What are the Core Decisions Required for Developing a Marketplace Website?

In the last blog, we explained what classified websites are, and provided examples of successful enterprises.

So, what's next? 

Here are three steps to consider when you start to plan the development and design of your website.

• 1. How to test our your ideas (essentially testing out your target market before you start)
• 2. Deciding what functionality and features you want in your marketplace platform
• 3. Determining how you are going to monetize your business (hint commissions is a good one)

Start by Taking Your Marketplace Project Idea to the Next Step: Identify Your Target Audience

Start by Identifying a Target Market for Your Marketplace

By using a simple funnel process, you can identify who your target market might be.

If Amazon didn’t exist and you were considering opening an ‘everything store’, who would be your target market?

Anyone who has access to the internet and money (a bit broad but you get the idea).

For anyone launching a typical marketplace though, that's too broad. Let's dig deeper.

Let's Dig Deeper: Who is Your Ideal Customer

It's not always that easy to determine when you start who your ideal customer is.

Often, this is something that develops over time as you hear feedback from customers. 

The ideal customer will see the value in your offer.

The ideal customer is an individual who will want to share their experiences with others.  

They will be your brand ambassadors. Your case studies. 

10 Questions to Consider When Determining Your Ideal Customer

What are Your Customer's Demographics?

1. What is their gender, their age?

2. What is their occupation? What do they do for work?

Where are Your Customers Located?

3. Where are they located? I.e., Canada, capital cities around the world, or a specific area such as Mercer Island, Seattle, Washington.

What are Some Unique Customer Characteristics?

4. What do they do in their spare time?

5. Are they religious? Political?

6. What would their life mantra be?

What are Your Customer’s Greatest Wishes and Deepest Fears?

7. What motivates them?

8. What are their greatest wishes or hopes for the future? This may be something as simple as taking a holiday this year.

9. What are their fears? I.e., A fear of spiders, losing their financial security or loneliness.

10. What frustrates them in their daily life?

The more you can learn, the better you can target your service/product and marketing.

Testing the Market with Your Marketplace Idea

Testing the market can be done in a few ways. Sometimes it depends on the budget.

Using a test user group can be one way.

Using a user group can help you understand how your idea will be received before committing a lot of money. 

Pros

• Learn if the market supports your idea 

• Iron out and tweak the idea with regular feedback

• Experiment with pricing and see how individuals react

Cons

• User groups can be expensive to set up

• User groups can be time-consuming

• Often delays the official launch

How Can You Potentially Test the Market on a Budget?

Chances are, you might not be in a position to invest in a user test group.

There are other ways, maybe more "crude" to analyze your target market.

Talk to people! 

This idea might sound basic, but it does have value. Talk to the people you know and people in your local community.

If you have a great idea that will make processes easier for hairdressers (for example), head out to a few salons and chat with the staff.

Talking directly with your target market will help you assess whether your idea has value and what parts of the idea can be tweaked.

By including your target market in this process, you are also expanding your network of potential clients.

As they say, you don’t know what you don’t know (until you do!).

Conduct Online Research

Do product research online to learn about:

• 1. Who your competitors would be
• 2. Similar products to your potential product
• 3. Create a matrix of competitor pricing (balancing the value you offer and profitability)

Researching your target market on social media can be a clever (and free) way to learn about your audience.

The Best Websites Have Well-Designed Functionality & Features 

Now that you know who will be using your website, you can better tailor it to suit them!

With your ideal customer in mind:

• 1. How is your website going to function for them?
• 2. What features can you include in the design to tailor it to your ideal customer?

Start by visualizing the journey customers might take on your website to make a purchase. 

Through this process of visualizing you will see exactly what features they will need to complete their purchase. 

Buy and Sell Marketplace Websites

For e.g. eBay and Amazon are "buy and sell" marketplaces. 

They require functionality for users to both list and purchase items; a basic requirement of any marketplace. 

Location-Based Marketplace Websites 

Airbnb is a good example of a location based marketplace.

Hosts (the sellers) need to be able to add their location, while, visitors (buyers), need to be able to do location-based searches on the website.

Direct Marketplace Sales

If you are selling a product or service directly to a consumer, security becomes paramount. 

Consumers are very concerned about security when they are purchasing anything. 

They want to know this is a reputable website. 

Building your brand help ensure people that you have a secure website.

With that security, you'll need to incorporate easy search functionality so people can find products, and check out securely.

Monetizing Your Marketplace Website - Do You Use Freemium, Subscription, Membership or Commission? 

Here are a couple of monetization models (or revenue models). 

Freemium offers users access to basic features for free. 

Users then have the option to upgrade to a premium option for more (or better) features. 

The website, Medium, is a good example of a freemium website. 

While anyone can read Medium, in order to read more, eliminate ads, and support writers, you need to go to the 'premium' paid version. 

There are many websites that use a "freemium" model to market their solution. 

If you're a marketplace, you might use the freemium model to initially let people post their listings or products for free and then later on charge sellers for the option to list more. 

Membership/Subscription Options

In a subscription model, customers must subscribe to access the website and features. 

At Yclas, we allow our marketplaces to charge memberships to access the website and post listings. 

You can find more information in our guides here.

Sometimes to attract subscribers, one might offer a free trial initially to a subscription. Like the Yclas free trial offer. 

Mainstream products such as Microsoft D365 are offered by subscription services.

Commissions/Fees

Websites such as eBay charge sellers fees for using their marketplace.

It's typically that model that's used when creating product or service marketplaces.

Marketplaces that use commissions are typically amongst the fastest-growing marketplaces. 

How are You Going to Accept Payments?

Lastly, how are you going to accept payments?

Who you build your marketplace website with may have suggestions on the best apps, plugins, or software to integrate.

There are many options available to merchants around the world, i.e. Paypal, Stripe, Square, Google Pay.

On the Yclas platform, we provide Paypal and Stripe amongst a series of other payment providers. 

In selecting a payment provider, security is paramount.

Customers want to know their information will be kept private by a reputable company.

The more well-known the better.

What's Next? 

In the next blog in this series, we dive into the process of developing your website:

• 1. What is involved in building a website from scratch 
• 2. What you need to know about speed, security certificates, and other info about the back-end
• 3. What you need to know about developing the front-end content for your website

References
1. Cohn, C. Steps to Identify Your Target Market. Forbes. 2015.
2. QuickBooks. 5 Steps to Identify Your Target Audience 2022 | Start Your Business. YouTube video. 2021.
3. Erhart, A. How to Identify Target Market | Target Market Examples. YouTube video. 2019.
4. Marketing Evolution. Steps to Find Your Target Audience. 2022.
5. Cadbury, ND. When, Where, and How to Test Market. Harvard Business Review. 1975 (first printed date).
6. Bhasin, H. Test Marketing – Introduction, Benefits and Disadvantages. Marketing91. 2020.
7. Deeb, G. You Don’t Know, What You Don’t Know. Forbes. 2020.
8. Newberry, C. How to Find and Target Your Social Media Audience (Free Template). Hootsuite. 2020.