When the pandemic hit, companies experienced an economic downturn they never anticipated. Amazon, on the other hand, grew its revenues from 35% to 40% range. A massive growth from what has been a 20% to 21% range during the pre-pandemic era. It was mind-boggling, and aspiring entrepreneurs discovered the hidden potential of running a marketplace business.
But before you dive in, there are checklists for successfully launching your marketplace. Dabbling into this business shouldn't cost you a hand and a leg. It calls for diligence and hard work - putting the right mechanisms in place that ensures success.
In this article, we’re going to discuss checklists that you must tick to successfully launch a marketplace business. If you could tick the right boxes, scaling your marketplace to the rank of giants like Amazon becomes possible.
So, let’s begin!
1. Research Your Industry
It is probably the first step every marketplace founder must take. Through your research, you get a vivid idea of how the industry is, and the right approach to penetrate the market. You have two options to choose from.
You can either create a horizontal marketplace or a vertical marketplace. The first option comprises a wide array of items, just like how you can find virtually anything on Amazon from books to electronics.
The second option entails narrowing it down to a specific niche - a particular user category. This approach has proven to be more successful, especially for marketplaces still starting with a small team.
2. Study your target audience
A horizontal marketplace can prove to be quite complex, especially when you delve into studying your target market and discover how almost everyone is a potential customer. But a vertical market ensures you focus on a specific user category, which helps you personalize your customer journey.
The fact is that detailed knowledge of your target market will help you build a brand that resonates with them, thereby addressing their pain points, aspirations, and lifestyle. When you understand your target, you solve the chicken and egg problem. That is getting sellers and buyers to use your platform to transact.
When defining your ideal market, consider the following:
3. Come up with a model
Another checklist you must tick is your business model. How do you plan on making profits from your marketplace? With the right model, achieving your goals becomes feasible. Remember, your job is to provide your vendors with the right conditions, as that will pave the way for your marketplace to flourish.
Here are some monetizing strategies used by most of the big giants like Amazon, eBay, and others:
A listing fee
An advertising fee
4. Write a business plan
Not writing a business plan for your marketplace launch is like walking through a dangerous street blindfolded. It's like wandering through a forest at night with no torchlight, no navigation device, no map. It's a mistake you must never make. It's an important checklist for successfully launching your marketplace business. There are tons of reasons why you need a business plan.
First, it serves as an important element to outline your business’s goals and vision. With this tool, you can track your progress and probably incorporate some strategies that boost your performance.
5. Choose a development team
You need a marketplace that is scalable, engaging, and easy to maintain. Thus, the right development team that understands your vision and what you’re trying to achieve is a must-have. Getting this right will cut down on the roadblocks you might encounter later on.
Let’s talk about some key areas that will help you get on board the right team who will help translate your vision to reality.
Visit platforms such as Goodfirms, Clutch, or Appfutura, and browse through a list of professionals alongside reviews left by their previous clients.
Ensure that the team you’re going with has ample experience with what you’re trying to build and that they could build something that offers value both to your sellers and buyers.
Go through their portfolios and ensure their past projects had a user-friendly interface that solves the proposed problem.
With the right team on board, you make the process a whole lot easier
6. Find a reliable co-founder
You could decide to run your marketplace solo. But the fact is, you will benefit a lot from a co-founder. Not only are two heads better than one, but a co-founder also gives an aura of reliability, which is a factor that most potential investors look for before investing.
Your co-founder should complement your skills and help you make informed decisions as your platform grows. Not only does this cut down on stress, but you will also have more time to focus on the bigger picture and your family.
For instance, you could be pretty good at hiring people, while your co-founder could be tech-savvy, thereby helping you tackle the technical aspects of your marketplace. Before you make someone a co-founder, take your time to go through their educational background, experience, and achievements.
7. Look for investors
You probably might need investors to scale your marketplace, and there is more than one way to go about it. No matter how incredible your business model is; and how big you already are, more capital will give you more financial leverage.
Looking for investors is a vital checklist for successfully launching your marketplace business, and shouldn’t be neglected. Think about it; even the best-funded billion-dollar companies have engaged in more fundraising rounds than ever before.
There are numerous online fundraising platforms that you can use to raise funds, such as AngelList, SeedInvest, StartEngine, CircleUp, and a whole lot more. You can also hook up with investors through events, social media platforms like LinkedIn, or even sending direct mail to prospective investors.
8. Protect your IP
If you don’t protect your Intellectual Property, someone else can make money off your idea. So, protecting your intellectual property is an important checklist to avoid unforeseen legal battles.
First, secure your marketplace domain name, social handles, and email address. If not, you run the risk of having someone else register your domain name or social media handles, then offer it for sale at a ridiculous price.
Here are other ways which you can use to protect your marketplace business:
The patent - This sort of protection is given to investors for a specific period, in exchange for detailed public disclosure of an invention.
The trademark - This can be a word, a phrase, or perhaps a symbol that is legally registered. It is crucial when protecting your marketplace name.
Copyright - This right protects literary work, movies, songs, software, or images. It protects your marketplace content, including articles, images, and descriptions.
Successfully launching a marketplace business is not rocket science if you tick the right boxes. Although it requires a lot of preliminary work to set the pace for success, such as researching your industry and target market, including finding the right team, co-founder, and investor.
If you can get everything right, scaling your marketplace business becomes a lot easier. To ensure your marketplace keeps growing, it is imperative to work closely with your team and compliment them for a job well done.
You do it better by ensuring they are paid instantly, with pensions, insurance, and taxes covered. That is why companies like Adrecord, memmo, and taskrunner use GigaPay for instant salary payment. You don't need to be techy, as it's unbelievably easy. Go ahead and book a demo, we’d be excited to walk you through how our payment system works. :)