Before you start counting profits from your online marketplace, you better calculate your expenses needed to launch your platform. Here is our recap of necessary things to put in your estimated budget if you wish to create a marketplace.
Taobao is worth 515 billion U.S. dollars, which makes this marketplace the most popular online marketplace worldwide in 2018. Tmall, Amazon, JD.com, and eBay, which occupy next locations in this ranking, combined are worth 1 131 billion dollars. These are the numbers which are easy to find, and companies themselves like to boast them about. But it is more difficult, if not impossible, to track data regarding expenses incurred and obligatory to make the marketplace a well-profitable machine. Hence, you may imagine how much money you can earn, yet you are unsure about how much you ought to spend. How then can you work out the optimal budget for your marketplace? We suggest you to start from choosing what activities you need to undertake to create your functional, fully-operating marketplace. You still don’t know what could be such activities? Well, we have some suggestions for you.
From Scratch or Not?
The absolutely fundamental question should be: what platform will you use for the marketplace? You face two options. You can either select a ready-made solution or develop a brand-new online place.
Already existing platform is quick to implement and launch. You will not waste precious days or even weeks on configuration or design. You adapt a platform that suits your needs the best and, more or less, it is ready to use. However, with such simplicity often come severe limitations. You may not be able to implement all functions or features as platform developer didn’t foresee they would be required. And even if right now you can install all plugins and add-ons, it doesn’t mean you would be able to install them when your marketplace turns into a huge, frequently-visited place. Why is it so important? As such barriers could stop you from further growth or even worse: make your online business dysfunctional.
If you wish to create an entirely new as well as fully adjusted to your needs platform, you have full freedom in designing it. Whatever comes to your mind, can be transformed into a line of code and provide you with a unique, fantastic web platform. You can base on inspirations from other marketplaces or stick only to your ideas. This is a more expensive option, which also takes more time.
It is recommended first to try to estimate the cost of your project with an external software house. It will allow you to learn what amount of money would be needed to create a marketplace you think about. (You can book such an estimation with our team of experts!)
What is your MVP?
The Minimum Viable Product can be defined as the fundamental set of features making your marketplace a place attractive for buyers and users. If you decrease MVP, you may not be able to generate a satisfying number of visits and never gain momentum. If you increase MVP, then you somehow blur your marketplace identity and make it less appealing to people looking for specific services or products.
You need to predict some amount of money required for narrowing your market to optimal size. Probably you will invest in market research. It can be done via some external expert. Working with external software houses has a well-documented history of successes.
You can order an individual report or buy already written one. Or you may hire your team. Such people could work within the future as your MVP will be probably changing due to its own growth, new trends emerging in the economy, or previously unseen social behaviors among your users and buyers.
Skipping the proper identification of MVP may seem as smart saving, but in the future, it will probably become your fiscal nightmare. And it will do harm to your marketplace development.
Again, what is your MVP?
Achieving MVP standards is not a one-time expense: even if today your marketplace fulfils these standards, it is not guaranteed that tomorrow a critical update will be needed. Plus, you will probably be forced to cooperate with a smart tech crew who will be able to handle such challenges smoothly and with no damage to your marketplace brand. Try outsourcing MVP issues to an external software house. Such a company will utilize its expert knowledge and experience to bring to you a platform that answers to all your questions.
Do They Find You Attractive?
Next step we recommend you to take is spending some time on marketing. You must take care of your image among your target group. You must find an effective way of reaching your target group. You must plan how to keep your audience interested in your marketplace. You must know everything about your customers, their behaviors, their preferences, their reasons why they visit your marketplace.
To put it short, you definitely need a complex marketing plan if you wish to create a marketplace. Taking into consideration how important role plays proper branding and efficient campaigns, you should not underestimate marketing issues.
This also means that you should not skimp your financial resources on this part of your marketplace business. Because if you do, then expect frustration caused by lack of knowledge why your platform isn’t visited, why your customers dislike using it and, eventually, why they are leaving it.
Marketing expenses can be usually condensed into the following categories: developing a marketing strategy, creating marketplace brand, selecting communication channels, and then – executing such plans. When budgeting these actions, please do remember about paid campaigns, e.g., Facebook Ads, Google AdWords, YouTube, etc.
In our opinion, these are the key areas to create a marketplace based on a reliable, comprehensive business plan. If you include them in your budget sheet, you gain certainty that nothing will be omitted. However, we are aware that these categories could be supported by other ones. We are equally confident that even the categories presented in this text could be enhanced and discussed more thoroughly.
If you wish to have such expert discussion, if you wish to confront your idea with our experts – do not hesitate to reach us. You should contact us, especially in a case, if you wonder how much does it cost to build a marketplace website or what is a marketplace plan.
We will explain it to you.