a general rule, any user action must invoke a visible response from the site.

6. Payment Gateway

This feature enables secure and convenient payment transactions. It should allow users to choose from various payment methods like

  • credit/debit cards,
  • digital wallets,
  • bank transfers, or
  • Even cryptocurrency.

Popular third-party providers of payment gateways are Stripe, PayPal, and others.

7. Notifications

Notifications are important for both sellers and users. Sellers must get notified about orders being made, or about customers’ interest. Users need to be informed about order status, shipping status, delivery information, and other important information. You can send notifications about discounts or new items from favorite sellers. It is important not to overdo it, though. Depending on the marketplace, notifications can be delivered via email, in-app notifications, or SMS.

8. Admin Panel

The admin panel provides the marketplace owner or administrators with full control over the platform. It includes features for

  • managing user accounts,
  • monitoring sellers and products,
  • handling customer support,
  • analyzing performance metrics, and
  • enforcing policies.

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These features form the foundation of a marketplace app. They facilitate a user-friendly and efficient platform. Implementing these features ensures

  • connectivity between sellers and customers,
  • streamlined purchasing processes, and
  • a secure and satisfying experience for all parties involved.

Competitive Edge Features

Social Media Integration

Often, social media integration is used for user login and authentication purposes. When used like this, this feature allows users to sign up or log in to the marketplace app using their social media accounts like Facebook, Twitter, or LinkedIn. It provides users with an easy and convenient authentication method.

However, it is more important to provide with ability to share products on social media. This feature is often included in an MVP version because it is essential to successful marketing. In addition, when users post about the item from your marketplace on their SM pages — they generate conversation about the product and your marketplace. This way you establish your online presence. It is also a good practice to track those conversations via hashtags or else. Then, respond and post screenshots on your marketplace for additional buzz.

Advanced Search & Filters

This feature enhances the search functionality of the app. Generally, you will have a search bar and some set of filtering and sorting. However, by enabling users to refine their search results even further according to specific criteria, you make for a better user experience. First of all, user gets a feeling that you can really provide something particular to users’ needs. Second of all, it saves users time when the user knows what they want.

Some marketplaces practice making searching and sorting challenging for the users. It is done to bump up metrics of how long users stay on the website. But this short-term gain makes for a long-term loss. Users will remember how difficult it was. Upselling is better done through a recommendation system.

Voice Recognition

This feature allows users to interact with the marketplace app using voice commands. The new generation of digital natives might find it confusing if your marketplace doesn’t follow their voice commands. But jokes aside, it does become a more and more commonplace feature. Tired users talk to a phone to order things online. And a lot of users just don’t want to look at the screens any more than they have to. So by catering to this need, you really improve user experience and facilitate user loyalty. Implementing a voice recognition feature for your custom marketplace app creates a hands-free and intuitive user experience.

Messaging & Chatting Capabilities

This feature allows users to communicate with sellers and other users of the app. Marketplaces now aren’t simple buying and selling platforms. A lot of businesses see benefits from adding social aspects to the online shopping experience. True messaging and chatting capabilities are state-of-the-art functionality. It aims to replicate real-life social shopping experiences and create a positive atmosphere in your marketplace. In addition, it introduces a touch of transparency to your marketplace.

Augmented Reality

This feature allows users to virtually visualize or try out products. By superimposing digital content onto the physical world, AR enables users to get a better sense of how products might look or function in real life. For example, a furniture app might allow users to see how a couch would look in their living room before making a purchase. This feature reduces uncertainty and increases confidence in making purchasing decisions. In turn, it also reduces returns.

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This is not an exhaustive list of competitive edge features.

  • You can introduce AI in marketplace support or as a store host kind of thing. We wrote about that and more in our article How can AI power up your custom marketplace app?
  • You can also go with design and animations to create special UX.
  • You can embed data analytics systems to ensure state-of-the-art recommendation systems.

You can also read more about awesome features for your marketplace in our article 10+ features to develop the best online marketplace app. All these features enhance the usability, functionality, and engagement of the marketplace app. It all enriches the user experience and makes the app more appealing to your customers whether they are buyers or sellers.

Researching the Feature Set

With an MVP approach, the research will be done on what target customers value when shopping for the type of goods you are planning to sell. Based on that, the features are ranked. It is done to select those with the highest impact on your bottom line. For example, the research results below show such kind of user survey of a generic customer.

  • From it, you can see that having ratings is really important. 71% of online shoppers do pay attention to those.
  • Second, you would want to display some products at really affordable prices. Even if the customer ends up buying something more expensive, chances are they’ve come to your website attracted by the lowest price.

A bit different results would be produced when the research is done on online brands. Here, you can see that the top three leading reasons for choice are:

  • Low prices;
  • Quality;
  • Customer Service.

The first stage of a custom marketplace app development is always research. You ought to see what your target consumers value. You should decide whether you are going to develop the brand. Try to see what words to use to market your business. For example, ‘locally-sourced’ or ‘sustainable’ can be part of your business mission. Based on that, your development agency will suggest ways of surveying potential customers. Then the list of features will be prioritized.

Trendy Competitive Features

The chart below shows the top features where the most competition is concentrated at present. Marketplaces try to outdo one another by:

  • providing personalized shopping experience,
  • easing the process of searching,
  • being more transparent about the products,
  • implementing useful wishlists,
  • enabling users to shop in one click or directly from an SM post,
  • Accessing useful analytics from customer dashboards. After all, customers also want to make data-driven and informed decisions about their shopping.

Final Thoughts

This article provided a panoramic view of what it is like to develop an online marketplace. It showed interesting niches for entry. It also provided solid reasoning for an MVP route to develop your marketplace. Then, it discussed the feature selection. Along the way, we recommended a few interesting articles for you to check out.

To finish up, here is a final bit of data for your consideration:

  • Mobile e-commerce is gaining weight. It now generates 72.9 of total e-commerce making a mobile custom marketplace app a solid choice;
  • Mobile e-commerce might include a web marketplace optimized for mobile, but 70% of sales come from native apps;
  • Even if you have a web custom marketplace app, chances are customers will come through a mobile device. 66% do;
  • Mobile shopping is a convenient and happy way of shopping for 89% of users;
  • Lastly, the average check for an online order placed via the phone is $79.

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