A complete guide to start an e-commerce marketplace that grows

  • Munna Khan
  • 3 years ago
Complete guide to start an e-commerce marketplace.jpg
10 min read

A complete guide to start an e-commerce marketplace that grows

The world is experiencing the peak of online marketplace businesses in recent years. Extensively successful online marketplaces like Amazon, eBay, Alibaba, and AliExpress have demonstrated that marketplaces will have good vibes in every business sector. Here in this article, you will get an exhaustive guide to building and growing a multi-vendor eCommerce marketplace website. start

Understanding eCommerce marketplace

The eCommerce marketplace is such a platform where sellers from different locations, even from different countries can display their products or services to potential customers. Simply explaining it is:

  • An e-commerce website where product listed by the vendors or sellers.
  • Transactions are processed by the vendor or the admin of the marketplace.
  • Orders are executed by the vendors or the admin of the marketplace.
  • The site owner is getting paid with a commission on every sale or a periodic membership fee or even both.

Steps to your journey (Beginning to Growth)

If you are immensely passionate about starting an online marketplace business and have the enthusiasm to spread it all over the world then this article is for you. We'll guide you step by step with everything you need from A-Z about the online marketplace business.

Step 1: Spot out the niche and conduct a market research

From the ocean of available product categories spot out the niche, you want to work with. No matter you have been a businessman before starting an online marketplace, it may be the beginning of your business journey. Don’t hesitate to begin with a small niche because Amazon’s beginning was with only books. Once you have selected the niche your next task will be to:

  • Discover your target customers and their motives behind the purchases they make.
  • Go through their buy history to learn from where they buy and why they choose to buy from there.
  • Justify the market of your product by conducting keyword research.
  • Have a clear idea of the market size and possible quantity demanded of your target niche products.
Step 2: Selecting the appropriate business model

Startup failure is a very common phenomenon in the online marketplace business. Most of the causes are related to business model selection. Before starting the marketplace you must decide what business model would be a good fit for your marketplace, not in the middle of the business stream. Choose one and stick to it. We’ll discuss a few most common monetization models used by today’s marketplaces:

Sign-up fees: The fees you collect from the sellers willing to use your online platform. Be technical in setting up the fee. You have to convince the seller that your platform is worth getting the amount and he/she will not regret what been paid.

Pros: A sign-up fee will filter serious sellers from others.

Cons: This is one-time fees. So you must think of other sources of cash flow rather than depending on only this.

Subscription fees: To keep the marketplace going a definite sum of money is charged to the seller regularly is called a subscription fee. The subscription fee is the main source of revenue for the site owner. Simply speaking the larger virtual economy is energized by subscriptions. You can incorporate the concept of different upgraded facilities which the seller can avail, for example, the latest selling tools or lower sales fees by paying the subscription.

Pros: Most familiar business model to all. You’ll get continuous cashflow to operate the business.

Cons: Small vendors may not like this model.

Listing fees: When sellers add products to your platform you can charge a fee on that. It is called a listing fee. The amount is small usually and can be charged based on the volume or price of the product. Listing fees can either be collected at the time of listing or after each sale.

Pros: Sellers will be comfortable paying a small amount of listing fee if they can make a large scale sale and profit.

Cons: The earning of the marketplace may suffer at the beginning when site visitors are limited.

Selling fees: The largest monetization policy is selling fees which are present in every multi-vendor site. Every time the seller makes a successful sale from your platform you will charge a commission or selling fee. A good payment gateway will help you separate the selling fee from the sales revenue. You have to work on bringing in a stream of orders for endless earning. You can get an idea of the amount to be charged from popular marketplaces like Etsy, Airbnb, or Amazon.

Pros: This is a continuous process and your revenue will increase with more orders processed by the sellers.

Cons: The earning of the marketplace may suffer at the beginning when site visitors are limited.

Other monetization techniques: Unless you have plenty of orders and fees in your platform you can find out some more strategies to monetize. You can charge payment processing fees, run ads, make sponsored or featured stores, etc.

Step 3: Managing technological aspects

As an online-based marketplace business technological right technology and tools can make the difference between success and failure. This is not a problem nowadays. Everything is available and you don’t have to be a programmer or IT expert to build an e-commerce marketplace business.

I am trying to make this part very easy to understand as most people are afraid of it. You have to follow some simple steps here as listed below:


A perfect e-commerce software solution: 

Selecting the marketplace software solution is the most important part of this section because this will be your place of business where sellers and buyers will meet. Luckily there’re so many good options available to choose from. Do some research on which platform will be the perfect fit for your business model and product niche. You can choose either platform facilitated or a self-facilitated platform. The first one is a software as a service(SAAS) and the second one is hosted on your own server. There are some pros and cons of both. Let’s discuss a little more.

SAAS: Software as a service is a popular way to start an online business. You just need to register on some SAAS provider and don’t have to worry about technology and other server-related stuff. The provider will do everything for you and keep the platform uptodate.

Few advantages of using a SAAS based solution:
  • No need to worry about technical aspects.
  • Ready to start right away.
  • Less expensive to start with.
Disadvantages of using a SAAS based solution:
  • No controls over the platform.
  • You have to believe the provider with sensitive and valuable data.
  • There is risk of data breach to third-party.
  • Cannot change the UI and Features they provide.
  • Customisation not possible.

Example: Shopify is a good SAAS based platform to start e-commerce business. There are other options but you may need to shop around to find a good one.

Self-hosted: This type of software mostly open-source and you’ll get the full source-code downloadable. You need a server to host the code and maintain it to keep updated and running. This option will give you more freedom and flexibility but it takes special skills and effort to handle. You have to choose a provider that provides good after-sale support and have a skilled team to help you with everything you may need to set up and run.

Major advantages of using a self-hosted based solution:
  • Does not depend on third-party service provider.
  • Full freedom to making changes and make it fit.
  • Easy to extend functionality that useful to your unique business model.
  • Minimise the risk to breach sensitive data as it will remain on your own server.
  • Allows to set up your own security and data backup systems.
  • Comes with one time fee and optional upgrade fee that make it less expensive for long run.
  • No limitations to use resources like storage, data.
Disadvantages of using a self-hosted based solution:
  • Expensive to start with not because the product itself is expensive but because of its long-term maintenance.
  • This will often require you to hire IT services, which may get costly especially if you only outsource their assistance.
  • Have to maintain and monitor everything.

Example: zCart Multi-Vendor eCommerce Marketplace solution by Incevio is great option to start your eCommerce marketplace. It comes with 6 months of included support that can be extended when needed. Incevio has a skilled team to help you with 360 degree need of an eCommerce marketplace.

Domain and hosting:

Get a simple and short domain name for your site and enroll in your area. After you have finalized your domain name you have to get it registered. For a SAAS platform, you may need to configure the domain on the site and for a self-hosted platform, you will need to get a server to host your site with the domain name.

An appropriate payment gateway selection:

A suitable payment gateway is a door to your success and revenues. So picking up the correct gateway is imperative. A payment gateway facilitates card payment procedures in the web. Some popular gateways are Stripe, PayPal, Worldpay, etc.

Step 4: Organise marketplace activities

Now you know what type of marketplace you gonna build and how you earn from the business. Now your priority will be to getting vendors to sell their products or services on your marketplace and organize the overall operations for your multi-vendor marketplace. These tasks are mainly:

Seller management:

Sellers are the primary resources of your business. Seller management will include finding new sellers and giving them all-over support to begin a vendor on your platform. Wait! Your task is not over here. You have to keep old sellers satisfied and continue to acquire brand-new sellers at the same time. You must finalize a sign-up procedure and make things easy for the sellers and provide guidelines regarding the outlook of the platform and control over their store. If the seller is selling already on an existing platform you can make a linkage to import the catalog from the site to yours. It will make things easy for the sellers.


Manage merchandise:

Although a marketplace owner need not think about an inventory of his own, still you may have to manage the products of the sellers. A well-organized product catalog is necessary for the easement of operation. Some marketplaces allow one seller for one product while some others keep the option to sell the same product by different sellers by separating listings from the catalog. The marketplace owner can also set some catalog rules for vendors.

Step 5: It’s marketing time, begin optimising your site

Once you have completed the above steps it’s the turn to boost sales and spread your marketplace’s reach to the target clients. Here is how you can do it:

  • SEO(Search Engine Optimization): The SEO process involves generating domain rank by the backlinks. Domain ranks help your site to be available in google search results through definite keywords that will attract organic traffic to your site. 
  • Social media marketing: Facebook, Instagram, Pinterest, Youtube, and other social media are vital platforms to market your marketplace. Buyers are attracted by social media marketing and it’s a matter of time they become your client. 
  • Email Marketing: Email marketing is a cheap and promising marketing technique. Promotional emails and thanks letters through emails bring in and retain customers. 
  • Advertisements: Google ads in search, responsive, and display are common campaigns. Keep a closer look over which campaign works better for your site. As advertisements are expensive try to make a balance between your income and expenditure.
Step 6: Performance evaluation

Once you have started operation, run marketing strategies it's time to evaluate the performance of your store. A performance evaluation helps you to arrange and rearrange things for betterment. You can take the help of Google analytics to do it. 


Website traffic:  At first make a rough calculation of how many visitors your site gets daily, weekly, or monthly? From where clients discover your site? Looking deep into the website traffic lets you answer these questions. Suppose most of the clients discover your site from Facebook ads, then you can easily make an investment in attracting more clients from there.

Transformation Rate: It’s time to know how many visitors are purchasing from you. If the number is satisfactory this is a very positive sign. But if you find that a poor number of guests are becoming your clients you have to look deep into it. The possible reasons may be:

  • You have targeted the wrong group.
  • There is a deviation between your marketing products.
  • Your site is not user friendly.

No matter what the cause is, but you must take steps to resolve the issue and increase the transformation rate.

Step 7: Focus on continuous growth

Success in the online marketplace business has two-fold demands. At the same time, you have to concentrate on the sellers and customers. Major tasks here are listed below:

  • Attract new sellers by talking to them or inviting them towards you through advertisements.
  • Keep in touch with existing customers by giving the different promotional offers and at the same time bring new customers to your site.
  • Set up similar stores on Facebook and Instagram. That will help your business grow and attract customers from different locations.
  • Keep an eye on your competitors and try to beat them by offering better services to retain the customers.


Always try to improve and be updated with time to cope with the competition. Now it's your turn to go and win!