How to Create an Online Marketplace MVP

The article was updated on January 22, 2023.

The concept of online shopping is not new – electronic commerce appeared as soon as people got access to the Internet. Since then, this market has been growing and sparking innovative ways of thinking in the minds of entrepreneurs all over the world.

Creating an online marketplace is a very beneficial business today. For many brands and vendors it is a great and inexpensive way to create awareness and attract customers. With the convenience and increased use in technology, clients are able to easily browse through your products and services from the comfort of their homes.

You probably have heard about some of the online marketplace leaders such as Amazon, Ebay, Airbnb and Etsy. They are all great services that prove that going online can be very attractive and successful as they stretch across many areas in business. But you should stop at this point and think carefully. Does your idea have a target audience? Will your business survive in a severe competition? You will get the answers by developing an MVP for your marketplace.

Small but confident steps are important when you enter a highly competitive e-commerce market. In this article, we explain how to start a marketplace startup and what you need for that.

Online marketplace: The definition and convincing reasons to create it

In simple words, an online marketplace is a platform that connects buyers with multiple brands and handles money transactions between them. Nowadays, online purchases are becoming a norm for people of any generation – this is one of the main reasons to consider starting your business in this niche. But it is not the only one.

Why creating an online marketplace is a good idea

Recent years have proved the necessity of online marketplaces. These platforms can meet any customer’s shopping needs, providing them with fast services and a large variety of options. Considering the convenience and accessibility, more people choose to shop online these days.

In fact, the current e-commerce market size has reached over $5.7 trillion in 2022, expecting 9.7% growth in the next five years. By this year, online marketplaces will be responsible for approximately 20.8% of total sales. Needless to say, creating an online marketplace has become quite a profitable business.

Do you want to build a marketplace platform?

Our experienced development team at Eastern Peak can help you create an online marketplace MVP, prove the concept, gather valuable feedback from users and let you move to a full-fledged online platform that brings profit.

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So, let’s see in detail why such a shopping experience is taking over. Here are the main online marketplace benefits for all involved parties.

Benefits of a marketplace for vendors

First of all, there are barely any reasons for sellers to not offer their products on a multi-vendor marketplace, especially on a popular one. A selling platform can provide vendors with numerous shortcuts to their goals. Thus, an e commerce marketplace platform can ensure greater audience reach and exposure online. A business can now build higher brand awareness and a loyal customer base while spending the minimum on marketing and other operations.

A platform ensures quick communication and cooperation with the customers, providing better services and higher customer experience. Vendors are mainly responsible for filling their online stores, communicating with customers, and completing deliveries.

Benefits of a marketplace for customers

The benefits for customers are many. First, people prefer online shopping for its convenience, wide product selection, and accessibility. Thus, users can open a marketplace website from any device at any time, find what they need, and place their orders.

Such platforms also offer easy and helpful search filters, so looking for what they need and comparing items on the site won’t be an issue. Plus, online marketplaces provide detailed descriptions and reviews on each product. Therefore, customers are able to make well-informed decisions.

In addition, users can count on fast services, online customer support, and special bonus and loyalty programs.

Benefits of a marketplace for its owner

There are several main advantages of an online marketplace for their owners. First of all, owners don’t have to deal with products themselves. They are not responsible for storing, shipping, producing, etc. Marketplace owners serve only as mediators – the third party that connects supply and demand. Their responsibility is to build a marketplace platform for others to use.

As a result, owners have to care only about running the platform marketplace itself. Such concerns include security, revenue models, and flawless functioning of the website (no downtime, customer support, etc). However, the content of the site and services fall out of their responsibilities.

What are the main types of online marketplaces?

Not all marketplaces are similar. As market relations evolve, people can buy and sell almost anything online. There are four types of marketplaces depending on the sale’s subject, and each of these types has its leading representatives.


  • Product marketplaces: only physical products are in the spotlight (Amazon, AliExpress, Walmart).
  • Service marketplaces: people buy and sell services. These are often services of a certain type: taxi, renting, home improvement, etc. (Uber, LiquidSpace, Airbnb).
  • Hybrid marketplaces: customers can find both products and services here (Houzz, OLX, Oodle).
  • Project marketplaces: fundraising platforms for startups. Any individual can invest some money into a new business and get benefits in return (Kickstarter, Fundly, Crowdfunder).

What is an MVP for a marketplace?

Amazon or Airbnb are those great marketplace examples that appear in a marketer’s dreams. But let’s be real: building a global e-commerce project and making money right away is not realistic. First, you should have the product’s model that provides its main value and features.

An MVP (Minimum Viable Product) for a marketplace is a fully operational version of your product that includes the most important features and can be offered to early adopters.

What you will get with an MVP:

  • deciding whether you have chosen the vital features correctly,
  • figuring out which features have the potential to become more popular than others,
  • making sure that the target audience is interested in your offer,
  • getting the database of potential clients for the start,
  • finding out the project’s flaws and imperfections.

How to create an online marketplace MVP: From the original idea to the product’s launch

An MVP and a full-fledged marketplace are not the same things – an MVP is one of the steps to the finished result. However, you should treat a minimum viable product seriously because it will define the direction of your business progress.


1. Find out what the market has to offer

At this point, it does not matter whether you will research your local or national market. You should get the big picture of what is going on. Your idea does not exist on its own – it is surrounded by several external factors that have an influence on every business.

The two main research points:

  • The number of companies on the market, their size, market share, and success stories. These are your direct competitors which are setting the tone to the niche you are going to enter.
  • Who their users are and what they are looking for. These people can potentially become your loyal customers, so you should learn as much as you can about them. Gender, age, needs, and preferences – everything is important.

2. Decide on the value of your idea

In other words, now decide what you can offer to the customers. First, you should figure out what type of online marketplace you are going to build. In the beginning, it is better to choose either physical products or services – do not push forward too diligently trying to seize all at once. 

Then, create a unique value. With time, there will be more and more competitors appearing on the e-commerce market, and you should be ready. What is one unique thing or experience that is hard to duplicate? This is the main value that will make vendors and buyers happy and will bring you success.

User expectations:

  • online transactions will be safe and sound;
  • a broad range of products/services for different prices gathered in one place;
  • a smooth user experience: buyers know exactly what button to click next to finish their purchase;
  • the offering of discounts and coupons for the products they usually buy.

Vendor expectations:

  • find more customers and increase their market share;
  • get a full package of services in one place instead of building their own digital solution;
  • cut marketing costs;
  • are given an additional option to promote their business.

Creative ideas for creating a marketplace platform:

  1. How to Develop a Freelance Marketplace like Upwork and Keep It Competitive
  2. Building a Rental Platform: Types, Features, and the Airbnb Example
  3. How to compete in the modern eCommerce market like Tophatter
  4. How to Build a Handicraft Online Marketplace like Etsy
  5. Fundamentals of How to Create a Workspace Rental Platform
  6. Apps Like Offerup: 2023 Guide to Develop Your Buy and Sell App


3. Choose a business model

Next thing, you should pick a monetization model, i.e., how your marketplace will bring you income. These are the most popular methods:

  • Commission. A platform would get the money from each closed deal. Buyers can use the platform for free, while vendors have to share a part of their income. In exchange, they easily get access to their target audience and a big client database.
  • Payment for a listing. A seller should pay for placing a listing on the website. Usually, this revenue model is a good match for big deals, such as selling a car or an apartment. In this case, marketplaces do not handle the transactions, so they have to choose another option. The marketer’s task is to drive lots of traffic to the marketplace so the expenses would be justified.
  • Freemium. It is a widely-used model where all users have free options on the platform, but they should buy a premium account to enjoy the full range of features and opportunities. In the case of marketplaces, it can be the offer of several products for free (like photos in the photo stock).
  • Subscription. Usually, both buyers and sellers should pay a certain amount of money per month to get the full range of features. This one is tricky. You should offer a unique experience to the users so they are ready to pay regularly.
  • Ad placement. This option is often paired with another business model as an additional revenue source. It works this way: a vendor places their listing and can pay a little extra for it to be shown at the top of the list. Sellers would be ready to pay for the ads if they are sure your platform has enough potential customers.

4. End up with a list of features

And finally, what features do you think are essential for an MVP? At this stage, you will probably need a piece of advice from developers, but before that, check out these popular features and collate them with your primary marketplace idea.

The following MVP features are what we consider to be the core of your future product:

  1. Personal profile (with basic settings facility)
    • User’s profile: Your MVP can include a more simplified version of a user’s profile. When the profile is complete, it will contain useful information about the user and help to define the customer’s preferences.
    • Vendor’s profile: It’s better to represent a full-functioning vendor’s profile in your MVP. This is the vendor’s chance to showcase their product or service and to introduce it to its potential customers.
  2. Activity history
    • For a user: Allowing your users to access their activity history can help them to easily navigate across products that they have viewed in the past and might have decided to buy.
    • For a vendor: Being able to track all the activity on your web page is important in understanding your target users’ interests and needs.
  3. Messaging system
    • For a user: A messaging system allows your users to interact with you and to give them the opportunity to share their thoughts or to ask questions about your products.
    • For a vendor: You will establish a sense of trust from your users and directly discuss about resolving any issues.
  4. Searching feature
    • For a user: A searching feature allows users to navigate easily and conveniently through the pages of website.
    • For a vendor: This feature can save you time by searching for specific products or links instead of browsing for long periods of time.
  5. Reviews and a reference system
    • For a user: Having a section for reviews provides the users with a sense of reliability about your product. Your users will be comfortable knowing that others have tried and tested your product or service.
    • For a vendor: This section can give yourself the opportunity to voice your experiences with your customers and to create more online presence and build a trusted buyer-seller relationship.
  6. Payment system
    • For a user: A secure payment system will allow your users to handle the exchange right then and there, all in one place.
    • For a vendor: Having a secure payment system will save you time and give you a breakdown of all transactions and receipts.
  7. Back-office reports, metrics, and statistics
    • For a vendor: Keeping an eye on the breakdown of your back-office reports can give you an upper hand when it comes to understanding your areas of strengths and weaknesses.Your online marketplace MVP must include this feature.


What additional features can be added later?

For users:

  • Product Comparison. Opportunity to compare products alongside each other can be very attractive for the users. Having a good comparison system on your online marketplace is a great competitive advantage over other e-commerce platforms.
  • Sharing on Social Networks options. Allowing your users to share and post links directly from your site can promote your business by connecting to their network.
  • Pop-up notifications. Users may not always be aware of all the functionalities of your site. Having pop-up notifications can help bring attention to certain areas and create reminders.
  • Wish list. Having a wish list can remind users of what they want or need. You can incorporate this information to cater your web page to meet some of their needs.

For vendors:

  • B2B interface. Having a B2B interface will improve efficiency and enable you to grow and scale to meet market demands and vendor’s needs.
  • Comprehensive reports and forecasts. You will be able to easily measure and evaluate your campaigns, effectiveness of sales, inventory, customer sales and customer engagement. A lot of this behind-the-scene data can add great value for future insights.

General features:

  • Version for mobile devices. It can be implemented through creating a mobile app, responsive web design or other options.
  • Rating system. You also can create a rating sytem for vendors and users to encourage the most active ones. The policy of the ranking is up to you but remember that rating system can be a great tool to increase user engagement.

5. Visualize the сoncept

Now you should see how the initial idea will look. This is the stage of design and prototyping. A prototype is not an MVP yet, but it demonstrates the concept behind every page.

It is important to see the platform’s visual representation and user flow. The color scheme and visual elements should match your initial requirements and the list of features you approved with developers.

As a result, you get a live demo version which includes:

  • UX/UI design;
  • Microinteractions (what users do to accomplish one task on the platform);
  • User flow (what steps users make to finish the purchase).

Then, you should share the demo with partners, stakeholders, or even friends and family. This is a testing step before development starts, which can save you from having to rework the code in the future.

6. Develop and test

Creating an online marketplace MVP surely takes less time than building a full-fledged platform from scratch. While the development team is busy writing code, you should form a group of early adopters and test an MVP with them. 

This focus group is a checkpoint of your idea: how many right and wrong decisions have you made? Figuring it out at the MVP stage will save you from lots of mistakes and extra spending in the future.

We at Eastern Peak have extensive experience with marketplace platform development. See our marketplace portfolio to find out more in-depth information about our recent cases. 


Things to keep in mind when creating your online marketplace MVP:

  1. Keep your expenses low. Give yourself some time to grow. Start off small and keep your spendings to a minimum so that you can develop your marketplace after getting some feedback and attention from customers. There’s no need to spend big and rush into it before knowing if your idea will sell.
  2. Tighten your focus. Since you will be limited in resources at the beginning, you should narrow your business efforts. You can begin building traction in smaller segments and then continue to expand into bigger markets once you’ve accumulated safe feedback.
  3. Engage your users. In order to create a lasting impression, you need to interact with your users through your product or website. What can you offer them? How will you make their lives better? Why do they need your product and what good reason do they have to tell their friends about it? Properly engaging your users will help market itself.
  4. Take your time but know when to adjust. It should take around six to nine months to pick up some speed after establishing your marketplace. Sometimes even this can be too quick and it could take much longer. You need to develop both buyer and seller communities, and we all know this cannot happen overnight. However, if a lot of time passes and you still do not get the results you’re looking for, it could be time to reassess your model or business plan.

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After the launch: How to make a marketplace idea successful

“And they lived happily ever after” is a good ending for a fairy tale, but in the digital business, the story only begins after the product’s launch. So, we have an MVP tested by potential users. What is next?

Attract new users

Right after the launch or one year later – this point is always vital for your market presence. But getting off the ground might be the hardest step for a marketplace. Here are several ideas to grow your user base:

  • Use content to your benefit: create your company’s blog or share analytical insights from your daily work. It is important to share truly valuable information so the readers could trust your expertise and share your articles through social media;
  • Start referral programs: one happy customer can bring more people to your platform. These newcomers already got an invitation from a friend, i.e., a person they trust. If they get some benefits with a referral discount, you will grow your audience faster.
  • Go offline: take part in the offline events where your potential customers might appear. Even Etsy started this way: they went to the local markets where people were selling their hand-crafted pieces and offered them to try out online sales.


Read also: Smart Strategies to Attract Sellers and Buyers to Your Online Marketplace

Use marketing wisely

Strictly speaking, any effort you make to find vendors or buyers is your marketing activity. The world of marketing is too broad for the section of this article, but we will list some of the major key points.

  • Use email marketing to strengthen up relations with existing buyers. These people are likely to buy more because they already had a positive experience.
  • Never underestimate the power of a good (and a bad) review. The more reviews you get, the clearer your reputation becomes.
  • Do not sell directly – the market is overloaded with that. In your blog, tell stories that matter to your audience. You should know trends, needs, and demands to respond respectively through your content.
  • Connect emotionally with your customers. In this case, social media is the best helper. Create an image of your business by sharing your values, elements of the corporate culture, and engaging in conversations with followers. This way, you show that there are people behind your company and not only low prices or a wide variety of products.
  • Use SEO (Search Engine Optimization). Your business exists only online, so it is crucial to be found on Google. First of all, you should be sure that the listing pages are well-optimized and provide detailed product descriptions. This way, you can be found through a product page on your website.

Small steps for maximum results

Starting your own online marketplace is both easy and difficult these days. On the one hand, you have plenty of opportunities to explore the market and quickly come up with a minimum viable product. On the other, the online market is growing every year, giving way to new shopping platforms, i.e., your potential competitors.

An MVP is a valuable asset that can save you from many strategic mistakes. You can test your idea, design, its elements, and user flow – and all that with early adopters who will give you valuable insights.

Building up an online marketplace is a task for brave ones, but you can handle it with a reliable team. What features can help you conquer the market? Let’s figure it out together – just leave us a message.

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