An online marketplace benefits both businesses and customers. It keeps businesses visible 24/7/365 and provides a safe shopping space for customers. Customers meeting sellers virtually is how most shopping is done now. And this trend is here to stay.

Businesses benefit from platforms where they:

  • list their offers
  • advertise and promote
  • meet relevant prospects
  • safely sell to customers

Buying habits fundamentally changed during 2020. Online is safer.

It still is. That is why demands for marketplace development has skyrocketed.

Online marketplaces give customers a safe place to wander virtually and buy safely.

Is designing a marketplace difficult? Yes.

Be wise. Follow in the footsteps of today’s online marketing giants. They started by launching a Minimum Viable Product (MVP).

Many of today’s giants, such as eBay, Kickstarter, or Etsy, began their successful business journeys by first opting for a marketplace MVP development. They heeded valuable user feedback and kept improving and fine-tuning their products to meet customer expectations. They are now billion-dollar businesses.

Learn how to create an online marketplace. In this article, we help you pave the way to a successful launch and get your first customers to register on your platform.

Remember a marketplace is not difficult for experts who have already designed and developed marketplace.

They have the roadmap. They have the right expertise

Reasons to create a marketplace MVP

Marketplace MVP development gives startups an opportunity to validate their market ideas fast with minimal upfront investment.

Globally, there are hundreds of marketplaces. Users can buy almost anything. They choose the amount, payment option, and delivery terms.

Should you give up your idea of starting a new marketplace?


Find that special something your marketplace can do better than existing competitors do.

This is where MVP development helps. An MVP tests the waters to find out what users prefer and want.

An MVP is a ready-to-use piece of software. It contains core features to help you find out if your business idea appeals to users and solves their perceived pains better than any other available solutions.

When starting MVP development, your startup gets:

  • Reduced time – idea validation cycle accelerates substantially.
  • Agility – you introduce required features fast remaining ahead of competitors.
  • Down-to-earth approach – your software is based on real feedback from customers.

Main types of online marketplaces

One size does not fit all: customer needs vary greatly. So do the types of online marketplaces. Before you start any marketplace MVP development, make sure you identify your target market and envisage a relevant solution for them.

Below are several types of online marketplaces to help you set up criteria for your solution.

  • Depending on users
    • B2B (business-to-business) – Companies are sellers; they offer their products to other companies. (Amazon Business)
    • B2C (business-to-consumer) – Companies sell their products or services to individuals. (Booking, Yelp)
    • P2P (peer-to-peer) – Individuals sell to and buy from individuals. (eBay, Etsy)
  • Depending on marketplace focus
    • Vertical – Specialize in a certain industry, (MyCarrier, Airbnb)
    • Horizontal – Either have no particular specialization or unite several domains. (Kijiji, Craigslist)
  • Depending on type of a purchase
    • Products – Buyers acquire various goods and products, general or specialized.(Amazon)
    • Services – Buyers hire a professional to perform a certain task. (Upwork, Taskrabbit)
    • Projects – Startups receive funding for their idea. (Kickstarter)

    Certainly, marketplaces can combine different features to some extent.

  • Depending on geographic span
    • Global – Available worldwide. (Alibaba, Globalsources)
    • Regional – Serve a certain region. (Fnac, Poshmark)
    • Local – Help sell within a single country, city, or community. (, VarageSale)
  • Depending on sellers’ occupation, marketplaces target
    • Amateurs – Help regular people sell things they no longer need. (Decluttr, Airbnb)
    • Professionals – Sell regularly as a living. (iTalki)

    Last but not least. When expanding, many marketplaces switch to the hybrid model. Hybrid marketplaces share characteristics of different categories, e.g., make it possible to sell both locally and globally. However, when planning a marketplace MVP, you must have a narrow focus on a specific type of marketplace. Expand to other categories only after your initial marketplace offer wins a stable user base.

Benefits from starting a marketplace MVP

A marketplace MVP is a practical way of finding out more about your avatar. Startups face this fact fast. They see which ideas work, which don’t, and which need improvement.

Benefits of launching an MVP include:

  • Time to market

    Reducing all ideas to the core lets present software for startups quickly. Startups get feedback from early adopters fast and present a new version of its product quickly.

  • Cost control

    An MVP contains absolutely necessary functionality. Nothing more. Nothing extra, nothing fancy. This keeps development costs in line and results in robust software. (What you want to achieve with a reliable software development company.)

  • Ready for pivot

    It might turn out that part of the software should be redeveloped to cater to actual needs. As long as an MVP is simple, making changes is relatively easy and affordable.

MVP development keeps development costs low helping startups “stay in the game”.

online marketplace mvp infographic

Best practices for creating an MVP for an online marketplace

Not sure how to build a marketplace?

Use the tried-and-true MVP approach.

An MVP is a safe, relatively low-cost way to verify a business idea. Instead of aiming high—and missing—with an expensive launch of fully fledged software, a business targets a basic version aimed at solving a narrowly defined user problem. The business gets a response from the market. Based on user feedback, the business refines its idea and works on its next launch.

Rinse and repeat.

A good MVP helps product owners get to market quickly and build a sustainable business for less. How do you launch a good MVP for a marketplace?

Here are tips to help you do this:

  • Start small

    Determine one key action people need to solve one of their problems. Decide how you are going to stand above your competitors (e.g., enable sales in local currency). Make a feature list. The feature list for your MVP for a marketplace lets users accomplish this key activity. Narrow your focus to one important action your target audience wants to do.

  • Use Agile for software development

    Flexible software development is crucial for startup survival. Requirements might change after you find out important details about user needs or habits. You need a development team that can work with changing requirements and launch features users want, even when this means reworking part of a program.

  • Maintain transparency on a project

    Clear, transparent communication decreases development time and costs. On one hand, you articulate your expectations ensuring the development team understands what it is developing and why. On the other, the development team provides detailed reports on the work they do. This ensures you get what you expect, when you expect it.

  • Keep pace with the plans

    It could take time before a sustainable business is possible. Many startups invest considerable time and effort building a marketplace users recommend to their friends and colleagues.

    To succeed, ensure you have these two roles on your project covered by reliable people:

    • Marketing manager responsible for marketing activities.
    • Product owner responsible for technical decisions on a project.

    This balances both the technological and marketing sides of startup development.

  • Save where it is possible

    Where to save:

    • An MVP can be launched with a basic design. This saves time on expensive creative designers.
    • Third-party modules add required functionality (e.g., for safe payments) saving hundreds of working hours.
    • Back-end can be simple.

important note. For initial success, a marketplace can be simple but it absolutely must be reliable. Do not take shortcuts to save money on testing, poor design of app architecture, or quality of the source code.

Follow these tips to build a safe, reliable marketplace MVP users will want to try and keep using.

How to create an online marketplace MVP: a five-step approach

Now let’s focus on the technical side of the question “How to create an online marketplace?”

Developing an MVP for an online marketplace includes five steps.

For optimal success, be wise and include all five.

Some steps can be done simultaneously when using Agile development.

Here is the five-step path on how to create an online marketplace:

  • Discovery

    At the discovery stage, there is laser focus on project goals. The team does a deep dive into project details to help a startup determine requirements and a precise budget range.

  • Mapping

    During the mapping stage, the product owner and development team plan a detailed roadmap. When the development path is ready, work on the project starts.

  • UI/UX design

    The design stage is done separately but with both UI and UX designers working in sync. UI designers prepare layouts of the app screens and different visual elements (e.g., icons, buttons, etc.). A UX designer is needed when user flow is not clear and ensures users intuitively understand how a marketplace MVP works.

  • Code development and testing

    The code development and testing stage is a series of iterations during progress on the code. Software developers program source code for present and future functionality. Software engineers work simultaneously on different parts of the system to make rapid progress on the project. When a section of source code is complete, QA engineers check it and send it back for improvement if required.

    Also, performance testing becomes crucial when rapid user-base growth is anticipated. It ensures software can withstand user influx.

  • Project launch

    After the codebase of an MVP for an online marketplace is ready, functional, and stabilized, the development team deploys it on the production server and/or publishes the app in an app store.

    The development team works continuously on one Sprint after another to deliver the software. At the beginning of each Sprint, the team sends the product owner a plan on estimated Sprint activities. At the end of each Sprint, the product owner gains access to the finished part of functionality and a detailed report on work completed.

    Sprint 1-4 weeks≈ 2 weeks
  • Project maintenance and expansion

    This is where an important project stage starts. The development team supervises software ensuring no downtime, bugs, or flaws spoil user experience. They provide needed system updates and enhance security.

    Also, once the MVP is available, focus on paying attention to user feedback and adjusting it to user recommendations/requirements. Analyze user feedback and introduce changes to functionality. Make an assumption, introduce a new feature, or change existing one, get user response. With every new added feature, repeat the process until a perfect solution is ready.

IT Craft’s expertise in building MVPs for an online marketplace

There are three main options for startups when building an MVP for an online marketplace.

Startups can:

  • Ask a development company for help.
  • Hire freelancers.
  • Build a marketplace MVP on their own.

The best choice depends on a startup’s managerial and engineering background and available budget range. Still, if there is little-to-no experience, it seems wise to choose software development for startups with an experienced software development company. Startups benefit from an established workflow and accumulated expertise. Faster to the finish line. Fewer headaches.

These two show how an established company decreases an MVP’s time to market:

  • itechcraft logo


    Web platform

    MyCarrier startup founder envisaged an MVP for an online marketplace for shippers and logistics companies. Shippers find the best prices for less-than-a-truck loads by communicating directly with carriers. They can also use MyCarrier functionality to book and track their shipments.
    Logistics companies optimize delivery costs by managing shipment deliveries from one place. They can also automate sharing required information. This increases the level of services without extra workload.
    The IT Craft development team ensured timely delivery within a tight timeline. After six months of intensive work on software development, an MVP was launched. The carrier portal was ready nine months from the project start. This made it possible for the startup to find its first clients among big transportation companies. With new clients, the startup focused on product improvement and delivery of new features.

    • ASP.NET
    • MongoDB
    • MS SQL
    • AngularJS
  • itechcraft logo


    Web platform

    With Upwedding, IT Craft helped launch an MVP for an online marketplace for wedding services. Finding the best-suited wedding service provider can be exhausting. A young USA couple learned this from their own first-hand experience. They wanted to create their own marketplace for other soon-to-be-married couples. Potential customers find providers, evaluate their offers, and negotiate the cost. All using the Upwedding platform.
    For service providers, the service offers an opportunity to publish their services and market them to potential customers. They can include client feedback. Also, the service makes it possible for vendors to see the net income of their offer.
    The development team designed all algorithms to ensure complete pricing transparency freeing vendors from tedious calculations. This made flexible pricing in the system possible.

    • React
    • Docker
    • AWS
    • MySQL
    • Symfony

Core functionality of a marketplace MVP

All successful MVPs for marketplaces contain unique, killer features differentiating them from their competitors.

As long as they serve the same purpose—providing a safe space where customers meet sellers—startups need the same or similar functionality when they build a marketplace MVP.

All marketplace MVPs required functionality for three groups: two primary user groups— buyers and sellers—plus administrators to supervise system activities and help both user groups when needed.

Sprint 1-4 weeks≈ 2 weeks

An MVP for an online marketplace needs the following functionality:

Sprint 1-4 weeks≈ 2 weeks

For you very best chances of success, remember a mobile-first approach for a successful marketplace MVP. Users prefer online shopping from their smartphones. Ensure they can do it without stress.

Further reading: What Does Marketplace Website Development Cost You in 2021?

Attracting clients and measuring success of an MVP

Service promotion must start long before actual MVP development.

There are free and paid methods. Startups use both.

  • Free
    • When researching user interest, set up a landing page to collect emails from people interested in trying out your service. Offer them something of value with a lead magnet. They will be the first users after your MVP is launched. To keep their interest, send them regular updates on the project progress via blog posts.
    • Pitch your idea to online media to increase your online visibility. If they find your idea innovative, you get free mentions in front of a large audience. More people will want to learn about your service.
    • Use your social network accounts to put your product in front of my eyes and carry on dialogue with your audience.
    • Working on blog posts and articles lets you grow organic traffic from search engine results.
  • Paid
    • Use narrowly targeted ads on social networks and Google to attract attention of specific audience.
    • Offer discounts and free trials to help future users try your service with no risk for them.
    • Offer best partnership conditions to the top businesses in your niche ensuring their clients will sign up for your product in order to reach them.

    What about measuring effectiveness? Unfortunately, metrics for marketplace MVP success are not set in stone.

    Still, the following metrics can display the signs that strategy must be reconsidered:

    • Customer happiness – Reviews on specialized platforms, ratings on app stores, and commentaries in social networks belong here. Make sure your users are heard. Value their input.
    • Download and launch rates – This metric alone makes little sense. Still, it shows whether your product is gaining traction among prospects.
    • Customer acquisition costs – Shows how much you pay to get a user. If costs are too high, this can be a sign that users are not really interested. Or the competition is incredibly harsh.
    • Active users – How many users are active in your system within a pre-defined period of time. Study what seems to stop active users from becoming paying users.
    • Paying users – How many users actually pay you? Exactly how do they use your app—your most valuable asset.

How do online marketplaces make money?

It is crucial to decide on a pricing strategy in advance.

Pricing options can be divided into two main groups:

  • one-time commissions (per transaction, per added item, etc.)
  • regular fees (membership, subscriptions, etc.)

The main sources of revenue for marketplaces.

Sellers pay:
  • commissions for payment processing
  • access to platform API (can be integrated to sellers’ apps)
  • membership fees
  • premium features for customization and branding
  • promotion and advertising
Customers pay:
  • commissions for packaging and delivery services
  • premium features
  • premium subscriptions for early access, unlimited deliveries, etc.

Rates and their combinations can vary for different user groups (e.g., no membership fees and higher transactions for small businesses vs. membership fees and lower transactions for large businesses). This creates a balance for everyone.

Online marketplaces are businesses at scale. They encourage users to be active and sell more through the platform. Fees and commissions are an effective instrument for client retention.

Final thoughts on an MVP for an online marketplace

The best time to start working on an MVP is now. Establishing a successful, sustainable, online marketplace takes time. The sooner you determine what you want, the faster you get started.

An MVP is usually followed by a series of forays trying to find out what users really need. The result of the first attempt might not be as mind-boggling as anticipated. Listen and learn from user feedback, correct your assumptions—then start again.

Think in advance about these two crucial points:

  • Why are users going to pay?

    A business survives only when it has a stable base of paying clients. Seriously consider why people would choose your service over any competitor. Also, consider monetization (premium features? ads and promotion? transaction fees?)

  • Who helps you design software?

    You can do it on your own. You can hire an in-house team or order single development activity from different freelancers. Or you can find an experienced, reliable software development company and benefit from an established, efficient, predictable workflow.

    Over the past 20 years, IT Craft has been helping startups succeed—and succeed greatly.

    IT Craft will also do it for you. This is why IT Craft is an ideal partner for startups that strive for a successful MVP marketplace launch:

  • Strong engineering background

    Development teams consist of experienced professionals who keep improving their skills. A special R&D department tries new technologies ensuring your project is based on a relevant tech stack and a prolonged software life cycle possible.

  • Expertise in launching MVP marketplaces

    Development teams have helped many startups launch MVPs for their marketplaces. They know where possible pitfalls occur and how to eliminate them. Developers and DevOps help optimize resource consumption ensuring lower maintenance bills. Also, developers design flexible architecture to ensure scalability when the startup gets traction.

  • Immediate start

    IT Craft has 300+ engineers of various specializations. It is easy to find the right team who can take over the project. The company estimates the scope of work then discusses project details with its client. As soon as they both sign the contract, the IT Craft designated team starts working. No time wasted.

  • Communication

    A dedicated project manager and a business development manager are responsible for smooth workflow. They provide timely reports on all project activities. They always stay in touch with the client and respond swiftly within business hours to client’s questions.

  • Post-launch guarantee support

    Every project includes post-release guarantee support. Every marketplace startup enjoys

    1 – 3 months of support when the same development team efficiently fixes bugs and flaws in their source code at no extra cost for the startup.


  • How much does it cost to create an online marketplace?

    An online marketplace solution will cost you between $14,000 – $60,000, depending on app complexity and type of cooperation (in-house, onshore, offshore, nearshore.) Costs could skyrocket to $150,000 and higher when extensive work on software back-end is required.

    Read more in the article: “How Much Will an MVP Cost Your Business? How Do You Calculate MVP Costs?”

  • How do I create a marketplace app?

    Use the following steps to create a marketplace app:

    • Determine your target audience
    • Study your competitors
    • Determine your killer feature
    • Make a list of requirements
    • Determine user flow
    • Prepare UI designs
    • Develop source code of the app front-end and/or mobile app
    • Develop app back-end
    • Test thoroughly
    • Stabilize the app
    • Launch!
  • How do I verify my idea for an online marketplace?

    Start with a prototype to see what your idea is worth. This can be a website or a landing page describing your future services and offering to subscribe and become an early tester.

    As an alternative, start a crowdsourcing campaign on Kickstarter or a similar service.

  • Rocket How do I start an online marketplace business?

    To start an online marketplace business, take these action steps:

    • Determine your target audience.
    • Answer these questions:
      • What makes them unhappy when using existing solutions?
      • What can be done better?
      • What can encourage users to pay you?
    • Write down your answers.
    • Start a marketing campaign or give a series of interviews to determine if your answers are correct.
    • Improve your answers based on interviewers’ responses.
    • Formulate idea of your marketplace MVP.
    • Make a list of requirements for your MVP.
    • Start MVP development.
    • Launch your MVP.
    • Promote your MVP among potential customers, collect their feedback and pay careful heed of the constructive comments.
    • Improve your MVP and offer a new version.
    • Repeat until you get a stable customer base.
  • How long does it take to build a marketplace MVP?

    It depends on the project scope. Usually, a simple marketplace MVP takes 4 – 5 months of development. Bigger projects can take 9 – 12 months.

Do you want to know what we can do for your project?

Contact us to schedule a consultation.