Article | 6 min read

How To Create An Online Marketplace Like Etsy

Build a Marketplace
Author
Khyati Buddhadev
Editor
Manav Gupta
Published
October 9, 2024
Last Updated
December 12, 2024

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If you’re an entrepreneur passionate about empowering creative communities or a business owner looking to diversify your offerings, developing a similar marketplace could be your next big venture.

Etsy boasts an impressive 96.4 million daily customers, making it a major player in the artisan platform space. This is a reminder of the vast market potential and the many opportunities for success for you as an artisan platform entrepreneur.

Let's kickstart your journey to become the next most successful and efficient online marketplace platform! 

1. Three factors democratizing online marketplaces

Etsy is today known as a global marketplace with buyers from around 80 countries and sellers in around 234 countries. 

But was this always the story of Etsy?

No.

In 2005, Etsy founder Rob Kalin was an amateur furniture maker who struggled to sell his furniture. Partnering with Haim Schoppik and Chris Maguire, he then created Etsy. Within a few months, the platform attracted thousands of buyers and sellers.

Today, Etsy is a public company with a net worth of $20 Billion.

Though it took Etsy around two decades to be a successful e-commerce marketplace, you can do the same in a few days. Today, it is easier than ever to build an e-commerce marketplace website like Etsy. How?

The three major push behind it are: 

  • First, e-commerce marketplace companies are growing very fast and growing vertically! Unlike a horizontal marketplace, which sells a wide variety of goods and serves multiple industries (e.g., Amazon or eBay), a vertical marketplace ( e.g., Mybageecha, Gabbar Farms) specializes in a single product category or industry segment. Founders have countless opportunities to build and scale their marketplace businesses. What it demands from you is focus and specialization.
  • Second, you don't need to break the bank to start a marketplace. Gone are the days when business owners primarily allocated their capital to initial inventory investments. Dropshipping make the process easy cutting the need to buy supplies and manage logistics. Your marketplace users now do it all by themselves. All you have to do is to provide them with a platform to meet their potential customer.  
  • Third, the easy availability of multivendor marketplace builders like Shipturtle. We can help you validate and launch your idea. When you need to advance, the software offers you a chance to add custom features with minimal costs compared to creating a platform from scratch.

Top ways to create a marketplace like Etsy: 

  1. Create a site like Etsy from scratch
  2. Use no-code multivendor builder apps over carts like Shopify or Woocommerce
  3. Headless development with off-the-shelf marketplace solutions

Moreover, no-code marketplace software is by far the fastest way to launch marketplace software like Etsy!

2. Features of a B2C/C2C marketplace website like Etsy

Image: Etsy home page

Etsy - a platform to buy and sell handmade and unique products- has become the go-to online marketplace for independent entrepreneurship and artisanal craftsmanship. If you also want to crack the code of what makes Etsy a household online store name in the world of e-commerce, you must be familiar with the core features that support its user-friendly interface. Let's dig into this information.

I. Platform overview

  • Business Model: Etsy operates on a multivendor marketplace model where artisans, small businesses, and independent creators list their products, and Etsy facilitates sales through its platform. Etsy takes a commission on each sale and charges listing fees.
  • Focus: The platform focuses on handmade, vintage goods, and craft supplies, allowing small-scale sellers to reach a global audience.
  • Scale: As of 2023, Etsy boasts over 7.5 million active sellers and more than 95 million active buyers, making it one of the largest craft-focused platforms in the world.

II. For buyers

Image: Etsy search & discovery options

1. Search & discovery

  • The feature of filtering search by price, location, and item specifics streamlines the customer's product discovery progress.
  • Detailed product listings & customization options help the buyer make a calculated and mindful decision.

Image: Etsy user reviews & ratings

2. User reviews and ratings

  • When shopping online, the customer needs some feedback on the product to build trust.
  • Etsy has an honest review and rating corner on the platform for the sake of transparency and brings marketplace solutions.

3. Conversations and messaging 

  • The direct conversation with sellers helps with orders, payment queries, or any shipment-related issue.

Image: Etsy multicurrency options

4. Shopping cart and transaction

  • Buyer can easily add the item from multiple sellers and process for payment quickly.
  • Multiple payment gateways, such as credit cards, PayPal, and the Etsy payment system, ensure a safe and secure option.

Image: Etsy- seller trust badge

5. Etsy’s buyer protection program

  • Etsy reassures buyers that they are protected if items do not arrive, arrive damaged, or do not match the description.
  • This helps build trust between buyers and sellers on the platform.

III. For sellers

Image: Etsy- Simple seller signup

1. Seller onboarding and verification

  • Sellers can sign up with just an email address, and the platform guides them through setting up their shop, creating listings, and understanding Etsy policies. "Sell on Etsy" option enables users to be both buyer and seller from a single account.
  • Etsy provides clear guidance through its Seller Handbook and tutorials, covering topics like photography, marketing, pricing, and customer service.
  • All items listed must be handmade, vintage (over 20 years old), or craft supplies. Sellers may be asked to provide evidence of their product creation process to prove authenticity.

Image: Etsy- Seller product list

2. Product description and customization options

  • Seller gets to make a detailed description of their products with high-quality pictures, prices, and product credits.
  • Etsy offers some listings with customization options, enabling sellers to offer products tailored to individual preferences.

3. Sales and promotion updates 

  • Seller gets to create their coupon codes to offer discounts to their customer. It encourages the customer to buy from the platform.
  • Sellers can pay to have products showcased prominently in search results and category pages, which can increase their visibility.

Image: Etsy- Seller payouts

4. Shopping cart and payment

  • Sellers can manage and process orders directly from the shopping cart.
  • Sellers can use Etsy's integrated payment system, along with options like credit cards and PayPal, for secure transactions.

5. Etsy community & compliance

  • The Etsy Community Forum provides a space for sellers to ask questions, share advice, and learn best practices directly from Etsy and other sellers.
  • When selling on Etsy, sellers agree to follow the terms of service. This helps the seller ensure they are legally compliant.

If you want to build a marketplace like Etsy, there are key elements that should be part of your strategy:

  • C2C functionality: Users can be both buyers and sellers from the same account. Moreover, buyers may be provided with "Make an offer" feature for price negotiations. Additionally, an auction-type system could be added.
  • User-friendly seller tools: Sellers should have access to tools that make it easy to list products, manage inventory, and communicate with buyers. Provide easy product categorization, variation options, and SEO tools.
  • Focus on Niche Products: Just as Etsy focuses on handmade, vintage, and craft items, your marketplace should focus on a niche to differentiate itself from general eCommerce platforms.
  • Multi-currency payment and shipping: Offering a secure, versatile & multi-currency payment system (like Etsy Payments) and integrated shipping solutions will be crucial to enable global commerce.
  • Community building: Etsy has created a strong sense of community among its vendors. A similar marketplace can provide forums, team features, and seller education to foster this sense of belonging.
  • Seller & buyer protection policies: Implementing transparent fee structures, fair policies, and a robust dispute resolution system will ensure trust on both sides of the transaction.
  • Analytics & reporting: Offering detailed analytics and performance reports to vendors will help them optimize their business strategy, much like Etsy’s Seller Dashboard.

Integrating a registry feature, similar to Etsy Registry, is a strategic move that not only expands your customer base but also encourages higher-value purchases, strengthens vendor relationships, and enhances customer loyalty. By creating a platform that caters to significant life events, you position your marketplace as a place for meaningful, personalized, and handcrafted goods—giving you a competitive edge in the artisan and handmade goods market.

3. Highlight feature: Etsy-style registry

Image: Etsy Registry - New business feature to explore! 

As an entrepreneur looking to build a marketplace like Etsy, incorporating a registry feature similar to Etsy Registry can be a strategic move. Here’s how and why you should integrate it into your business model:

I. Attract new customer segments

By offering a registry feature, you can tap into an entirely new audience—individuals planning special events who want to create curated gift lists. A registry appeals to users looking for:

  • Weddings and Anniversaries: Couples can create gift lists featuring unique home décor, personalized keepsakes, and custom artwork for their new home.
  • Baby Showers: Expectant parents can list one-of-a-kind nursery décor, custom baby clothing, or handmade toys.
  • Housewarmings: Individuals moving into new homes can choose artisan home goods, furniture, and décor for a truly unique space.

Why it matters: When you cater to these events, your marketplace becomes more than just a place for casual purchases—it becomes a destination for meaningful, one-of-a-kind gifting experiences.

II. Enhance vendor sales with custom and personalized gifts

Etsy Registry capitalizes on its artisans’ ability to offer personalized, handcrafted items. If you implement a similar feature, your marketplace vendors can significantly increase their sales by targeting customers seeking customized gifts. Allowing vendors to offer personalized items within a registry enables them to:

  • Upsell: Custom products often come with a higher price tag due to their bespoke nature. Vendors can charge a premium for customized work.
  • Build Relationships: Providing personalized items creates a deeper connection between buyers and vendors, fostering repeat business and brand loyalty.

Actionable Tip: Ensure that your vendors have an easy way to add customizable options (like names, dates, or special messages) to their product listings, and make this process seamless for buyers.

How to integrate a "registry feature" into your marketplace

Here’s a roadmap to help you implement a successful registry feature for your platform:

  1. Contact Shipturtle team to customize marketplace workflow to match your registry feature requirement.
  2. Train your vendors on how to leverage the registry feature by offering customizable products that appeal to special events.
  3. Plan a marketing campaign around popular life events like weddings, baby showers, and housewarmings. Utilize targeted advertising, partnerships with influencers, and content marketing to drive traffic to your registry feature.
  4. After launching, continuously track how users are engaging with the registry feature. Analyze data on which product categories are most frequently added, customer feedback on the process, and vendor performance. Use these insights to fine-tune the feature and improve the overall customer experience.

4. Three ways to create an online marketplace like Etsy

Image: Different ways to create Etsy-like marketplace website

I. Create a site like Etsy from scratch 

If you want to create your website from scratch and add the features of your requirements, this option suits you. The only issue is that even if you excel at advanced front- and back-end coding skills, this process can be knotty and time-consuming. To your rescue, here's a comprehensive guide on how to create a marketplace from scratch. This step-by-step walkthrough will help you understand the process thoroughly.

Build a Marketplace Website: Guide for a Successful Online Business

If you lack coding knowledge, pursuing this path could backfire. Why? Because for coding your website, you have to outsource a service that will cost you around $50,000. It takes a couple of months to get the final website output. 

II. Use any renowned website or eCommerce builder

The second option you have is to choose a popular eCommerce site builder that has a multivendor plugin. A few standard choices for marketplace development you can explore are Shopify, Magento, or Squarespace which support multi-vendor marketplace plugins. You can also get it on WordPress sites that have WooCommerce and Dokan plugins.

For example, Shopify provides various apps that convert a single-vendor store into a multivendor marketplace. The leading multivendor Shopify app include Shipturtle. It is ideal for creating a multi-seller marketplace with features like shipping integrations, vendor syncing, commission management, and detailed vendor performance reports.

You can compare Shipturtle with other no-code multivendor marketplace apps here.

But, you must know that this option will work best for you only if your end goal is to build an online mall and not a platform where the seller and buyer interact closely. This will give you an up-and-running website much earlier than going to code the same from scratch. 

III. Headless development with off-the-shelf marketplace solutions

Headless commerce offers the flexibility to customize the frontend user experience while leveraging off-the-shelf solutions for backend functionality. This is a middle ground between custom development and using a no-code tool.

Headless commerce separates the backend (e.g., inventory, vendor management, order fulfillment) from the frontend (e.g., website, mobile app). This allows you to use pre-built marketplace backends but design your own frontend experiences.

With open APIs, Shipturtle also excels in custom marketplace development to accommodate your unique needs.

Estimated cost of developing a website like Etsy from scratch

1. Designing

  • UX development: 56 hours, $2,800
  • UI development: 96 hours, $4,800

2. Infrastructure

  • Project setup: 36 hours, $1,800
  • DB structure: 24 hours, $1,200

3. Payment and shipment integrations

  • (Paypal or Stripe): 80 hours, $4,000
  • Shipment: 80 hours, $4,000

4. Core website operations

  • Homepage: 64 hours, $3,200
  • Authorization and security: 56 hours, $2,800
  • User profiles: 32 hours, $1,600
  • Search and filters: 72 hours, $3,600
  • Product page: 32 hours, $1,600
  • Shopping cart: 84 hours, $4,200
  • Vendor panel: 92 hours, $4,600
  • Admin panel: 72 hours, $3,600
  • Reviews & Ratings: 48 hours, $2,400

5. Non-development activity

  • Project management: 72 hours, $3,600 
  • Code review: 36 hours, $1,800
  • Quality assurance: 92 hours, $4,600

Estimated cost of developing a website like Etsy using no-code tools

  • Go live on Shopify in less than 48 hours using our out-of-box multivendor functionalities.
  • Our solution offers 400+ pre-built workflows, including vendor management, product listings, order processing, and payment management.
  • The app is configurable, has no code & boasts 1000+ integrations!
  • Enjoy the robust cart functionality of Shopify with Shipturtle's pre-built marketplace workflows to match your multivendor business requirements.

99.9%

Our Vendor Sync feature works via Webhooks and not APIs. This eliminates overselling and underselling completely, promising upto a 5% boost in revenue. Moreover, Shipturtle's super strong reconciliation mechanism and change log ensures accurate inventory almost all the time!

5. Build your multivendor marketplace like Etsy using Shipturtle 

Shipturtle is your ultimate partner for setting up and running your marketplace website within a few hours. 

Once you have a validated marketplace business model, Shipturtle allows you to test various growth strategies. 

But why choose Shipturtle for your marketplace website launch?

We provide custom solutions that cater to your unique marketplace needs, ensuring a functional and effective online presence. 

We're committed to launching a project and building a cooperative alliance that promotes growth and evolution for all stakeholders. You can rely on our unwavering support and a team that is genuinely committed to your success along the journey.

Now that you're rolling, keep going. Add features and make investments to go even farther with Shipturtle. Book a demo today! 

Monetize your marketplace like Etsy

Artisans and buyers prefer Etsy as their go-to online marketplace website because Etsy is free for buyers to use.

They just pay for the products they buy, and that's it—no extra fees.

Etsy's monetization strategies are centered on the seller side of the platform.

Here is a breakdown of Etsy's monetization strategy:

  1. Transaction fee: 6.5% of the sale price
  2. Subscription charges: $10 for getting Etsy plus a subscription
  3. Pattern tool fee: $15/month
  4. Listing fee: $0.20/ item
  5. Order fee: varies with the seller's bank account location
  6. Advertisation charges: depending on the product category and country of advertisement
  7. Currency conversion charges: 2.5% of the net sale amount

Shipturtle lets you connect vendor websites, and automate listings, orders, shipping, payouts & much more. You can scale unlimited with open APIs for custom development. Install Shipturtle today from the Shopify App Store and enjoy a free trial to experience its benefits firsthand.

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

Khyati Buddhadev

Khyati is a versatile content writer. She holds a Masters in Journalism and crafts compelling narratives that drive user engagement. With a keen eye for detail and a strategic approach, Khyati helps Shipturtle communicate messages effectively and connect with the target audience.