How to Create an Online Marketplace – A Complete Guide

As an increasing number of individuals opt for online shopping over conventional brick-and-mortar stores, e-commerce has witnessed an unmatched surge in popularity. Even a recent study found that approximately 79% of Americans shop online. Thus, it’s no surprise to see that more aspiring entrepreneurs like you look forward to creating an online marketplace like Amazon and eBay. In this guide, we will walk you through the steps on how to create an online marketplace. From creating a marketplace MVP to launching and growing your business, you’ll get to know everything to get started on your journey today.

What is an Online Marketplace?

An online marketplace is a digital platform where multiple third-party sellers can list and sell their products or services to a wide audience of potential buyers. It serves as a platform where buyers and sellers can connect, transact and exchange goods or services. Online marketplaces can vary in size and scope, from large global platforms like Amazon and eBay to smaller, niche-specific marketplaces like Etsy catering to specific product categories or industries.

Types of Online Marketplaces

Before you learn how to create an online marketplace, you should know that online marketplaces can be classified into different types based on a number of factors, including focus, target audience, and geographic reach.

Classification	Marketplace Type	Examples
Based on the focus	Horizontal marketplaces: They offer a wide variety of products and services from different sellers.	Amazon and eBay
Based on the focus	Vertical marketplaces: They focus on a specific type of product or service.	Etsy, Upwork and Udemy
Based on the audience	B2C (business-to-consumer): These platforms connect businesses directly to individual consumers.	Amazon and Walmart.com
Based on the audience	B2B (business-to-business): These connect businesses with other businesses.	Amazon Business, Alibaba and Tradekey
Based on the audience	C2C (consumer-to-consumer): These enable individual consumers to buy and sell to one another.	Etsy, eBay and Craigslist
Based on the audience	B2G (business-to-government): These connect businesses with government agencies.	FedBid and GSA Advantage
Based on the reach	Local marketplaces: Hyper-local platforms within specific geographic areas.	Nextdoor and TaskRabbit
Based on the reach	Global marketplaces: Online marketplaces with a global reach.	Amazon and eBay

Key Benefits of Creating an Online Marketplace

Launching an online marketplace can offer numerous benefits for marketplace owners. Here are some potential benefits to expect:

Low operating costs: Compared to traditional brick-and-mortar businesses, online marketplaces often have lower overhead costs. There’s no need for physical stores or extensive inventory management since it is maintained by third-party sellers on the platform.
Multiple revenue streams: Online marketplace owners can generate revenue through various channels, such as transaction fees, subscription models, advertising, premium listings, premium memberships or other options.