How to Create a Niche Online Marketplace

January 21st, 2023 | 9 min read

Shopping has been revolutionized! And it will forever be different. Online marketplaces have taken the place of the big shopping centers of the world.


And it will forever be different. Online marketplaces have taken the place of the big shopping centers of the world.

Online marketplaces were created by identifying a need in the market, conducting competitor research, and identifying their target market. Why would you want to learn more about the process of creating an online marketplace?

Creating an online marketplace can be a lucrative business venture. The platform owner (e.g., yourself) can earn a fee for every transaction that takes place on the marketplace.


Even if the marketplace doesn’t reach the size of Amazon or Uber, you can still target a niche. Take Etsy, for example. Etsy was founded in 2005 in a Brooklyn apartment by friends Robert Kalin, Haim Schoppik, and Chris Maguire.

Kalin was an amateur furniture maker at that time. He found it difficult to sell his furniture online. His friends had the idea to create a platform where artisans could sell their handcrafted creations rather than on their own individual websites.

When they launched the website that year, the platform took off. Today, Etsy is known as the go-to online marketplace for creators and designers all over the world.

Or Uber’s story. Uber’s story started in 2009 when Travis Kalanick and Garrett Camp after they had a difficult time hailing a taxi in snowy Paris and thought to themselves, "What if you could just use your phone to request a ride from wherever you are?"

Or Uber’s story. Uber’s story started in 2009 when Travis Kalanick and Garrett Camp after they had a difficult time hailing a taxi in snowy Paris and thought to themselves, "What if you could just use your phone to request a ride from wherever you are?"

The idea of being able to order a ride from your current location using a cell phone was innovative and convenient. It quickly gained popularity in cities like San Francisco and Paris! Uber solved a common problem for people by making it easier to hail a ride without having to wait on the street or search for a car.

93 million customers now use Uber's platform, and 3.5 million drivers serve this growing user base! In 2020, Uber processed a total of $26.61 billion in gross bookings from its ridesharing business.

So, let's start! Three key points that you’ll want to consider - yes, really, when starting an online marketplace.

Create Your Own Marketplace Fast

  • Launch your own marketplace niche fast
  • Easily connect your own domain name
  • Create your own categories quickly
  • Create custom fields specific to your requirements

Online Marketplaces are Created Because a Need or Opportunity is Identified

Online marketplaces are often created in response to a need or opportunity in the market! Something the entrepreneurs identify as a frustration they’ve had. 

For example, Airbnb was created because the founders saw a need for more affordable and unique accommodation options - in a city with high demand and limited hotel rooms! They saw it was not easy to book a room!


For example, Airbnb was created because the founders saw a need for more affordable and unique accommodation options - in a city with high demand and limited hotel rooms! They saw it was difficult to book a room!

By identifying a problem or gap in the market, entrepreneurs develop solutions to the need they’ve identified. Understanding the market and identifying a need or opportunity can also help entrepreneurs develop a clear value proposition.

  • Spoonflower, a global marketplace that connects consumers with independent artists in the textile industry, has grown its community to 3.3 million creatives. Its founders identified a gap in the print-on-demand textile industry and then created a unique platform centering around it.
  • BetterHelp saw the need to provide better therapy services to individuals through the internet. The platform gained a 60% increase in downloads in April 2020, at the height of the pandemic.
  • TaskRabbit was able to fill a gap in the gig industry by connecting those with tasks they don’t wish to do with people who are offering to do the tasks for them. In 2019, there were more than 140,000 taskers on the platform, earning $35 per hour on average.
  • Airbnb is a popular online marketplace for booking vacation rentals and short-term accommodations. Brian Chesky and Joe Gebbia, facing financial difficulties in 2007, came up with the idea to rent out air mattresses at their place to attendees of a conference in San Francisco, as all the hotels were fully booked. They identified a need and named their makeshift accommodation service "Air Bed and Breakfast." 

As a future marketplace operator, focus on creating your business under a still low/untapped segment of the industry by identifying pain points or gaps in the market.

As a future marketplace operator, focus on creating your business under a still low/untapped segment of the industry by identifying pain points or gaps in the market.

Researching Competitors Can’t be Under Estimated When Building an Online Marketplace

Research helps you identify the unique value proposition of the new marketplace you’re building and how it will differentiate itself from competitors. For e.g., take Swappa, a niche online marketplace for sellers and buyers of gently-used small tech devices.


Ben Edwards, the platform’s founder, got the idea to build Swappa because he had problems sourcing test devices for Android development projects. He didn’t trust the ones he could get from eBay or Craigslist.

Ben Edwards, the platform’s founder, got the idea to build Swappa because he had problems sourcing test devices for Android development projects. He didn’t trust the ones he could get from eBay or Craigslist.

There were too many defective devices or blacklisted phones sold on those websites. Swappa came to understand the weakness in the available devices in those huge marketplaces.

So they created a unique value proposition by including an approval process to ensure there were no junk items being sold on their platform! By doing this, Swappa was able to create a “moat” around their marketplace.

Find out what’s different about you:

  • According to this Etsy study, 86% of Etsy’s sellers identify as women. Because of this, the platform has become a niche marketplace for female business owners and buyers.
  • When it comes to gig marketplaces, Fiverr has better pricing and search filters than Upwork. In the United States, Upwork only gets 41.01% of the traffic share, while Fiverr gets 58.99%.
  • Airbnb, which has a niche targeting approach by offering homestays and affordable lodging around the world, has a 67% direct traffic advantage compared to its competitors. This means that most of its site visitors directly visit the platform when they need accommodation instead of checking out other websites.

TaskRabbit is an online marketplace that was created in response to the competitive gig economy. When TaskRabbit was founded in 2008, there were already several platforms available for individuals to find freelance work and gig jobs.

However, the founder of TaskRabbit saw an opportunity to create a more specialized platform that would connect individuals with one-off tasks and errands that needed to be completed.

However, the founder of TaskRabbit saw an opportunity to create a more specialized platform that would connect individuals with one-off tasks and errands that needed to be completed.

Spend time doing some competitive research to ensure you have a unique value proposition. Whether it’s you allowing a convenient mode of payment for your consumers to pay for their products and services or giving some guarantee that makes online shopping safer for them.

It pays off for you to be the first to offer something that your competitors don’t have yet.

It pays off for you to be the first to offer something that your competitors don’t have yet.

Online Marketplaces are Defined by a Target Market (Demographics, Interests, & Needs)

Target markets drive how you determine the types of products or services you offer and how you should market your site to potential customers.

Take Etsy, for example. It’s a large online marketplace in its own right. That being said, right from the get-go, the founders of Etsy clearly defined their target audience - artisans, crafters, and buyers of handmade items.


They haven’t strayed from that, even as the platform grew. In fact, it’s one of the biggest selling rules of Etsy - that only handcrafted items may be sold on the website. This has contributed to Etsy’s success.

They haven’t strayed from that, even as the platform grew. In fact, it’s one of the biggest selling rules of Etsy - that only handcrafted items may be sold on the website. This has contributed to Etsy’s success.

When people shop from their website, they know what they’re getting is a one-of-a-kind item that’s not been mass-manufactured somewhere else.

One platform that clearly defines its target market is Handshake. Created with the goal of giving college students equal access to meaningful careers, Handshake connects these students with employers looking to hire across the country. Handshake has developed its platform to cater to young adults.

One platform that clearly defines its target market is Handshake. Created with the goal of giving college students equal access to meaningful careers, Handshake connects these students with employers looking to hire across the country. Handshake has developed its platform to cater to young adults.

Since a large portion of college students conduct their transactions on mobile phones, the company has developed a mobile app where students can create profiles and get personalized job recommendations.

Knowing that company culture is important for Gen Zers, job hunters using Handshake can meet with employers for them to learn the company culture.

This has led to Handshake becoming one of the leading early career communities in the United States, with 12 million active users and more than 750,000 employers!

Give thought to how you want to define your target customers’ needs, demographics, and interests early on during the planning stage of their platforms.

Doing this during the early stages will help you. Help you with your branding, marketing the actual website or whether to make a mobile app together with it.

You may eventually choose to expand your target audience as Amazon did. Amazon eventually decided to move from its online bookstore to the sell-everything approach they have today.

The importance of a niche target market to penetrate when launching, though, can’t be underestimated.

You may eventually choose to expand your target audience, like what Amazon did. Amazon eventually decided to move from its online bookstore to the sell-everything approach they have today. The importance of a niche target market to penetrate when launching, though, can’t be underestimated.

Summary

Online marketplaces are the future of shopping; many want their slice of the pie. However, there is some stiff competition out there; it's not recommended you follow the catch-all approach of bigger platforms like Amazon.

You can find ways to make your online marketplace stand out from the other ones already in the market. Do this by:

  • Offering a unique value proposition
  • By identifying and filling a gap in the market
  • Conducting competitor research, and
  • Defining your target market.

We would love to hear your thoughts. 

  • Can you think of any niche that would provide an opportunity to build an online marketplace?
  • What other online marketplaces can you think of that curated their services to fit their target audience?
  • What other gaps in the marketplace industry can you think of?


Create Your Own Marketplace Fast

  • Launch your own marketplace niche fast
  • Easily connect your own domain name
  • Create your own categories quickly
  • Create custom fields specific to your requirements

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