A few years ago we were on the brink of a technological revolution. And while it has come a long way (especially during the pandemic), it still has bigger goals to achieve. Well, there is no such thing as perfection. The more technology develops, the more it affects the business sphere. This also has an impact on e-commerce.
The widespread question is which e-commerce business plan is relevant. What actions will lead to success? Entrepreneurs worry about this for a reason. Getting started is the most challenging part of business. The business differs from one sphere to another, but there are general recommendations on how to do it.
In this article on innovation, we will discuss what marketplace technology is, what the main problems are, and what innovation can do. There is also a ready-made online business plan template.
What are the differences between a web store and marketplace
Until the 90s the most popular business model was the bricks-and-mortar store. Since the development of the Internet, businesses have started to move to a new format. eCommerce is a technology that can transfer the business to an online representation. At first, there was a small number of online stores, but then a new branch of eCommerce appeared—marketplaces.
Marketplaces and stores are online shops but the main difference is that they have a different number of vendors. An administrator and a supplier are one person in a common webstore, while in marketplaces there are several suppliers called vendors and one administrator. A marketplace platform is a collection of products and services from different businesses.
Here is a short overview to help you see what an eCommerce marketplace is:
Online store business plan and multi vendor marketplace business plan may be a bit different. So, we are going to look through the second one.
What are the pros and cons of marketplace business
Each business model has certain advantages and disadvantages. Marketplaces have some specific features that entrepreneurs should take into account in advance.
Pros of launching a marketplace
- It is a demanded and prospective direction of business—when searching for products, marketplaces consistently occupy the top lines of the search results. Statistics also show a permanent growth of the sphere.
- Increased profits due to high customer flow—in comparison with other business models, marketplaces are one of the most lucrative ones.
- Large audience coverage due to a variety of products and services—the number of products and services, certain brands at lower prices, and specific vendors attract a heterogeneous audience.
- Several monetization options—marketplaces have different sources of earnings which make this business model financially flexible. We will take a glance at them a bit later.
- Savings on the maintaining warehouses—not only do marketplaces have a high profit but also allow for saving spendings on brick-and-mortar stores.
- Expanding trading opportunities—the marketplace sphere has almost no limits to globalization. With the right approach you can greatly develop it.
Cons of starting a marketplace
- There might be big spendings in the start—as any business marketplaces require great efforts at the start.
- Difficulties related to attracting users—people are skeptical about everything new. They might need time to get used to a new platform and you should overcome the barrier of first mistrust.
- High-competitive environment—the Internet has much to offer today. You should be very appealing to stand out from a great number of other competitors.
How to cover the start marketplace problems
There are some methods on how you can cope with the problems related to the start of a marketplace.
- Find investors—first of all, develop a detailed eCommerce plan and then display it on different specialized websites where you can find potential investors. Your plan should be realistic and objective about all the pros and cons, profits and expenses. Be honest about expected results and be clear about your intentions. Investors may also be in a close circle of friends and relatives.
- Start a marketing strategy—Both types of users, contributors and consumers, should see all the advantages you can offer. Try to find their “problems”—needs and promote information about them.
- Offer unique services—this is about how quick-witted you can be. A useful approach here is to analyze your competitors and define what makes them different.
- Do not forget to test your idea in MVP. This is another point that can help you save money and time. The MVP marketplace allows you to test the hypothesis as quickly as possible and correct the business plan, if needed. The main idea of MVP is to help you see the points of growth and the correct directions for development.
This is a prospective area. The possibilities of a marketplace platform cover all the challenges of launching. Let’s look at an online marketplace business plan.
How to launch a marketplace successfully
There are some essential steps which help you to start and then boost your business.
Step 1: making a concept
The idea is the most important step is an e commerce business plan. There are some methods that can help you to choose.
- Select 2 or 3 promising ideas—you do not have to reinvent the wheel. The only thing you need to do is find a not overwhelmed business sphere, analyze players in this sphere, and improve the idea to be compatible.
- The arrangement of products and services—Decide how many categories of products and services will be offered in your marketplace. Will it be a niche marketplace or multi categorical one? Read about the importance of a niche.
- The scale of a startup—why are we talking about scale if you are eager to build, for example, a global marketplace and scale is obvious? All global marketplaces started from servicing a certain area. Amazon and eBay were not global ones for the first several years. Find a geographical territory where demand will be the strongest. Plan to do everything to perfection on a certain territory.
- Define your audience—If your audience is too small you will not probably have any prospects. However appealing the idea might be, without customers it is useless. Do not hesitate to drop the idea and examine another.
- Discuss your idea with several competent specialists, you can organize a survey among your audience.
Step 2: testing the idea
In e-commerce planning is a nice tool and all that you have done before was a theoretical examination but on this step it is a practical experience that is significant.
MVP—minimum viable product—is a must-have step that helps to reduce future expenses. MVP is a prototype of a business with minimal features and characteristics. It enables targeted actions—selling and buying.
On this step you can see if your idea is irrelevant for any reason. You have two options in this case: you can try to optimize it or go back to the first step. It is a normal practice of selecting ideas.
CS-Cart Multi-Vendor offers interesting possibilities for testing MVP on our platform: a launch within a week, available tariffs with the price which starts from $95/month. You can choose between the two editions: No-Code and On-Premises.
While the Multi-Vendor On-Premises is a self-hosted solution that allows the code changes, No-Code is a cloud solution that doesn’t have to be installed on the server and requires no coding experience. The solution is perfect for getting your own MVP up and running within 2 weeks.
See how you can launch a marketplace in 5 minutes:
Step 3: attracting users
Some entrepreneurs stumble at the very beginning when launching business and only then start looking for users of their platform. Audience is an issue that should be contemplated at every step. There some advices:
- You should come to agreements with several sellers in advance and make pre-sales. Pre-sales is a handy marketing instrument. You can offer discounts and favorable conditions for customers. It is a win-win strategy.
- Advertisement via social sites. Social sites are a source of word-of-mouth advertising. It might be not only targeted advertising but also an advertising in blogs of famous people who relate to your products. Such advertisements are much cheaper than TV commercials but it is a possible way, too.
- Calls and mailing. It is a time-tested tactic to contact clients directly. There might be cold and warm calls to potential clients. This method requires work with client’s bases which should be formed in advance as well.
Step 4: launching a marketplace
Do not let your hair down! Fast development of business processes is a significant part. Try not to miss possibilities for development.
Step 5: maintaining work
The cost of attracting a new customer is 5 times higher than retention of an old one. A person who is already familiar with the product will make a purchase in 70% of cases, while the probability of a potential customer buying is only 15%. So, it is important to attract and then keep the client. Remember about the final goals and follow your online store business plan template.
How to set goals
Planning is beneficial in general:
- It disciplines and develops punctuality
- Simplifies the workflow
- It makes us more efficient
- It reduces stress levels
- It helps to organize our free time
- It frees the brain
- It provides goals achievement
- S—Specific—your goals should be clear. Answering five “W-questions” may help to define a particular area:
- What is my goal?
- Why is it significant?
- Who do I need to achieve this goal?
- Where is it located?
- What resources do I need? - M—Measurable—your goals should have certain criteria to be measurable. It helps to maintain motivation and monitor progress. The main question here is “how will I know that this goal has been reached?”.
- A—Attainable—your goal should be realistic. If you have a big goal, try to divide it into mini-goals and use them as steps. Taking into account all the factors ask yourself: “is my goal achievable? Is it possible to reach it in these conditions?”.
- R—Relevant—this is a check whether your goal coincides with your development direction in general.
- Is it worth it?
- Is this the right time?
- Am I the right person for this? - R—Timely—you should have time limits. Make sure that you know the answers to these questions:
- How much time does my plan require?
- What should be ready by the middle of this period?
- What can I do today?
A lot of people have timetables and stick to them. But they do not achieve goals. It is like an everyday arranged but purposeless circle. They miss some indispensable parts of planning. Apart from general advantages of planning, SMART planning is a way to set your goals and achieve them.
S.M.A.R.T.: Specific, Measurable, Attainable, Relevant and Timely.
Cross-reference your goals to these points to make you aim smart. Such planning is applicable to all steps of an online marketplace business plan.
It’s not just the marketplace that needs constant development. Continue to learn in every way possible, from educational sites and groups (Facebook, LinkedIn, etc.) to professional courses and webinars.
If you don't feel ready to pay extra for the courses, check out the free Marketplace Academy course. It will help you form the business model, marketplace strategy, test the MVP and set in the design for the marketplace. Moreover, you will not be alone. There is a chat of the marketplace owners that will be able to share their expertise in maintaining the business.
Summary
In conclusion, a marketplace business model is a relatively new and interesting one. It attracts many interpreters and can be a profitable area. It is important to plan your objectives to understand all the processes that happen in your business. When you run your business consciously, you can manage crises and problems well. You can also predict them and prepare a strategy for solving them. We have looked at an e-commerce plan and highlighted the key steps. We hope that it will inspire you and give you the confidence to start a marketplace.
