If you are looking to build a two-sided online marketplace (and who isn’t?), you’ll already have ideas about how unmet wants and untapped assets/capabilities can seek each other.
Great! You have now advanced all the way to square one.
Read on to find out how to move to square 2!
Here are 4 things you should know BEFORE you start building a Two-Sided Online Marketplace:
Thing 1: Be unique
There are hundreds of different categories and hundreds of individual offerings in the marketplace sector already. They come in all sizes, from micro-marketplaces for highly specialised needs right out to mass market players. Each online marketplace company fulfils the needs of its users with targeted solutions.
For example, Hunted Hive’s own STEM Connectors is specialised to link secondary school students with the sector’s leading entrepreneurs, academics and thinkers.
These are the 3 ways your offering can be unique:
Conceptual - are you completely original?
Experiential - do you offer unbeatable engagement?
Methodology - are you offering new functionality?
Thing 2. Bespoke power or white-label ease?
At present, there are two main ways to build your two-sided marketplace’s digital functionality: white-label or bespoke. Because no two marketplaces are identical (see Step 1), white-label platforms still require a lot of customisation beyond the basic operational similarities most share.
This is where platforms like near-me.com and sharetribe.com, with their rigid architecture, leverage the similarities to deliver a ‘cookie cutter’ marketplace at a lower overall dollar cost. The inherent trade-off in this is circumscribed future customisability and scalability.
If that’s acceptable to you, then a white-label solution may be able to deliver your MVP for as little as US$20,000 for turnkey solution (depending on the scope of features), and US $119 p/month for a DIY solution on sharetribe.com. As always, opting for low price brings trade-offs on quality and schedule.
We call it the QIF phenomenon (Quality, Inexpensive, Fast), if you can find a solution that is high quality, inexpensive and delivered really quickly, then you have found your ideal solution. However, realistically this is very unlikely.
Meanwhile, at the top end of the market are the fully bespoke solutions that have been developed from scratch and have development budgets which reflects this. Companies like Uber are great examples. The development cost of the minimum viable product (MVP) for the ride-sharing giant’s bespoke solution has been estimated at US$1 million.
There is a third category now emerging. Platforms, like our own CNXION, that can bridge the gap between the turn-keys and bespoke solutions through innovative scaling capabilities built right into a lower-cost platform.
Thing 3. Unique marketplace = unique roadblocks = unique costs
Because you have to be unique, you’re also going to need to do some level of customisation even with the most basic white-label two-sided marketplace. Custom work routinely yields hurdles, hindrances and hang-ups that have no precedent. Good resolutions of these come down to the responsiveness of the project management and the skill of the developers.
Like any other development work, this extra work will be billed at some hourly or fixed rate. Your business plan and post-launch ROI modelling must account for these sorts of emergent costs. Your break-even point must be well established and your time-to-profit thoroughly worked out before your expenses begin adding up.
Thing 4: Tick the boxes
Beyond ROI and timelines, here are a few other key data points you will need in choosing between a white-label solution and bespoke development:
What programming language or underlying framework is used?
What is the expected uptime?
Is there a redundancy system on offer?
How will updates and maintenance be delivered?
What security will be offered on identity and financial transactions?
Will your marketplace crash if the launch is a smash hit?
While white-label solutions are all about reducing technology risk, they do not take it zero. The answers to the questions above will, however, give you benchmarks to gauge when you’re pushing the envelope post-launch.
If, however, you choose the bespoke route, there are a few additional points to think about:
Does your developer offer a data-driven technology roadmap or planning phase to model scope, schedule and cost of development?
Can your developer deliver a dedicated mobile app and at what cost?
What service level agreement is available? To ensure accountability.
What is the developer’s pricing structure?
Will they undertake a scoping exercise to minimise the risk of budget blowouts?
How come we know all this?
Because we’re already delivering white-label and bespoke marketplaces. At Hunted Hive, our CNXION product is a state-of-the-art platform to deliver your two-sided marketplace your way.
However, before doing any work, we’ll perform detailed planning to precisely step you through scope, price and budget. When you are ready to go ahead, we can then take care of:
Leaving all this to us means you can focus on marketing, attracting users and building your multi-sided business platform model.
If your two-sided marketplace concept is at square one and you don’t know what to do next, following the guide above will give you a sense a direction to find and reach square two, and three, and four and all the way to a successful new business. For more, contact Hunted Hive today. Find out what CNXION can do for you.