How to Build a Marketplace App: Types, Features, and Examples

Since the 1990s, people have been selling their goods and services on sites like eBay, Amazon, and Craigslist. These early sites have helped introduce businesses to new markets and have simultaneously allowed buyers to find products and services in a more convenient manner.

For small and medium vendors, for whom it’s too expensive to spend on creating their own online store and invest in its promotion, the marketplace can be a great opportunity. On such platforms, they can list a variety of products and services with the marketplace acting as an intermediary between the buyer and seller. 

Smartphone apps have transformed how people interact with the world around them. Marketplace apps have recently emerged as a new form of mobile application that delivers the benefits of online marketplaces to a mobile audience. The fact that people spend more hours staring at their phone screen than sitting in front of a computer has led to a habit of making purchases spontaneously, on-the-go, any minute the necessity or desire arises. When a tempting purchase is just a few clicks away, who can stand? That’s why marketplace apps are seeing more and more use.

In this article, we’ll delve into the essential aspects of building a successful marketplace app, exploring the diverse types of marketplaces, key features that drive user engagement, and inspiring examples from industry leaders. From defining your niche and target audience to crafting a seamless user experience and ensuring robust security, we’ll equip you with the knowledge and insights to navigate the dynamic world of online marketplaces.

What do You Need to Know About Mobile Marketplace Apps?

A marketplace application allows users to buy and sell goods and services from each other. The main functionality of a mobile marketplace app is to connect buyers and sellers and facilitate transactions between them.

Many people think that transition from a web version to an app can be done very easily, it is a misconception. Here are some difficulties you may face with:

• To launch a marketplace app, you’ll have to follow app store submission guidelines. 
• Users behave another way using mobile apps, that’s why it requires well-considered UI/UX design. 
• You need to convince new or existing customers to download and log in to your app. The first time it takes more effort to use a mobile marketplace app than to enter an online store name in a search engine.

However, building an app and inviting users to interact with it is a long-term but beneficial investment. On average, smartphone users spend 3 hours and 10 minutes each day on their devices, of which 2 hours and 51 minutes are spent in apps (almost 90% of time).

Why Do You Need to Build a Marketplace Platform?

In 2024, a significant portion of the global population – 33%, or 2.71 billion people – are shopping online. This represents a 2.7% increase from the previous year, highlighting the continued growth and widespread adoption of e-commerce worldwide.

The main reason for you to create a marketplace app is that it is a great possibility to reach the fast-growing mobile market that promises all the online marketplace owners extra earnings. It may also be the next step of evolution for eCommerce platforms in order to access new markets and the growing mobile marketplace. As the smartphone market continues to expand, so do the mobile marketplace solutions.

Smartphones are now the primary way in which people access the internet. In fact, a recent study found that the average user spends 57% of their time on the Internet on mobile devices. All the leading online marketplaces in the above list have their own application. 

Why choose a mobile app instead of just preparing a responsive web version? Mobile apps work much faster and more effectively because the web depends a lot on the correct browser work. Besides browser, smartphone power capacity and screen resolution may affect the displaying of websites. Websites are still mostly intended for desktop users. Meanwhile, apps` UI/UX allows to fully leverage smartphone features building more comfortable conditions for customers. For example, it helps easily interact with displayed products by just tapping, sliding, and spinning on them. Cameras in smartphones give marketplaces another great opportunity to show their products—with the help of augmented reality images (AR). 

How Marketplaces Make Money?

A marketplace helps facilitate a connection between a buyer and seller. For buyers, the incentive is often access to products or services at reduced prices. Sellers gain access to new markets and customers, but what’s in it for the marketplace?

There isn’t one simple answer to this. Many sites charge a specific fee, which may vary based on the platform and service.

• Commission for every transaction – some sites take a commission from every transaction. Amazon for example charges 2.9% for domestic transactions and 3.9% for cross-border ones. 
• Fee for featured listing – Etsy has a listing fee and then charges 6.5% on top of the transaction.
• Subscription fee – with some sites, a monthly subscription fee is charged that helps maintain services. A good example is Couchsurfing.
• Advertising – these solutions make their revenue directly from the seller. A prominent example of this is Zillow. 

While other sites use different methods of monetization based on the type and volume of traffic as well as charging for additional services. 

The sums involved are often not huge, but they can add up. Marketplace apps are great for bringing in extra revenue from existing customers and can help increase profits for businesses.

Types of Marketplaces

There are many types of marketplaces in existence. Some focus on a specific sector, while others are more general. It is easier to make a decision on how to build a marketplace in your particular case, based on its product and target audience type.

Types of Products

1. Goods Marketplaces

One of the most common types of marketplace app is the goods marketplace. These are sites that offer a wide range of different products and services for sale.

Amazon and eBay are examples of product marketplaces. These sites offer thousands of different products from hundreds of different vendors.

2. Staffing and Service Marketplaces

Staffing and Service marketplace is another popular option for building a marketplace app. These apps offer a marketplace for services rather than products and are excellent for freelancers, private individuals, and even companies that want to advertise services for sale. 

Fiverr, Upwork, and TaskRabbit are all examples of such service marketplaces. These apps offer thousands of different services from hundreds of different providers helping create a single location for seekers of services.

3. Fundraising Marketplaces

Fundraising marketplaces are a little different from the other types of marketplace apps. These sites don’t actually sell anything from their site. Instead, they offer a platform for arranging funds through crowdfunding for startup projects.

The most well-known example of a monetization marketplace is Kickstarter. Kickstarter provides a platform for people to offer projects and products. It has helped fund over 246,131 projects and raised billions of dollars in total.

Types of Target Audience

1. C2C

A customer-to-customer or peer-to-peer type marketplace refers to a marketplace app where users can sell their own products. 

Etsy, BlaBlaCar, and DogVacay are the most well-known examples of a participant-type marketplace. The site allows sellers to offer a wide range of products, but it also allows sellers to sell their own handmade or vintage products.

2. B2C

Business-to-consumer marketplaces provide a forum where clients can directly purchase goods and services from an organization without a middleman. These organizations provide consumers with a one-stop-shop solution where they can purchase lots of different products in a single place. AliExpress is a great example of this type of marketplace.

3. B2B

With business-to-business marketplaces, buyers and sellers can meet in a single place where bulk purchases can happen. For example, if you look at a site like Alibaba.com, you find that this is a site where Chinese companies are selling to other Chinese companies. Or you can look at a site like Tagasauris, which is an auction site for rare books. So this is a marketplace where you can both buy and sell books.

A distinguishing feature of a B2B marketplace is the allocation of different payment methods – for example, scheduled payments – in comparison to B2C or C2C markets. 

Top Marketplace Platforms to Check

Now, we will look at the best marketplace platforms that will become prototypes for your application.

Amazon

Amazon was founded in 1994, and initially, it was a platform for selling books. Over time, the company grew and began selling other digital and physical products. In 2022, Amazon’s worldwide revenue was approximately $514 billion. 

Currently, one of the main features of this platform is highly intelligent search and selection of products based on AI. Amazon also provides several options for selling goods, such as third-party sellers, Fulfilled by Merchant (FBM), Fulfilled by Amazon (FBA), Amazon Vendor, and first-party sales (sold by Amazon).

eBay

Probably the most well-known bidding and B2C/C2C platform with a 25+ year history, eBay generated $9.7 billion in revenue in 2022. 

Incorporating AI into its marketplace, eBay includes product reviews, user ratings, detailed search parameters, customizable filters, its own payment system, PayPal, and so on. This platform also provides extensive customization and branding opportunities for sellers, which helps make their stores recognizable.

Poshmark

Poshmark is a fashion marketplace where ordinary people and small shops sell pre-loved clothes, shoes, bags, accessories, and other things at incredibly low prices. Founded in 2011, the platform has been gradually expanding and now, according to data for 2022, it has 7.8 million active users and 8 million sellers. 

The marketplace offers a search tool for products by brand name, type of clothing, color, price, and other parameters. Users can also find designer brands. In general, Poshmark is one of the best app for reselling products due to the unique features it provides.

Alibaba

Being founded in 1999, Alibaba is one of the largest B2B, B2C, and C2C trading platforms. According to statistics, in 2023, the marketplace’s revenue amounted to 126.49 billion US dollars. 

Among the key goals of the platform is to provide sellers and buyers with protection from fraudsters. Many companies are faced with dishonest suppliers or fake orders. To remain a leading B2B platform, Alibaba introduces indices and restrictions that allow its users to weed out unscrupulous partners.

Etsy

Etsy is a marketplace that was originally conceived as a small platform for selling handmade goods. Over time, Etsy has grown to become a full-fledged selling app. At the moment, the platform has 4.36 million active sellers and 81.9 million buyers. 

The application’s interface is very simple, allowing users to upload products in minutes. Sellers can also create their own stores.

Craigslist

Craigslist wasn’t always a large-scale marketplace; it was originally created in 1995 as a website for sharing events among friends of its creator, Craig Newmark.

Now, the scale of the platform has grown and Craigslist is considered one of the most popular trading platforms. Today, according to statistics, Craigslist is visited by about 250.6 million users every month, who spend an average of about 14 minutes exploring the website.

Craigslist is an informal trading platform where users can sell and buy goods of any type. The application is very convenient for users who want to sell retail goods or handmade products. The platform is also an excellent option for garage sales, local merchandise exchanges, and moving sales.

How to Build a Marketplace App

After you make up a market research and concept, and decide on the type of marketplace and financial model you need, it is time to consider the strategy of building the desired app. You can think of many fundamentally new features and spend months trying to find common ground with programmers and get the result you want. Creating a minimum stack of features for a minimum viable product may not be easy for an entrepreneur with no technical background. That’s why, to build a marketplace app without wasting time and money, you’ll need a professional software development team of project managers and business analysts, software developers, UI/UX designers, and QA engineers. Choosing a team of professionals and Agile software development solutions, you pick flexible planning, effective response to new information about customer’s needs, and rapid delivery. 

Strategy Phase

The first phase of online marketplace app development is the strategy phase. Here domain experts together with business analysts, project managers, and customers decide how to build a marketplace corresponding to customer requests, define user needs, and system requirements, and detect potential risks. At Nix, we take every measure for the product to be efficient and secure. At this stage, the project receives an evaluation of the required time, force, and budget.

Design Phase 

The second phase is the design phase. At this stage, software architectures analyze user behavior in similar projects and create structure and detailed future app layout. After designers create interface mock-ups and define how they will be connected with databases and servers.

App Development Phase

Based on all the previously compiled documentation, we move to the third phase – development. At this stage, we realize the project. Here are two ways to carry out the development process: custom marketplace mobile app development or non-custom app development.

Non-custom marketplace app development is the cheaper route, but it can have drawbacks. The biggest drawback is that you will be limited to using the functionality that is present in the Software as a Service (SaaS) online services that were designed especially for building a marketplace application or general app builders like Magneto, Drupal, and OpenCart. If your processes or tools will no longer be supported, you will either need to adapt or change the structure of your app.

Custom marketplace app development allows you to build a marketplace app that is designed to your exact requirements. The biggest drawback is that custom app development is more expensive and it can take time to create. It will require a team of developers to code your app from scratch. Besides building interfaces for both marketplace customers and sellers, developers will build database servers to make the app work.

Testing Phase 

The fourth phase is testing. It includes product testing and bug fixation until the product corresponds to the claimed at the first phase requirements. After that, your marketplace app is launched and you move to the fifth phase – ongoing support. If all the stakeholders are satisfied with the product, then the building app process is finished. 

You need to understand that you are going to compete with marketplaces presented on the market for quite a long time, among them big names like Amazon, eBay, Uber, and others that sell an enormous range of products and services. That’s why, besides excellent UI/UX with must-have features, you need to think of extra ways to attract your particular share of the audience. 

What Features Can Make Your App Stand Out?

When thinking about app features, consider your market as well as what you are designing the app to look and feel like. Explore your market and your competitors. If your app is designed for sellers, then you need to consider the features that they are looking for. How to build a marketplace app so it can make life easier for future customers: is it designed to save their time or save their money? Likely, customers will expect products at your marketplace to have lower prices as it is not brick and mortar and more like brick and click they suppose you spend less on product storage and staff.

Use different analysis tools to build a marketplace app. Using a TOWS analysis when defining what your app should accomplish is critical. With a TOWS you are looking at the threats, opportunities, weaknesses, and strengths to accelerate your success. 

Consider things like:

• What is your unique selling point?
• What features does your marketplace application need to have or improve?
• What features are present in competitive apps?

By offering extra plug-ins or services such as simplified up, dashboard with real-time data analysis, or built-in chats, that help make you distinctive in the market, you can gain market share at a faster pace.

What Challenges Can You Expect Building a Marketplace App?

So as we have already discussed earlier, the first analysis phase of building software includes detecting all the risks. There are lots of challenges and issues that you may need to deal with when building your marketplace app. But knowledge is power. We’ll tell you what issues you can face and you’ll be able to foresee how to avoid them right from the start.

• How do you deal with fraud and chargebacks?
  
  One of the biggest challenges when building a marketplace app is how to deal with fraud and chargebacks. Marketplaces need to deal with the fact that there will be fraudulent sellers who try to defraud the marketplace. These fraudulent sellers will often be selling counterfeit products, but they might also be selling fake versions of products that are sold by legitimate sellers.
  
  How can you make sure that you don’t end up selling counterfeit products? How can you spot the fake sellers? One way of solving this issue is by using automated fraud detection tools, but human verification is also very useful.
• How can you build a marketplace app with robust security?
  
  One of the best ways to make your marketplace app more secure is by using a payment gateway. Payment gateways offer a way for people to pay for products on your site and a way for you to accept payments. Having a payment gateway means that you can accept payments from a wider range of users. It will also help to make your site more secure.
• How do you deal with logistics?
  
  Logistics is a big issue for any marketplace app. Whether you are selling a digital product or a physical product, you will need to deal with the logistics of shipping and delivery. How do you make sure that products get to the right place? How do you deal with returns and replacements? All of these logistical issues need to be considered when building your marketplace app. You can use different methods to handle logistics, but you need to make sure that your methods are efficient and cost-effective.

Estimating the Cost of a Marketplace App 

Building a marketplace app is not an inexpensive undertaking. A marketplace app can take months to build and require a significant upfront investment.

While there are a number of different costs that you need to consider when building a marketplace app, the biggest cost is the cost of the development.

The cost of building a custom marketplace app will vary from developer to developer. In fact, within an organization costs could differ based on the seniority of the developer as well as the complexity of the application. It will also vary depending on which platform you are building your marketplace app.

Costs can also vary depending on the features you are trying to incorporate. If you are building a marketplace app with geolocation capabilities, for example, it will cost more than a marketplace app without such.

The cost of a marketplace app will also vary depending on how complex you want your app to be. Consider features like single sign-on, multiple currencies, chat integration, order tracking, and payment gateways as additional options to be added into the mix.

It is important to keep in mind that the cost of building a marketplace app is not just the cost of the initial build. Once your marketplace app is built, you will have costs associated with marketing and maintenance.

The cost of running a marketplace app can be significant. You will need to budget for the cost of server space, maintenance, and ongoing support.

Conclusion

When building a mobile application, you have a lot of different things to consider. You need to think about the UI/UX, the features, and the capabilities of your app. Ask NIX experts how to build a marketplace considering what platforms your app will run on.

Our global team of developers, project managers, and business analysts can help you find an answer to all of these reflections based on our 27 years of experience.

At CarSoup.com NIX helped create a mobile marketplace that tied together over 20,000 dealerships throughout the US. These dealers were able to upload new vehicles and configure them for sale in a matter of minutes. The CarSoup.com solution required the creation of multiple websites and applications that could be used on every platform. Users were able to search for cars and contact dealers directly from mobile devices.

Another mobile marketplace NIX created was for an organization involved in lifestyle industries. The business already had a robust online presence but needed to enhance its services with a mobile app that could be used by both new and existing customers. NIX was able to build solutions that allowed users to chat and video conference service providers directly, while at the same time integrating payment capabilities.

Our team has extensive experience in mobile application development, and we can help you build the best mobile marketplace app. We will work with you to ensure that your app is built to your exact specifications and designed to meet the needs of your customers.

With NIX, you can build a mobile marketplace app that will help you drive sales and increase profits. Contact us to discuss your mobile marketplace app development needs.

FAQ

01/

What Are the Benefits of Building a Mobile Marketplace App?

Building a marketplace app can lead to customers being able to browse and purchase products or services on-the-go and receive real-time updates, push notifications, and personalized recommendations, enhancing their overall shopping experience. A mobile marketplace app provides businesses with various benefits such as increased visibility, wider customer reach, enhanced user engagement, improved customer experience, and increased revenue opportunities.

02/

What Are the Key Features of a Successful Mobile Marketplace App?

You need to know how to create an in-demand marketplace app, as the competition in any market is extremely high. Key features of a successful mobile marketplace app include a user-friendly interface, advanced search and filtering options, secure payment processing, customer support, social sharing capabilities, ratings and reviews, and seamless integration with other platforms. These features can help attract and retain customers, increase engagement and conversions, and ultimately drive revenue for your mobile marketplace.

03/

How Can I Monetize My Mobile Marketplace App?

There are several ways to monetize your mobile marketplace app, including charging a commission on transactions, offering subscription-based services, charging for featured listings or ads, and leveraging affiliate marketing programs. It’s important to choose a monetization strategy that aligns with your business goals and provides value to your users.

04/

What Are Some Tips for Marketing My Mobile Marketplace App?

To effectively promote your marketplace app, you should focus on building a strong brand identity. You can optimize your marketplace app’s store listing, leverage social media, paid ads, and influencer marketing, offer incentives for referrals and reviews, and continually engage with your customers through targeted email and push notifications. This will help your business stand out from the competition.

05/

What Programming Languages or Frameworks Are Commonly Used for Marketplace App Development?

Some marketplace app tech stack commonly used for marketplace app development include Java, Swift, Kotlin, Python, React Native, Flutter, and Node.js. The choice of language and framework depends on various factors such as the complexity of the app and platform compatibility, scalability, etc.

06/

How Long Does It Typically Take to Build a Mobile Marketplace App?

The time required to create a marketplace app can vary depending on various factors such as the complexity of the app, features and functionalities required, chosen programming language, development team size, and development methodology. On average, it can take anywhere from a few months to a year to develop a mobile marketplace app.

07/

What Are Some Best Practices for Creating a User-friendly Mobile Marketplace App?

To build an in-demand marketplace app, follow best practices including prioritizing simplicity, clarity, and consistency in design and functionality. Additionally, providing clear navigation, easy-to-use search and filtering options, and secure payment processing can improve the user experience and increase customer satisfaction.

08/

How Can I Ensure the Security of My Mobile Marketplace App?

To ensure the security of your mobile marketplace app, it’s important to implement robust data encryption and multi-factor authentication, conduct regular security audits and testing, comply with data protection regulations, etc. It’s also important to stay up-to-date on the latest security threats and take proactive measures to prevent potential security issues in your marketplace app development. Additionally, it’s important to educate users about safe browsing and usage practices, providing clear and transparent privacy policies.