Article | 6 min read

Custom Marketplace Development Services vs Off-the-Shelf Online Marketplace Software

Build a Marketplace
Author
Protim Bhaumik
Editor
Sharad Kabra
Published
July 27, 2024
Last Updated
December 10, 2024

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Custom marketplace development vs Off-the-shelf solutions

Unlike off-the-shelf multi-vendor software to build a marketplace MVP (minimum viable product), a custom marketplace software development is tailored to your business needs, allowing you complete control over its features, design, and functionality. While off-the-shelf solutions offer a quick and affordable starting point, they sometimes fall short when dealing with the complexities of running a successful marketplace.

Here's why custom development might be the better choice for you:

  • Complex niche requirements: Your niche requires a multi-SKU listing process, while off-the-shelf solutions offer a simple listing format. You also need a custom CRM to manage intricate customer relationships. Custom development allows you to tailor the listing process and build a CRM catering to your niche needs.
  • Scalability issues: You envision your marketplace becoming massive, with 100,000 or more customers daily. While cart platforms like Shopify, Magento, or Woocommerce can handle some growth, scaling to that level might be challenging. Custom development allows you to build a platform that can scale seamlessly as your business grows.
  • Intellectual Property (IP) protection: Off-the-shelf solutions rarely allow for complete ownership of the platform's code or technology. If you have unique functionalities that could be your competitive advantage, a custom build is essential. Custom marketplace development solution ensures you own the intellectual property of your platform, allowing you to control its evolution and protect your competitive edge.
  • Better way to monetize your vendors: You can develop additional revenue streams, such as charging suppliers for premium access, providing value-added services to your vendor, and more with custom development.

Additionally, while platforms like Shopify and Stripe strive for compliance with regulations like GDPR, they might not offer the granular control you need for your specific security requirements. Custom marketplace web development allows you to build security measures tailored to your marketplace and data.

Moreover, if you answered yes to any of these questions, it might be time to consider custom development:

  1. Do you foresee significant growth in your marketplace, requiring a scalable platform?
  2. Are you aiming to create a highly differentiated experience in a marketplace a customer wants?
  3. Is your business concept dependent on the intellectual property you wish to protect?
  4. Do you have specific security needs beyond what standard solutions offer?
  5. Does your marketplace business model require unique features or functionalities that off-the-shelf platforms can't provide?

1. How can custom solutions enhance user experience?

Ecommerce statistics in 2024
Source: Statista

With a rising trend showcasing active online shopping adoption, user experience becomes the main selling point. A custom marketplace platform offers the flexibility to design workflows that precisely align with your business model, enhancing the user experience for both buyers and vendors. Here are some UX inspirations of how custom workflows can elevate your marketplace:

C2C example: Peer-to-peer fashion marketplace

  • A platform like Poshmark uses AI to suggest items based on a user's purchase history, size, and preferred brands.
  • Etsy employs escrow services to hold payments until the buyer confirms the item receipt, protecting both parties.
  • eBay offers mediation options and buyer protection programs to resolve conflicts between users.

Hyperlocal example: Online grocery delivery

  • Instacart allows users to find nearby stores and products based on their location.
  • Customers can choose from same-day, next-day, or scheduled delivery options.
  • Local farmers and producers can showcase their products on platforms like Freshly.

Booking and rental example: Vacation rental marketplace

  • Airbnb allows hosts to sync their calendars with other booking platforms to avoid double bookings.
  • Vrbo offers secure payment processing and deposit options for both hosts and guests.
  • Airbnb encourages users to leave detailed reviews to build trust.

Custom shipping options example

  • Amazon offers real-time shipping rates based on product, destination, and carrier.
  • Shopify allows sellers to easily create shipping labels.
  • Etsy partners with multiple carriers like USPS, UPS, and FedEx to offer diverse options.

Custom payment integration example: Subscription box service

  • BoxyCharm accepts various payment methods, including credit cards, PayPal, and Apple Pay.
  • Customers can easily manage their subscription plans and payment information.
  • Platforms like Shopify employ fraud detection tools to protect both buyers and sellers.

Custom commission and payouts example

  • Etsy offers tiered commission rates based on sales volume.
  • Amazon disburses seller earnings on a regular schedule.
  • Platforms like eBay provide tools to help sellers calculate and report sales tax.
  • Shopify allows sellers to create custom invoices for their customers.

Custom invoicing and taxation example: B2B Marketplace

  • Procurement platforms like Ariba automatically generate invoices based on purchase orders.
  • Amazon Seller Central provides detailed financial reports for sellers.

Private marketplace deals (PMP)

  • You must Implement robust security measures to protect sensitive data and prevent unauthorized access.
  • You can create personalized recommendations, exclusive discounts, or curated product selections.
  • PMP platforms can be connected with third-party services like payment gateways, shipping providers, and customer support tools to provide a comprehensive solution.

Building a custom platform from off-the-shelf multivendor software can simplify marketplace website development!

2. What is the right development strategy to build a custom marketplace platform?

Surely, building a marketplace from scratch is complex.

A two-sided marketplace or typically a marketplace has complex requirements of connecting two distinct groups of users (buyers and sellers) and facilitating transactions between them.

Choosing the right development strategy is crucial for the success of your marketplace. Let's explore three primary approaches:

  • Strategy #1: Using a SaaS Marketplace Platform with readymade workflows
  • Strategy #2: Using a Ready Marketplace Platform with Open Code
  • Strategy #3: Coding a Marketplace from Zero

three strategies to build a custom marketplace
Image: Top strategies to build a custom multivendor marketplace

Strategy #1: Using a SaaS Marketplace Platform

  • Pros: Rapid time-to-market, lower upfront costs, access to pre-built features, scalability.  
  • Cons: Limited customization, potential vendor lock-in, recurring costs, and potential feature limitations.

Ideal for: Startups with limited resources, those seeking a quick market entry, and businesses with basic marketplace requirements.

Strategy #2: Using a Ready Platform with Open Code

  • Pros: Greater customization, cost-effective compared to full custom development.
  • Cons: Requires technical expertise, potential for compatibility issues, ongoing maintenance.

Ideal for: Businesses with moderate customization needs, and those seeking a balance between cost and control.

Strategy #3: Coding a Marketplace from Zero

  • Pros: Complete control over features and design, scalability, and intellectual property ownership.
  • Cons: High development costs, longer time-to-market, and a strong development team are required.

Ideal for: Enterprises with significant resources, businesses with complex requirements, and those aiming for a highly differentiated marketplace.

By taking a custom development approach, you gain control over your marketplace's design, functionality, and future. It's an investment that can pay off significantly as your business scales.

3. What user features should be prioritized for better engagement?

Any attempt to custom design different workflows to suit your marketplace business model must take place within the following core components:

  • Product Catalog: This is the heart of your marketplace. It should allow for easy product categorization, search, and filtering.
  • Seller Management: This includes tools for seller onboarding, product listing management, order processing, and payment disbursement.
  • Buyer Management: This encompasses user registration, order placement, payment processing, order tracking, and customer support.
  • Payment Gateway Integration: Seamless integration with various payment methods is essential for a smooth checkout process.
  • Shipping and Logistics: Efficient order fulfillment involves managing shipping options, carrier integrations, and tracking.
  • Search and Discovery: A robust search engine and product recommendation system can significantly enhance the user experience.
  • Ratings and Reviews: These features foster trust and credibility within the marketplace.
  • Dispute Resolution: A well-defined process for handling disputes between buyers and sellers is crucial.
  • Analytics and Reporting: Data-driven insights help you understand your marketplace's performance and make informed decisions.

Moreover, a successful marketplace caters to the needs of both buyers and sellers. Prioritizing user features is crucial for driving engagement in your marketplace. Here are some key features and their potential impact on your online marketplace platform:

Buyer-centric & Vendor-centric features
Image: Key features to focus on in a marketplace

Buyer-centric features:

  1. Personalized Recommendations: Increased purchase frequency, higher average order value
  2. Advanced Search Filters: Improved product discovery, reduced bounce rate
  3. Wish Lists and Saved Items: Increased purchase intent, higher conversion rate
  4. Guest Checkout: Reduced cart abandonment, increased conversion rate
  5. Multiple Payment Options: Increased convenience, higher customer satisfaction
  6. Secure Checkout: Increased trust, reduced cart abandonment
  7. Order Tracking: Improved customer satisfaction, reduced inquiries
  8. Returns and Exchanges: Increased customer loyalty, reduced churn
  9. Customer Reviews and Ratings: Increased trust, improved product discovery
  10. Price Comparison Tools: Improved value perception, increased purchase intent
  11. Buyer ProtectionIncreased trust, reduced purchase anxiety

Vendor-centric features:

  1. Seller Dashboard: Improved efficiency, better performance tracking
  2. Inventory Management Tools: Reduced stockouts, improved order fulfillment
  3. Order Management System: Streamlined order processing, reduced errors
  4. Shipping Tools: Efficient label generation, carrier integrations
  5. Customer Communication Tools: Improved customer service, increased satisfaction
  6. Performance Analytics: Data-driven decision-making, optimized product listings
  7. Financial Reporting: Improved cash flow management, tax compliance
  8. Dispute Resolution Support: Reduced stress, faster resolution
  9. Marketing and Promotion Tools: Increased visibility, higher sales

How can payment integration be optimized for different markets?

Optimizing payment integration is crucial for a successful marketplace, especially with a global customer base. By offering a variety of payment options and handling currency conversions effectively, you can enhance user experience and increase sales.  

Key considerations for payment integration:

  • Local payment options: Prioritize locally preferred payment methods to cater to specific markets. For example, offering Alipay and WeChat Pay in China, or Boleto Bancario in Brazil.
  • Currency conversion: Implement a robust currency conversion system to handle transactions in multiple currencies.
  • Payment gateways: Partner with reliable gateways supporting various payment methods and currencies.
  • Chargeback management: Establish efficient processes to handle chargebacks and disputes.
  • Regulatory compliance: Adhere to local payment regulations and data privacy laws.

… My business model differs from typical marketplaces as my vendors are globally located. I needed a solution to convert my vendors’ currency into mine, a feature no other marketplace solution like webkul or onport offered. Shipturtle agreed to help with this customization. Additionally, I required automatic synchronization of my vendors’ inventory with mine, along with adjusting their product prices on my store automatically. Shipturtle developed an efficient solution for this, allowing me to manage prices seamlessly…

- Review on Shopify by Sasski Fashion, Estonia

Shipturtle's custom payment solution

As highlighted in the client review, Shipturtle demonstrated its ability to customize payment solutions to meet specific marketplace needs. By offering currency conversion and inventory synchronization, they addressed a crucial challenge many marketplaces face with globally dispersed vendors. Shipturtle has proven expertise in customizing other marketplace workflows. Get in touch to learn more about our online marketplace development services.

4. How to choose the right marketplace development service provider?

Selecting the right development partner is crucial for the success of your marketplace. You need to look at the following skills and experience in your potential development partner:

  1. An experienced marketplace development company with a proven track record in building successful marketplaces. Here's a detailed list of successful Shopify online stores converted into multi-vendor marketplaces using Shipturtle's off-the-shelf solution and its experienced custom marketplace website development services.
  2. Assess the team's proficiency in relevant technologies (e.g., e-commerce platforms, programming languages, databases).
  3. Ensure the development partner grasps your business model, target market, and unique selling points.
  4. Evaluate their project management methodologies and ability to meet deadlines.
  5. Effective communication is essential for a successful partnership.
  6. Review their previous work and client testimonials.
  7. Understand their pricing structure and compare it to your budgeted cost of custom marketplace development.
  8. Evaluate their commitment to ongoing maintenance and support.

It is very important to choose a team with marketplace development experience as they are strategic partners, not just a developer. They bring valuable insights, reduce risks, and increase the likelihood of building a successful marketplace.

Questions to ask your marketplace development partner:

Furthermore, asking the right questions can help you select the ideal online marketplace development company. Here are some essential inquiries:

Project  execution

  1. How do you approach understanding a client's business model and target market?
  2. What is your process for defining project scope and requirements?
  3. How do you handle project changes and scope creep?
  4. What is your development methodology (Agile, Waterfall, or Hybrid)?
  5. How do you ensure project timelines are met?

Post-launch support

  1. What level of post-launch support do you offer?
  2. How do you handle bug fixes and updates?
  3. What is your approach to ongoing maintenance and optimization?

Technical expertise

  1. What is your experience with marketplace platforms and technologies (e.g., Magento, Shopify Plus, custom development)?
  2. How do you handle payment integration and security?
  3. What is your approach to scalability and performance optimization?
  4. How do you ensure data security and privacy compliance?
  5. What is your experience with mobile app development?

Team and communication

  1. What is the size and structure of your development team?
  2. How do you handle communication and collaboration with clients?
  3. What is your process for quality assurance and testing?
  4. How do you involve clients in the development process?

48.7%

Expected user penetration in the global ecommerce market by 2028. Enhancing customer experience through custom development can help your multivendor e-commerce stand out! 

The multi-vendor marketplace landscape is rapidly evolving, driven by technological advancements and changing consumer behaviors. Here are eight emerging trends shaping the online marketplace industry:

  1. Live shopping experience
  2. Emergence of new marketplace business models
  3. Voice search & voice commerce
  4. Rise in the use of Augmented Reality (AR)
  5. Online shopping with image search
  6. Rise of AI chatbots for the shopping experience
  7. Integrating logistics and delivery into the purchase experience
  8. Shift to modern digital payments

Discover these emerging trends in detail in our previous blog.

What role does AI play in enhancing marketplace functionalities?

By leveraging AI's capabilities, marketplaces can significantly enhance functionalities, improve user experience, and drive growth. Here's how:

Optimizing Search and Recommendations:

  • AI analyzes user behavior and purchase history to recommend relevant items, increasing customer satisfaction and conversion rates.
  • AI can personalize search filters based on user preferences and past searches, leading to improved product discovery and a more efficient buying journey.

Streamlining Operations and Management:

  • AI predicts demand and optimizes stock levels, reducing the risk of stockouts and overstocking.
  • AI can adjust prices based on market trends, competitor pricing, and demand fluctuations, maximizing profitability.
  • AI algorithms can analyze real-time transactions to identify and flag suspicious activity, protecting buyers and sellers.

Enhancing Customer Experience:

  • AI-powered chatbots provide 24/7 customer support, answer basic inquiries, and resolve common issues, improving customer satisfaction.
  • AI can analyze customer reviews and social media mentions to gauge overall sentiment and identify areas for improvement.
  • AI can personalize product descriptions and visuals based on user profiles, creating a more engaging shopping experience.

Beyond these functionalities, AI can be leveraged for data ingestion, storage, and processing. It will help marketplaces gain valuable insights into buyer and seller behavior, optimize marketing campaigns, and make data-driven decisions.

What are the latest design trends in marketplace user interfaces?

Marketplace user interfaces are evolving rapidly to keep pace with consumer expectations and technological advancements. Here are some of the latest trends:

  • Microinteractions: Adding subtle animations or feedback to make interactions more engaging.  
  • Voice Commerce Integration: Incorporating voice search and commands for a hands-free experience.
  • Accessible Design: Ensuring the marketplace is usable by people with disabilities.
  • Seamless Cross-Platform Experiences: Providing consistent user experiences across different devices.
  • Immersive Visual Experiences: Utilizing high-quality images, videos, and interactive elements to create engaging product showcases.
  • Personalization and Customization: Tailoring the user interface to individual preferences and behaviors.
  • Minimalist and Clean Interfaces: Prioritizing simplicity and clarity in design.
  • Dark Mode Dominance: Offering a dark mode option to reduce eye strain and enhance user experience.

5. Is the custom marketplace development approach right for you?

Custom e-commerce marketplace development is a significant investment but it can offer unparalleled returns. You gain control over your brand, customer experience, and long-term growth by tailoring a platform to your specific business needs.

When to consider custom marketplace app development:

  • If your marketplace concept requires features not offered by off-the-shelf solutions.
  • When you anticipate rapid growth and need a platform that can handle increased traffic and transactions.
  • If your industry requires stringent data protection measures.
  • If you plan to build a sustainable, scalable business with a strong brand identity.
  • If you have adequate financial resources to develop a marketplace.

If you're on the hunt to close a tech stack for your marketplace, consider Shipturtle. 

Custom marketplace development services from Shipturtle

When building a custom marketplace, consider these essential marketplace app development services:

Core Development Services

  • Platform Architecture: Designing a scalable and secure foundation for your marketplace.
  • Responsive Design Framework: Implementing a flexible layout adaptable to different screen sizes.
  • Mobile-First Approach: Designing for smaller screens first and scaling up for larger devices.
  • Back-End Development: Developing the core functionalities and integrations on Shopify & Woocommerce.
  • Database Design: Creating efficient data storage solutions.
  • Payment Gateway Integration: Integrating secure payment options.
  • Shipping and Logistics Integration: Partnering with shipping carriers and managing order fulfillment.

Additional Development Services

  • Analytics and Reporting: Building data analysis and reporting capabilities.
  • Security and Fraud Prevention: Implementing robust security measures.
  • Cloud Integration: Leveraging cloud platforms for scalability and cost-efficiency.
  • AI and Machine Learning Integration: Incorporating AI-powered features for personalization and automation.

Specialized Services

  • Hyperlocal Marketplace Development: Implementing location-based features and integrations.
  • B2B Marketplace Development: Building a platform for businesses to transact with each other.
  • C2C Marketplace Development: Creating a platform for peer-to-peer transactions.
  • Subscription-Based Marketplace Development: Implementing subscription models and recurring payments.

Book a demo with Shipturtle to create a marketplace for specific business requirements.

Shipturtle lets you connect vendor websites, automate listings, orders, shipping, payouts & much more. You can scale unlimited with open APIs for custom development.

Want to learn more about how Shipturtle can benefit your business? Book a personalized demo with our sales team.

Experience the power of Shipturtle for free. Start your trial today and discover how it can transform your Shopify multivendor store!

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About The Author

Protim Bhaumik

Protim is a seasoned marketing expert in building and scaling startups, particularly in B2B, B2C, and B2D models. His career spans various roles in digital marketing, content creation, and SEO. He is also serving as the Fractional CMO at Shipturtle. Protim's diverse background also includes a career in music as a director and performer.