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How Much Does It Cost to Build a Marketplace in 2020 (3) .pdf


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How Much
Does It Cost
to Build a
Marketplace
in 2020?

What is a marketplace?
A marketplace is basically an independent platform that operates online, and its purpose is to connect
buyers and sellers directly. No actual warehouses are required to store items, because the database
contains descriptions and photos of goods. To survive among competitors, the marketplace must
provide the most advanced security features for E-commerce Fraud Detection, guarantee the integrity
of a deal for each side, and offer features such as detailed tracking of purchases in real-time.

What are the benefits of marketplaces?
The main advantages for businesses are the following:









You will get an additional channel on which to advertise and sell your goods or services;
Compared to other sales channels, marketplaces require lower marketing costs;
More opportunities for international sales;
Marketplaces are loved by customers and very convenient;
An established online marketplace improves your brand image and builds client loyalty;
Getting independent reviews and opinions on your products or services makes them more
attractive and ultimately increases sales;
Marketplaces make it easier to find new business partners; and
They work 24/7 with no limits on operating time;

Amazon is the biggest marketplace in the United
States. Initially, it was an online bookstore but has
now expanded to include toys, electronics, pieces
of art, and tons of other items. In 2020, it’s a
multi-billion-dollar corporation with 11 marketplaces
across the globe with a customer database from
180 countries. Amazon became a technological
company and now offers cloud infrastructure
services (AWS), analytics services (Alexa), other
software products, and multimedia content. They
leverage Artificial Intelligence for Predictive
Analytics in Retail to know what a customer wants
and even provide Customer Demand Forecasting
with Machine Learning. As you can see here, the
marketplace is not the sole business model for
Amazon, as they are looking to grow in other
directions in order to remain the leader in
E-Commerce.

So, how much does it cost to build a marketplace? These options, according to average costs, are
available.
$1,000-$5,000 budget
Building a platform from scratch with a hired team of experts is not an option at all because of the
costs involved. However, you can consider leveraging a SaaS solution or maybe an open-source
software marketplace. Using a generic e-commerce and website builder is also a great possibility
for this amount of money — if you can code and you don’t need the help of a software
development team, you can try to build it yourself.

$5,000-$50,000 budget
This is a great budget to work with. You can use API-based software, build a marketplace website,
and still have some money left to implement new features. Hiring a developer and using generic
website builders or open-source software is also a possibility here, but you must be aware that you
might not have much money left for updates. This budget is still not sufficient to build a platform
from scratch with hired software developers.
$50,000-$150,000 budget
This budget is perfect for hiring top software developers and building your custom marketplace
from scratch with all the necessary features. You are limited to only what you actually need to
achieve; all options are available with this budget.

Sources for more information on Marketplaces
1.
2.

https://spd.group/ecommerce-solutions/build-a-marketplace-in-2020/
https://www.forbes.com/sites/richardkestenbaum/2017/04/26/what-are-online-marketplac
es-and-what-is-their-future/#1f6e6ab53284

3.

https://www.mti.gov.sg/Resources/feature-articles/2020/Trends-in-E-commerce-in-the-Se
rvices-Sector

4.
5.

https://www.gsb.stanford.edu/faculty-research/case-studies/e-commerce-building-blocks
https://rubygarage.org/blog/how-to-build-a-marketplace-startup


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