Hacks to Build a Marketplace That is Profitable

What is an Online Marketplace?

Online marketplaces like Airbnb, Fiverr, Etsy, and Alibaba are centralized website that allows vendors and users to buy and sell products, add a listing fee for a product, compare prices, analyze reviews and feedback, and make informed decisions. Successful marketplace websites offer features like advanced search and filtering options, secure payment transactions, responsive customer feedback system, reviews, and ratings to build trust.

Unlike traditional brick-and-mortar retail stores, which typically maintain inventories, online marketplaces are intermediaries. This enables online marketplaces to facilitate seamless operations between buyers and vendors without owning any goods!

Typically, the marketplace supports B2B, B2C. C2C revenue model. It also includes various monetization strategies, such as

• Charging vendor-based listing fees
• Platform commissions on each transaction
• Offering premium membership services with additional features
• Displaying advertisements to users

Why is Marketplace Business Model Perfect to Grow Your Business?

Off-the-shelf marketplace software solution offers desirable functionalities to build a minimum viable online marketplace application or a full-fledged app for commission-based revenue. Here's how you can grow your business with online marketplaces in your target industry.  

1. Building a marketplace has low-risk factors
2. Wide expansion, collaboration, and scalability opportunity
3. Low marketing costs and higher returns
4. Enhance commission fees with marketplace operations
5. Better product, better service, higher footprint

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I. Building a marketplace has low-risk factors

The marketplace in 2024 & beyond will become better and bigger for all entrepreneurs and brand owners alike. Investing in an online marketplace is far less risky as compared to the physical store. Moreover, building a marketplace website from scratch is no longer expense, especially using the Shopify + Shipturtle combination.  

However, the sole risk connected with an online marketplace is not being able to meet client demand if traffic increases all of a sudden.

II. Wide expansion, collaboration, and scalability opportunity

Buyers from all over the globe have access to your products or services offered. All you have to do is create a multi-vendor marketplace website on Shopify. Your products will get the exposure and advertising that you won't get if you sell them in a traditional store.

It would help if you also learned how to build a successful dropshipping business.  

III. Low marketing costs and higher returns

Since your online marketplace already pulls in established brands with a huge user base, the marketing efforts become low.

IV. Enhance commission fees with marketplace operations

Unlike the single-vendor marketplace, a multi-vendor marketplace can charge a subscription fee from vendors or a certain fee for each transaction, allowing merchants like you to earn commissions.

V. Better product, better service, higher footprint

As the user base expands, the value proposition for both buyers and sellers strengthens. Buyers benefit from a wider selection and potentially better deals, while sellers gain access to a larger audience. This virtuous cycle, known as the network effect, leads to:

• Increased marketplace footprint: The marketplace has become a more prominent player in the industry, attracting even more users.
• Enhanced revenue generation: With a larger and more engaged user base, the marketplace has the potential for significant revenue growth.

Opendoor, a real estate online marketplace platform, exemplifies this concept. By focusing on a streamlined buying and selling experience, they saw a nearly 1.5x times revenue increase, demonstrating the power of a strong network effect.

12 Hacks to Build a Marketplace Website That Is Profitable

Having briefed you on why the marketplace is perfect for your e-commerce to grow and profit, let's introduce top hacks to build your marketplace that can oust the competitors.

Furthermore, here's how you can leverage Shipturtle, a no-code marketplace builder on Shopify, to craft different types of online marketplaces:

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I. Create multi-vendor seller profiles on your marketplace website

• Since your marketplace can list multiple vendors on its platform, you should have different seller profiles for buyers to view exclusive product ranges from their preferred sellers. This contributes to a better user experience and subsequently, better sales.
• It is, however, important to incorporate seller profiles with customized access to the marketplace, allowing vendors control over their pages, fields, lists, and policies within the multi-vendor marketplace.
• Having a dedicated seller profile page is essential, it provides consumers direct ways to connect with their preferred brand and trading partners. It is crucial to bring buyers to your online marketplace.

Customers demand transparency in their purchases. Shipturtle’s innovative utility generates unique Seller Pages for each vendor, giving your customers a comprehensive look at their products, brand descriptions, policies, and contact details.

Rashmi Chouhan, Journalist

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II. Build a marketplace by attracting trusted vendors

• Your vendors are the backbone of your marketplace. Don't just onboard any vendors to the online platform. Shipturtle provides a robust selection process, ensuring vendors offer high-quality products or services that revolve around your target audience.
• Another way of attracting quality vendors is by making a flexible commission structure in the marketplace. Shipturtle lets you design a win-win scenario in this case. It offers commission rates or listing fees that are attractive to vendors without compromising your profitability.
• Empower vendors with essential tools. Shipturtle provides tools like list managing, customer communications, and sales tracking. This gives a smoother experience for vendors and keeps them invested in your marketplace.

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III. Build vendor dashboards for better multi-vendor management

• If you are using cart builders like Shopify or WooCommerce, it becomes significant to have a dedicated onboarding page for each vendor, ensuring a seamless process that minimizes the time required to bring products to the market.
• Every multi-vendor website operates with a unique multi-vendor marketplace model, order processing criteria, and shipping and supply chain management workflow. When building your multiple-vendor marketplace store, the website design should be tailored to incorporate these fundamentals.

Stop managing multiple vendors, especially when relying on clunky manual tools or cumbersome Excel spreadsheets. ShipTurtle is revolutionizing your vendor management experience with most advanced and configurable Vendor Dashboards.

Sharad Kabra, Founder

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IV. Expand your product catalog for the online marketplace

• A successful business model continuously expands its product catalog by onboarding new sellers and offering a wide range of products or services.
• It is also to be noted that this wide product catalog also needs regular inventory updates to keep users engaged and encourage them to return and make purchases. When you launch your marketplace it takes a lot of effort that can make your business profitable and successful.

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V. Create a marketplace that has a user-friendly interface

• One of the major parts of a successful marketplace is the smooth user interface targeting effortless navigation. Shipturtle's out-of-box modules let you design an intuitive layout. Think clear menus, logical product categorization, user-friendly search bars, and unique functionalities to suit B2C, C2C, and B2B marketplaces.
• Every user has different ways of utilizing an online marketplace and it is evident to make your marketplace a perfect place for buyers and sellers.
• Understand what the user needs and ensure transactions quickly. This allows consumers to come back to the marketplace again and again.
• Your marketplace should be intuitive, appealing, and smooth at the same time. Shipturtle empowers you to create an Amazon-worthy UX:‍
  • Product Pages that Convert: Showcase your vendors' offerings with high-quality photos and detailed descriptions. Shipturtle lets you create product pages that are easy on the eyes and informative, increasing the likelihood of conversions.‍
  • Search Functionality Matters: Fast and accurate search is paramount. Shipture lets you integrate robust search features, including autocomplete and advanced filters. ‍
  • Mobile-First Design: Shipturtle ensures your marketplace is mobile-friendly, allowing customers to seamlessly shop from anywhere.

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You should also leverage Shipturtle's built-in analytics to understand user behavior and optimize your marketplace accordingly. Track what products sell well, how users navigate your site, and identify areas for improvement.

Rashmi Chouhan, Journalist

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VI. Build a marketplace that drives customer engagement

• When you choose to build your marketplace, driving and retaining your customer base is an important part of a successful store. With Shipturtle you can integrate popular marketing tools, allowing you to target your ideal customer base. Moreover, you can utilize social media advertising, content marketing tools showcasing your vendors' products, and partnerships to reach the correct audience.
• Reward your loyal customers with various loyalty programs. Ship Turtle allows you to integrate loyalty programs like discounts, offers, points, and other exclusive benefits.
• Create ways to build a community through social groups, customized blog segments, and through forums that advocate trust and loyalty towards the brand.

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VII. Your marketplace models should have cross-selling & upselling modules

• To increase the profitability of the store on the online marketplace, you should tap the cross-selling feature & upselling features. Studies have shown great success in stores for companies that actively do cross-selling & up-selling marketing techniques.
• The average order value should increase to have a cross-selling strategy that is profitable. Cross-selling will automatically increase your overall order value or sales figure for sure.
• Place ads on cross-pages on the marketplace, recommend higher-rated products to users, target consumers based on purchase history, and encourage them to make a purchase.

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VIII. Build a successful marketplace with referral programs

• This is a great hack for your marketplace. Launch a referral program that rewards the users for referring new leads to your marketplace. This emotionally connects the buyers and sellers.
• Gift both the referrer and the referee with customized discounts, credits, or other perks to stimulate marketing and user acquisition. With this, you build your consumer base and keep them emotionally attached to your business in the marketplace.

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IX. Build a marketplace platform with attractive incentives

• Your marketplace cannot just look like a boring products-listed page. It should feel appealing and attractive to consumers on various fronts.
• Ensure you keep offering incentives like discounts, coupon codes, or cashback rewards to encourage users to make purchases on your marketplace.
• Seasonal discounts, limited-time promotions, and mega deals can create a sense of buying urgency and drive your sales figures. Keep your online marketplace idea open and adopting.

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X. Create a marketplace from scratch with core modules

Developing a marketplace from scratch with core modules isn't necessarily a "hack" for profitability but a more traditional and resource-intensive approach. However, there can be some advantages to building from scratch:

• Customization: You have complete control over the functionality and design of your marketplace. This can be beneficial if you have a very specific vision that can't be achieved with a pre-built solution.
• Scalability: A custom-built solution can potentially scale better to accommodate a massive user base and complex business needs down the line. However, this requires significant upfront investment and ongoing maintenance.

The hack here is reinventing the wheel with existing solutions like Shipturtle. This Shopify app offers pre-built functionality for 40+ marketplace core modules. This saves you time and cost to build a marketplace website, allowing you to focus on what truly matters: attracting vendors, building a customer base, and perfecting your marketplace's unique selling proposition (USP) -

• Utilize Shipturtle's built-in features for product listings, vendor management, payment processing, and user accounts. This frees you up to focus on the more strategic aspects of building a profitable marketplace.
• While Shipturtle provides the foundation, your focus should be on what makes your marketplace unique. This could be a specific niche market, a curated selection of high-quality products, or a focus on exceptional customer service.

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XI. Build trust with consistent branding

• Remember, customization is the key to a profitable marketplace. No one will tell you this hack. Ensure consistent brand presence across Vendor registration, login, vendor micro-stores, shipment tracking, other page alterations, etc. within the Shopify ecosystem using the Ship Turtle marketplace creator app.
• Within the app or the website, your brand has full credibility in and out with a white-labeled Seller Panel compatible with the website design. It improves brand identity and ensures various stakeholders transact without doubt and with legitimacy.

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XII. Monetize your marketplace and reap better rewards

You can choose from several monetization options:

• Commissions: The bread and butter of most marketplaces. Charge a percentage of each sale made on your platform. Shipturtle allows you to easily set commission rates that are fair to both you and your vendors.
• Subscription Fees: Offer optional subscription plans with premium benefits. This could include premium listing placement, access to data analytics, or additional features for vendors who want to maximize their sales potential.
• Featured Listings: Give vendors the option to pay a fee to have their products displayed prominently on your marketplace. This is a great way to generate additional revenue and give some vendors a competitive edge.