Driven by the growing consumer demand for convenient online purchases, digital marketplaces have become a top shopping destination. 37% of repeat buyers shop there.

Even though launching a new marketplace takes effort and investment, it’s a highly lucrative niche. Online marketplaces are so loved by sellers and buyers that you, as a prospective software vendor, are guaranteed to have many interested users.

Want some guidance on how to build an online marketplace? We have a plan. Leobit has launched several projects in this field and wants to share our expertise with you.

What is an Online Marketplace?

Are you fascinated by the success of Airbnb, Booking, and Amazon? All these products have one thing in common – they are online marketplaces.

An online marketplace is a platform where providers of goods and services can directly offer them to customers or other businesses. This way, merchants don’t need to invest in custom online store development. They can start selling after a quick registration. On the other hand, buyers get a wide variety of products they can buy in one place with convenient shipping.

Despite a common belief that US marketplaces are the most popular, Asian platforms take the lead. So when you build an online marketplace, you may consider them competitors.

Online marketplaces software development(Source)

Why Should You Build a Marketplace?

The primary reason to develop a marketplace is an opportunity to join a profitable niche. Online marketplaces have been rapidly growing in revenue and number of users for years. B2B sales could reach $3.6 trillion by 2024, while the B2C segment is expected to reach $3.5 trillion annually. Besides:

online marketplaces


These numbers reflect a steady growth of online marketplaces and that consumers willingly spend money online. Your target audience may reach millions if you develop a marketplace.

Benefits of online marketplaces: for buyers, sellers, and software providers

Online marketplaces simplify the lives of sellers and buyers while bridging revenue to software providers offering them. Let’s clarify the benefits for each group:


  • Rich selection of brands on one platform
  • Convenient payment and shipping options
  • Centralized interface and review system
  • Reliable refund policy


  • No need to invest in custom online store development
  • No need to have a tech team for site maintenance
  • Variety of advanced eCommerce features for any taste
  • Steady flow of buyers


  • Access to the global market niche with billions of consumers
  • Rapidly growing demand for online marketplaces among SMEs
  • Convenient monetization models
  • Additional revenue from advertising

How to Build an Online Marketplace Website: 5 Steps

The software development process for online marketplaces generally resembles any other SDLC. Yet you pay extra attention to the monetization model and some unique features to include.

Step 1. Pick the marketplace type

Check currently available platforms to understand better what type of marketplace you want to create. Here are several main types:

By focus:

  • Horizontal. Offer a variety of products to a large audience (e.g., Amazon).
  • Vertical. Offer specific products to a narrow audience (e.g., Airbnb).

By offer:

  • Product. Sell physical goods like beauty products, books, clothes, devices, etc. (e.g., Walmart).
  • Service. Help users find a vendor that can complete a specific task for them, like writing an article or creating a logo (e.g., Upwork).
  • Project. Enable users to raise money for their project through crowdfunding (e.g., Kickstarter).

You must also understand your target audience – B2C, B2B, C2B, or C2C. Marketplaces that focus on connecting businesses (B2B) have different functionality and look than those that directly connect consumers (C2C), businesses with consumers (B2C), or consumers with businesses (C2B).

Step 2. Decide on the revenue model

Online marketplace development is not a volunteer job, so you must ensure all the investment pays off. That’s why you must create a software concept with a monetization model. Consider one (or a combination) of the following options:


Charge buyers, sellers, or both parties a specific percentage of every transaction completed through your platform. They can use your platform for free and pay only when they derive direct value from it.


Make users pay a certain monthly or annual fee for access. This model is popular for marketplaces that offer unique services in a narrow niche.


Charge users for advanced services while the basic marketplace functionality remains free. You must convince existing leads that they can significantly benefit from ordering premium features.

Listing fee

Charge sellers a small fee for every offering they post. For example, on Etsy, a listing costs $0.20. This insignificant amount will make a huge difference when your user audience reaches millions.


Monetize ads third-party companies place on your platform to generate extra revenue.

Step 3. Validate the idea

Once you know the marketplace type and revenue model, you must ensure the idea will work. Even if something sounds like a success in your head, the real market conditions may be harsher. So you must run an analysis yourself or hire a third-party provider like Leobit who can do it for you.

For idea validation, you must:

  • Run market research and analyze the latest industry trends to ensure your product matches them.
  • Find an unexplored market area and choose it as your niche.
  • Develop a unique market proposition by offering a better price, quality, or convenience.

Step 4. Choose the required functionality

When you know the target audience, it’s time to shortlist the features that can meet its needs. Here is the standard functionality to include in your marketplace.


Enable buyers and sellers to sign in through Gmail, Facebook, or other relevant platforms to save settings and share data securely. Although sign-in should be optional for buyers, you must have it.

Buyer’s personal account

Let buyers specify their contact & payment details, track orders, and check purchase history in their accounts.

Dashboard for sellers

Provide merchants and service companies with a dashboard where they can publish new offers, check transactions, view the balance, configure settings, and more.

Product pages

Build functionality that allows users to create product pages with multiple photos, descriptions, size charts, and color options.


Add standard and additional filters to enable users to narrow the search and quickly find the product they need.

Payment gateway integrations

Enable bank payments with MasterCard, Visa, Discover, and other popular payment processors. Also, connect third-party services like PayPal, Apple Pay, and Google Pay.

Leobit team will be happy to guide you through development and help optimize expenses while building the perfect custom marketplace for you.


Allow buyers to leave product reviews through 1-to-5-star ratings and text comments. It will make your marketplace look more reliable and help new buyers make the right purchase decisions.


Integrate convenient in-platform messages to connect buyers and sellers so they can discuss any issues.

Of course, you may need unique features to outperform your competitors and offer something others don’t. These may be advanced marketing capabilities, built-in analytics, voice search, 24/7 chat, or anything else your users will find valuable.

Step 5. Start the development

Specify the requirements and plan development before coding. Online marketplace development is challenging, so most vendors outsource the tech part. Find a software development company like Leobit that has developed eCommerce platforms and will do the tech part for you.

Once you find a tech partner, you will go through the following stages to complete the project.

Requirement discovery

Business analysts collaborate with engineers and project managers to specify product requirements. At this point, you clarify the tech stack, formulate user stories, and create a project timeline with cost estimates.

Gather a team

Outsourcing allows you to start development faster as you avoid the tedious recruitment stage. The hired software development provider assembles a dedicated team based on your previously specified project requirements. Outsourcing providers usually have in-house tech specialists available for work and can provide them for your project.

Create a prototype

Designers create visuals and interactive prototypes to test the first product version and gather user feedback. Once you have the prototypes, you can start marketing the marketplace to investors and potential users.

Develop the platform

A project manager, frontend devs, backend engineers, QA specialists, and designers collaborate to develop the product. Modern teams usually work in sprints lasting for two weeks. Such a project management approach ensures high flexibility and control over the project.

Test and launch

QA specialists run manual and automated tests to detect bugs before the platform launch. They hand over the test results to developers to fix any issues. After the platform launch, your engineering team keeps maintaining and updating it.

How Much Does It Cost to Build an Online Marketplace

The online marketplace development cost depends on software complexity and vendor location. The more sophisticated platform you want, the more time and money you will spend. As to your team’s location, hourly rates greatly vary worldwide. So hiring a team in Eastern Europe will be much cheaper than in the US.

Ukrainian developers charge 25 to 80 $/hour depending on the experience level. In the US, you would pay up to two times more for the same work.

Generally, the development of an MVP marketplace with basic features starts at $50.000 and takes 4-5 months. A full-fledged platform costs $100.000 and up with a 9-12 month development time.

Final Thoughts

Online marketplace development is profitable if you want to enter the eCommerce software market. Yes, you will need to compete with behemoths like Amazon, but many niches are still free.

The development process requires unique expertise and an understanding of the online marketplace specifics. If you have never worked on such projects, outsourcing is preferable. A reliable tech partner will guide you through development and help optimize expenses.

Contact us to discuss your software idea and get a quote.