10 Questions You Need To Ask Yourself Before Building A Marketplace
Here are ten questions worth asking if you want to build a digital marketplace. Of course, it’s not just a simple questionnaire. You will also get marketplace hints & tips. If you don’t know what is a marketplace and why it’s a hot topic, check our marketplace guide that will help you understand what is a marketplace plan as well.
Let’s get down to work!
1. Who are my customers?
You should ask this question for any kind of business you want to start. There will always be some friends, family, and freaks, who will buy anything from you. However, you cannot build a successful business only on that assumption. That’s why you need to know your customers. What kind of people they are? You will change your approach depending on your target. You will choose different marketing solutions to lure aspiring celebrities and different for introvert bookworms. To make the right decision you must know your customers. What are their needs, and how will your service help them? A successful entrepreneur must know that. Also, keep in mind that as a marketplace owner you have at least two categories of customers to attract. Clients who buy goods or services on your marketplace, and vendors, who pay for having their stalls at your marketplace. How to get vendors for the marketplace? Get into their shoes and find out what will make them come and stay. One popular and useful tool is a Persona. Try it out.
2. What will be my business model?
It is another way to ask, where will the money come from? It’s very important that you think about what to charge for. Think about a traditional bazaar. As an owner, you can charge a monthly fee for the right to sell things at your place. That would be a membership model. Another idea is that you are paid for each thing that vendors put up for sale. That would be the listing fee model. Any new announcement generates profit. However, if you know that there is a lot of money going through your marketplace, consider earning your share from each transaction. This one is a commission model. On the other side, there is a freemium model. Basics are free, but you provide your customers with paid premium experience as well. If you’re good at getting people together, you can consider the lead fee. You bring leads to your customer and get paid despite the outcome.
Which model is the best for you? Answer remaining questions from this list to get a deeper insight. And remember, no one ever told you that you can’t mix these models.
3. What is my road to MVP?
Let’s make something clear. You need your Minimum Viable Product as soon as possible. Why? You need to attract your customers and their clients. You need to build a community. It means you must satisfy their needs and give them the value they long for. That means you need to learn fast what works and what doesn’t.
Now, which feature is the most important for your audience? You have chosen the business model and know your customers. What value will be crucial for them? Choose wisely.
Otherwise, your road will be bumpy.
4. What is my niche?
Why a niche is so important? It is easier when you have to be the best in just one thing and there isn’t much competition. In the beginning, your niche should be quite narrow. It makes it easier to meet your customers’ expectations and build a faithful community. Your niche can be described by the audience (young mothers, motorcyclists, etc.), by the industry (beauty services, toys, tourist accommodation) or geographically. Before you make a decision, look up for competitors and the market growth potential. If there are too many competitors, jockeying will be exhausting. On the other hand, if there are none, maybe there are also no clients?
5. What technology should I choose?
To some extent, it depends on the features you want to apply to your online marketplace. If you choose to build it from scratch with bare hands (on your keyboard), you will probably use technologies you’re already familiar with. It isn’t a bad idea for the very beginning and an MVP. Thinking in the long term however, it’s good to look for an easily scalable option. Then you can choose from a variety of SaaS solutions. They will give you a fast and easy start, but they are also limited in features so later you will have to roll up your sleeves or hire some developers. Finally, there are companies on the market that are already familiar with marketplace development and will share their expertise with you. The only challenge then is to explain to them, what you have in mind.
6. What is the problem that I solve?
Your marketplace can be beautiful and work brilliantly, but if it doesn’t solve customers’ problem, it’s worthless. Airbnb helps tourists find accommodation that is cheaper than hotels and meet people who live in a certain city. The other side is that it provides additional profit for those who have some spare space. Etsy helps you find exceptional goods (often handmade) from all around the world, and if you’re a craftsman it gives you access to the worldwide market. The way you answer this question will help you find a way for your MVP.
7. Can I count on external founding?
If you think about getting some investors for your marketplace development, you will need to do some additional work (that is worth doing anyway). You will not only have to prove that you solve a vital problem and have engaged the community, but also that your investor will earn a considerable profit. The spreadsheet will become your best friend. Or enemy.
When you count only on your own money, the profit margin may be lower. It means less pressure and more time for money to come, but less money for development and marketing as well.
8. Who are my competitors?
In every industry, in every business, you need to know your competition. And by competition, you should count not only those who do exactly the same thing that you want to do. Take a look around and find all the ways to solve the problem that you want to solve. Then, think about how you can make it better and more valuable for your customers. Finally, keep in mind that making dinner on your own is some kind of competition for a nearby restaurant.
9. Do I have a technical background?
By technical background, I mean some IT knowledge essential to your marketplace development. This know-how will be important if you want to make everything from scratch, on your own, but also when you will be talking to your subcontractors. The level of your knowledge is a hint that should help you decide which way is right for you. Whether you should choose a company experienced in a marketplace development, or you are capable of doing it solely on your own. In other words, it’s good for you to know your limitations.
10. Why do I want to start this business?
Last but not least, the question I really like. Actually, this last answer can change the very picture that emerged from all previous questions. Your answer will determine your approach to business. So, is it about a solution to your own problem and you hope more people will need it? Do you want to build an international corporation? Or maybe you want to change the world for better? Maybe all of these are true to you. Of course, we’re all in business for profit, but what’s in it for you?
Do you still want to run a digital marketplace?
I hope that these dilemmas haven’t discouraged you. The effort to answer all ten questions is the investment in your future. Your road will be tough but you can find reliable allies if you look around. Here in Ideamotive, we are eager to support you with our deep understanding of the marketplace development. Let us know that we should estimate your digital project.