A Guide to Building an Online Marketplace from the Scratch

A Guide to Building an Online Marketplace from the Scratch

Online Marketplace is a hot cake nowadays. It’s very clear that building an online marketplace startup is really hard. The main difficulties in getting the right balance between suppliers and providers. Some biggest marketplaces like eBay, Airbnb and Uber have proven that the online marketplace model is very scalable and can be applied to pretty much any area of business. 

In these articles, we will give the details guidelines about building successful online marketplaces.

Building an Online Marketplace

What is an online marketplace?

An online marketplace refers to an online platform where buyers and sellers initiate or conduct transactions. The marketplace acts as a digital middleman that connects both buyers and sellers, to make it convenient for them to find each other as compared to before. Examples of such platforms are Airbnb, Uber, and eBay.

Online multi-vendor marketplaces made their debut twenty years ago, with most of such platforms focusing mainly on retail and goods. Examples of such marketplaces that dominated the era is Amazon, eBay, and Rakuten.

Types of Online Marketplaces that you can build for your business

When you talk about online marketplaces you definitely hear words like B2B or peer-to-peer. These are the types which classify online marketplaces.

Let’s go through available types of online marketplaces and find their meaning. Here are the 8 types of online marketplaces:

  • B2B – platform for transaction of products or services between businesses
  • mCommerce – platform for buying or selling of goods and services through wireless handheld devices
  • Crowdfunding – platform lets people post their projects and raise money for their execution through fundraising campaigns.
  • C2C – platform for transaction of products or services between customers
  • eCommerce – platform for two parties, e.g. seller – shopper, startup owner – investor etc.
  • B2C – platform for transaction of products or services from business to customers
  • peer-to-peer – platform which brings together users, who offer products through offline services
  • auction platforms – platform where a seller lists a product and sets a deadline; buyer with the highest bid gets the item

For instance, BlaBlaCar, OLX, Etsy and Couchserfing are C2C (customer-to-customer) marketplaces. AliExpress, Booking.com and Amazon – are the B2C (business-to-customer) Marketplaces. And Alibaba.com is the B2B (business-to-business) type of Marketplaces.

Additionally, Marketplaces also differ by type of a platform like horizontal and vertical.

  • Horizontal platforms: they facilitate exchanges in multiple different categories, like jobs, ridesharing, services, buying and selling stuff, renting apartments and so on
  • Vertical platforms: they focus on one particular problem / thing. For example, Airbnb – to find temporary accommodation

The vertical platforms have an advantage. Since they focus on only one thing, they are often able to do it extremely well. They can build their online platform solely around the one problem their users have, and thus provide a great experience.

Is it much more difficult to start an online marketplace?

Generally speaking, no, its easier, as anyone can build a site for such a thing at very low cost.

Observationally speaking though, yes it is as people’s understand of marketing has really taken a nose dive in the last few years… resulting in most online marketplace startups being started with no grasp of if there is actually a market for them, nor insight to how to build and develop one capably and competitively. Thus they fail and/or appear to be more difficult than is actually the case.

Why most online marketplaces failed?

Most of the online shops and eCommerce websites are using peer to peer or multi-vendor marketplaces. There are a large number of online marketplaces that are failing over time compared to other business web startups. Many of these online businesses are started with the great fan base but at last turns out to disaster.

Before starting any online business, everybody should do proper strategy planning and make some smart decisions. We have enlisted the main crucial points where these businesses fail to prove themselves.

  • Initial strategy making
  • Proper Business Model
  • Website Technicalities
  • Website Marketing
  • Other Issues

Initial Planning

Everybody should do proper market research before launching their website because little knowledge about the customers can do more damage to your business. It happens because of the hurry, when people get a new business idea they urge to launch that instantly and in this haste, they do not consider proper market research, competitor analysis and customer insights which is considered as the biggest ever mistake while making online businesses.

There is another major error that the business owner is not hiring the professional web designers to analyze the situation. You can hire eCommerce website design company to deal with the market research, customer analysis, and project insights.  Ignoring the advice and suggestion of these skilled professionals can cause a hazard to your business.

Business models

Getting started with new eCommerce business is simply different task from launching an online store. You will need to plan features and functionalities to lure merchants as well as customers. These functionalities can be achieved by hiring any professional website design company.

Another reason to the failure of any business is focusing on too broad items. You must select a niche that suits you best. Some of the marketplaces fail because they don’t start with a proper business model. Rushing to direct development phase before considering these points with perfect revenue model is a recipe for marketplace disaster. And this is the fact why most of the established businesses fail to perform profit.

Website Technicalities

Many of the marketplace website fails even after having a perfect business plan and revenue model. It is simply because of the design of your website. And this thing cannot be fulfilled until you hire a website professional for designing your website.

Building any online marketplace from scratch is quite a tough and sophisticated job so you should hire a Website Design Company to make impressive website solution. But along with this, you have to make sure that they get user experience, conversion strategies, and SEO. The bad user experience can make your website failure.

Website Marketing

Another reason for the failure of these businesses that they do not scale the time properly. For any business, it is an important aspect to proper scale because it establishes the relationship between both the buyer and seller communities. So you should not expect too much money to get just after launching your website. You can obtain these estimations by utilizing and implementing the solutions from any web development company.

In the last, some startups are resulted in failure even though they have utilized good ideas and that is just because of marketing intellect. Marketing strategy is most important for online business.

Other Issues

Along with all these points, there are several more reasons which cause failure of any online business. One of the biggest reason is choosing wrong technical support for your online marketplace. There are lots of website designer companies in the country but there are only a few with great expertise to create UX functional, SEO optimized business solution with unique features. You can invite disaster just by selecting a wrong web design company.

Why You Should Create an Online Marketplace?

One of the main reasons to start an online marketplace is to either help merchants to sell goods or services they don’t have a use for anymore or to help consumers get access to goods or services more easily.

By creating an online marketplace, you create a place where users can rent or sell goods, spaces or services online at a lower price, better quality, or in a more convenient way. Every successful online marketplace does this in a way big-box retailers can’t, which is what makes them competitive players in the eCommerce business industry.

Creating an online marketplace is also an ideal option because you don’t have to own any inventory to run. This makes them an attractive option for entrepreneurs who want to provide a service or solve a pain point without investing so much capital into the business. Online marketplaces acquire inventory from the merchants who sell or rent their goods or services on the marketplace, so it’s not solely up to the owner of the marketplace to source inventory.

If there’s a niche that exists where all the products or services can be sold or rented online from merchants to customers in a way where big-box retailers can’t provide the same service at a cheaper price, or in better quality, then you should start an online marketplace that can supply this to consumers.

Best Solution for eCommerce Business to start online marketplace


WordPress to build online marketplace

WordPress is a very powerful CMS tools to create your own website, blog or app. You can use WordPress as a tool to create content on the web, and acts as an interface that visitors use to access content.

You can download and install the WordPress software on your own web server within a minute. Once installed you can use a simple editor to create and modify web pages — without having knowledge how to code in HTML, PHP or CSS.

WordPress is very easy to learn, use, manage and update. It caters to all levels, that means you don’t need to be an expert to get going. If you face any problems or want to add custom features, it’s easy to find support in the official WordPress forum.

WordPress is very exciting because it is incredibly flexible and adaptable. You can build virtually any type of platform you want like a blog, portfolio, magazine, eCommerce store, community site, business site, forum, social network… the possibilities are endless.

To add to the versatility, there are thousands of pre-designed quality themes and plugins to choose from, which enable you to easily change the capability of your site, without altering the code or site content.

Themes relate to your site’s appearance and transform the way a site is displayed to frond-end, without modifying the underlying software. There are thousands of professionally designed themes listed on WordPress, free and premium, with a customizable theme for just about everything.

Plugins extend the functionality of a website, enabling users to tailor their sites to their specific needs. WordPress offers lots of of free and premium plugins to integrate into the platform, each of which offer custom functions and features.

WooCommerce (WordPress) eCommerce Solution

WooCommerce to build online marketplace

WooCommerce is an open source eCommerce platform which is free to download and offers you with an enormous amount of extended features. It is a WordPress plugin that has user-friendly features and functions to provide a better experience for building a marketplace startup. The seamless integration with WordPress makes it a breeze to install and manage, which is one of the main reasons as open source eCommerce platform of choice.

The mobile-friendly feature of WooCommerce makes it an appealing choice to the growing number of customers that use their tablet or phone to shop.

You will need to have an active WordPress website in order to utilize this platform. You will get the installation guide of woocommerce here.

Features of WooCommerce

Here are some of the customization and design feature:

  • Huge numbers of themes available.
  • Plenty of shortcodes to embed products on any page.
  • Split products according to categories.
  • Customize store based on location.
  • Products ratings and reviews option.
  • Add unlimited products and corresponding products images.
  • Selling option of both digital and physical products.
  • You can add affiliated products directly to your store
  • Add unlimited products variations.
  • Multiple shipping options (including free shipping)
  • Tax options.
  • Different payment gateway to accept credit/debit cards.
  • Support multiple currencies.

Advantage of WooCommerce

  • Free to download and install as long as you have a WordPress website.
  • This plugin can connect all major payment gateways.
  • It is very simple and more professional.
  • With a WooTheme, you hardly have to do any work besides adding content.
  • There are plenty of extensions available to add multiple features.
  • You will get fantastic support after installing WooCommerce.


Dokan to build online marketplace

Dokan is a commonly used multi-vendor WordPress plugin or marketplace software that leveraging the power of WooCommerce. It is the ideal plugin to built the multi-vendor marketplace like Amazon or eBay.

Till now, Dokan has created more than 10,000+ online marketplaces world-wide and has downloaded more than 173,000 times.

With Dokan every seller will get a unique URL for their store to manage products and orders from the front-end site.

As a site owner, you will get a commission from each sale. This is the platform where both the seller and site owner will earn money. The main advantage of Dokan is it support PayPal, PayPal Adaptive, Stripe, Bank Cheque, and Cash on delivery.

Features of Dokan

  • Free extensions to customize website like: Product duplicator, PDF invoice, WPML integration, WP vendors migrator
  • Free WP User Frontend to make site more user-friendly and secure.
  • Support all payment gateways.
  • Huge numbers of themes available.
  • Split products according to categories.
  • Customize store based on location.
  • Products ratings and reviews option.
  • Add unlimited products and corresponding products images.
  • Selling option of both digital and physical products.
  • You can add affiliated products directly to your store
  • Add unlimited products variations.
  • Multiple shipping options (including free shipping)
  • Tax options.
  • Different payment gateway to accept credit/debit cards.
  • Support multiple currencies.

With the Free version of Dokan you will get the following Advanced features.

  • Frontend Dashboard for Vendors
  • Frontend Simple Product
  • Order Management
  • Withdraw System for Vendors
  • Individual Vendor Stores
  • Order Email Notifications
  • Storefront Widgets

And you will get the following Modules free with Dokan Free version.

You will also get live support after installation.

Try Dokan Free from here.

With the pro version you will get the following advanced features.

  • Frontend Dashboard for Vendors
  • Frontend Simple Product
  • Order Management
  • Withdraw System for Vendors
  • Individual Vendor Stores
  • Order Email Notifications
  • Storefront Widgets
  • Multiple Commission Types
  • Multiple Product Category
  • Frontend Variable Products
  • Frontend Grouped Products 
  • Vendor Management UI
  • Admin Reports
  • Earning Reports
  • Vendor Statements
  • Shipping Management
  • Coupon Creation
  • Making Announcements
  • Social Login & Registration

And you will get the following Modules with Dokan Professional version.

Get Dokan Professional Pack from here.

How to create online marketplace with WordPress step by step

First, you need to make sure that you are using the right platform. There are two types of WordPress available: WordPress.com vs WordPress.org. One is a limited blog hosting service while the other is known as the self-hosted WordPress.

You will need the following things to build an online marketplace website using self-hosted WordPress.

  • A domain name and Web hosting. (This is where your website’s files are stored)
  • An SSL Certificate (To securely accept online payments)
  • WordPress
  • WooCommerce (best WordPress eCommerce plugin)
  • Service marketplace plugin (like Dokan)

Step 1

Once you are confirm that you have your own domain and hosting service from your respected provider you need to install WordPress on your server. This is different for every web hosting provider that are available. If you are encounter any problem configuring WordPress you can always visit their official website for more information.

Step 2

When you have installed WordPress successfully on your server you need to access the back end to install the necessary plugins. To access the back end just go the URL of your page and type your domain name /wp-admin. This will take you to the login page which looks like the following.

WordPress install back end login

After logging in you will enter in the WordPress Dashboard page.

WordPress Dashboard

Step 3

Now you have to install all the necessary plugins for your online marketplace. At first you need to install WooCommerce plugin from WordPress plugin store. To download WooCommerce you have to go to

wp-admin -> Plugins -> Add New

WordPress Dashboard Plugins Add New

Now go to the search option and type WooCommerce. The result will show the WooCommerce plugin with an install now button like the following. Just click on to install. Then activate the plugin.

WordPress Dashboard Add Plugin Install WooCommerce

Next you have to install another plugin, Dokan. To install Dokan you have to again search at the plugin option for Dokan. After getting the plugin you have to click on the Install now button and activate after that.

Dokan WordPress Dashboard Add Plugin Install Dokan

Step 4

You will now be able to see a menu named as Dokan on the Dashboard page. The Dashboard section shows an overview of your online marketplace. There are also different subsection menu that gives you options to customize all.

Dokan WordPress Dashboard

Now you have to enable membership registration to start adding vendors. To do that you have to go to

wp-admin -> Settings -> General

there you need to put tick on the check box of “Membership Anyone can register box” then click save.

Dokan Membership

Step 5

Now to see the front end page of a vendor you have to add a vendor user. To add vendor just go to:

wp-admin -> Users -> Add New

Fill up the form with the necessary information and select role as Vendor. Then click on save. Your vendor will be created.

Dokan WordPress Dashboard Users Add New Vendor

To see vendor store page add /store/vendor to the last part of your URL.

If you fill up all the necessary information for your vendor and add products it should look something similar to the following:

Dokan Vendor to build online marketplace

Congrats! You have successfully installed Dokan and set up a vendor page for online marketplace. You can now see all the features and customize it the way you like. 

A complete fully customized Dokan service Marketplace should look something like this.

Dokan WordPress Complete Online Marketplace

Best Practices For Launching Your Online Marketplace

When it comes to bringing your online marketplace to life, your launch will play a vital role in how your marketplace continues to progress over the course of its lifetime. Some best practices of promotional channels like an email list, advertising, press, influencers and online communities such as Product Hunt to get the attention of people who might be interested in what your marketplace has to offer.

No matter when it launches, it’s arguably most important to build trust within each and every user that enters your online marketplace as soon as you launch. Trust in your online marketplace is ultimately what’s going to make it successful in the long run.

Tactics to get trust from visitors to your online marketplace include:

  • Create a Good First Impression: How your website looks, the types of products you sell, the quality of your merchants, your FAQ Page, and your About Page can all affect a visitor’s first impression so put in the work to make it a great impression.
  • Have Inventory Ready to Sell: Make sure there are plenty of products ready for your customers to purchase.
  • Be Transparent: If there is still room for improvement on your online marketplace, let customers know that you’re working to make things run more efficiently and that you’re putting in effort behind the scenes to make it the best possible online marketplace experience for them.
  • Be Honest: No matter what your online marketplace promises customers, make sure you deliver the same on it. Don’t make any claims you can’t fully commit to as this will cause customers to lose trust in your online marketplace.
  • Allow Reviews: Customer reviews help all websites build credibility, so leave a place on your online marketplace for customers to leave their thoughts and feedback.

Building an Online Marketplace: Conclusion

Now you should be well-equipped with the knowledge to start your own online marketplace. Remember that your online marketplace’s niche will be what sets it apart from other online marketplaces in the industry and that executing ideas is what really matters to help you stand up to any competition. Focus on getting suppliers for your online marketplace first and then instill trust into every visitor that lands on your online marketplace after launch day. Have a good online marketplace idea. Get started!


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