Until recently, people used to head over to actual marketplaces to buy and sell goods. This would take up a lot of time, energy, and resources. Not only that: being confined to a particular time and space would limit outreach and growth, meaning only local consumers could be served.
All of this changed when the invention of the internet took the commercial world by storm and changed its core functioning. Now, with a single click, businesses can finalize deals in seconds and make transactions with consumers all around the world without the slightest hitch.
And consumers can purchase products not just from the partial local brands, but international ones as well. The need to step out of the house has been eliminated and replaced with a click-shop-and-ship delivery system.
With the marketplace sector going virtual, many online platforms have come into existence. Products are bought and sold on Amazon, Etsy, eBay, Tindie, and more. Services are bought and sold on Fiverr, Upwork, Freelancer, and Uber, among others. Even properties are presented and rented on sites such as Airbnb.
Why don’t you capitalize on this commercial trend by launching a virtual marketplace yourself? It’s not as hard as it may seem. All it takes is elaborate planning and tactical thinking on your part. To guide you through this venture, let me present you with some of the most vital steps needed for successful execution.
1. Careful Contemplation of the Business Idea
Brainstorm to come up with a number of possible scenarios. Research online using your Xfinity bundles connection, and see what competitors are doing. Check out the overall flow of the niche, and when you find a gap, seize upon it.
Observe the pains and problems that users are facing, especially those that are not being effectively addressed. This is where your relevance will lie. Hone your idea of the platform, and test its validity by discussing it with peers and experimenting with it.
Without gauging and presupposing the consumer reaction, it would be tactless to launch the idea and simply hope for the revenue to fly in. This requires both proper planning and an adoption of rea tried-and-tested business model on your part.
2. Getting Started on Platform Basics
After working on your theoretical idea, it is time to give it some shape. A few factors need to be considered before the process of building your platform:
- Theme: Are you going for an online platform which connects makeup accessories producers to makeup loving buyers? Furniture makers to homeowners? Baby whisperers to new mothers? Decide on a theme. This will help you in drafting the scope of your venture, like whether you need to launch it on a small-scale or a large-scale.
- Monetary Resources: How much money do you have to invest in this venture? This is a highly important point. If you’ve got a low budget, you might need to skip the excessive detailing and start on a small scale. However, if you have a significant amount to spare, go right ahead with a large-scale launch, where you can tend to even the littlest details.
- Personal Expertise: Next comes the coding. Can you do it on your own? Have you got the required expertise to work on the technical stuff that goes into a platform’s development? If you do, that’s great. Craft your own virtual marketplace domain using open-source software.
- Hiring Help: If you’re not familiar with the technical stuff, you can always recruit a developer to your team and let them develop the domain for you, and still on open-source software which is relatively easy to maneuver, as you’re using your own server.
- Subscribing to Providers: If you don’t have enough money to pay a full-time technical employee, you can subscribe to online marketplace providers that offer their technical services, like maintaining and updating software. They may either use open-source software, where you’re free to host the domain as you please, or closed-proprietary source software, where you’re bound to the provider’s whims. Check before making a move.
3. Building Supply and Demand Mechanisms
As a child, when you wanted to make some money during summer vacation, what did you do? Set up a lemonade stand, right? What were the basic steps?
- Make the lemonade.
- Re-check the hotness of the day.
- Put up the banner.
- Decide on an initial price.
- Attract customers.
As simple as that. You went for supply first (lemonade), inspected the contextual circumstances which created the demand (the hot day), and then you started interacting with the buyers.
Use the same principle with your platform. Contact and enlist producers who are interested in your idea and who may want to use your platform. Do this before actually launching so you have enough supply on your hands. At the same time, round your potential customers by asking for email subscriptions. Check out the following points which explain the role of these factors in this whole process one by one.
i. Forming a Provider Base:
Start with the supply. What’s so special about your platform that providers should choose you instead of all the others? Do you offer something new, something stable, or something more? Less fees and more profits? A vast, credible, and detailed user base?
If you do, then they’ll definitely follow your proposition and become a part of your venture. But be careful about the kind of providers you send your pitches too. There are many fakers in the market as well. Always aim for the top ones which are popularly targeted by other firms, and that offer excellent products and services that aptly sync with your theme.
Remember: your supply chain should be steel solid and should have no weak links.
ii. Gathering Users:
Generate demand. For this, you need to know who your target customer is and how you can interact with them. Your potential customers could be college students. Research shows they participate more energetically in online shopping. To tap into this sort of audience is relatively easy, as they are highly active social media users.
Just get on a high-traffic page or enter a dynamic community of users and participate in the ongoing conversation threads until other users start recognizing and acknowledging your presence.
At the peak attention moment, unleash your idea and ask for general feedback Direct them to a landing page and ask for their emails. This is a small example of how you can create a user base.
iii. Choosing the Right Business Model:
What’s in it for you? You’re enabling the consumer-producer interaction, but what are you getting out of it? Just like any startup, you need funds. Now, you can go ahead and invest some money initially on your own, but the future functioning of the platform and its sustainability depends on the funds generated from the very same consumer-producer interaction you’re cultivating.
To monetize it, you require a business model, which will ultimately serve your ends and lend you stability. There are quite a few models from which you can choose from:
In C2C Marketplaces, where users share low-value products for free with each other, you can monetize through a freemium model. How? Well, the original product has no substantial cost, right?
You can earn around it by including delivery charges, which the customer has to pay in order to get the chosen product delivered to their door.
In addition to that, you can ask for an insurance fee which ensures that the purchased product will be replaced if it gets stolen or lost. The transaction cost is minimal, but the true value lies in the features added on top.
Make your platform more valuable by integrating exclusivity in the form of a membership fee. How will this work? The users will have to sign up and pay the fees before they’re able to make any successful transaction.
They can check out the products and services, and they might even select one to buy, but they can’t purchase anything before depositing the required payment. This helps your platform retain a good amount of value and brings new customers to the providers’ front.
To solve the possible issue of users being discouraged by the subscription fee, you can offer discounts and promotions to keep their attention on you.
There are certain websites, like Craigslist, that run on the basis of listings that are posted by the providers. What are these “listings?” Catalogs of products and services on a provider’s page from which the user can choose.
And each time a particular provider posts new listings on your platform, they will have to pay a certain fee to you. This method shifts the value from the transaction to the provider’s page.
But you’ll need to have volumes upon volumes of listings in order to generate enough, as the listing fee cannot be so large as to dissuade the providers.
Because you bring the buyer and the seller together by facilitating them through a valid platform, you get to charge a certain percentage from every successful transaction between them. This flat fee is called a commission, and it helps to reinforce your future standing.
Out of all the examples, this model is quite feasible for you and beneficial for the providers as well, as they are not bound to pay before the actual dealings with consumers. Decide on the commission price and make sure that it’s justifiable. You can start with a lower percentage and then raise it as the sales go up. It depends on you and your foresight.
Some websites give users the opportunity to post their queries on the platform, and then those queries are presented to multiple providers. Each provider has to pay a sum in order to bid for such users.
This fee is called lead fee, which gets its name from the fact that providers have to submit it only when they get leads, or they go into business with the consumers. This fee gets its value if the value of the lead is substantial enough.
iv. Selecting Pricing
What should be the overall monetary tone of your platform? Should you start with a high-price mark or a low price-mark? What should be the future price curve? There are certain factors which affect the price setting decision, like the probable profit margin of the providers, the competition in the market, the relevancy of the products, etc.
Consider these before setting the mark. Going from high to low with discounts in between is a much better approach if you ask me.
v. Making it Official
Finally, after checking off the aforementioned pointers, you’re ready to launch your platform. Remember to always keep your credibility as a neutral connective platform on the forefront. This will help users and producers to trust you, thereby attracting more people your way.
Know that revenues are not generated overnight - successful transactions take time to build up and to gather momentum. For this purpose, you should know how to market your e-commercial venture as well. There are various tried-and-tested techniques which you can implement, like creating quality content about your platform, optimizing it to rank higher in search engines, and getting it shared virally on social media.
These are organic ways. You can go for paid marketing methodologies as well, like pay-per-click ads. Email marketing is also one of the best ways of gaining a good subscriber ground.
Be persistent, flexible, and don’t forget to track your performance.