As app developers for numerous marketplaces, we’ve learned a ton and received a lot of help along the way. We’re also firm believers in paying it forward, so that’s why we’re excited to share our learnings to help you go from 0 -> 1 faster than we did. Whether you’re designing a new marketplace or refining an existing one, absorb the following to build a better, more resilient marketplace:
1. Solve Your Chicken or Egg Problem
If you’re unfamiliar with this problem, it’s the question of which comes first? Every marketplace, including Amazon, must decide whether to start with the buyer side or the seller side. The answer to this problem is complex and always depends.
Here’s one approach we’ve used: start with the side with the strongest demand. Take for example, a job marketplace. If employers (buyer) need employees (seller) now, then prioritize building a large supply of employees first. The more employees you have, the more valuable the platform becomes to employers, which means the more likely they’ll spend on your platform.
The reverse can be true too. If employees need a pipeline of employers, focus on generating the employer supply early.
As you build out your buyer and supplier sides, consider these other factors:
- Buyer and Seller equilibrium: It’s rarely a 50-50 split, so it’s perfectly fine to have more on one side.
- User behavior patterns: Buyers and sellers have different habits, so lean into them to make a stickier app.
- Market maturity: Is your industry ready to embrace your marketplace? It could be a timing issue.
- Purchasing power: Which personas and buyer/seller side generate the most money? Tap into that early on.
- Early adopters: For new marketplaces, going after them is a must. Going after anyone else can put your platform at risk for failure.
- Niche opportunities: Is there an “Amazon” of your market, or has it started to fragment?
There’s no easy answer to solving this classic problem. As such, you must A/B test, iterate, and refine with the above in mind to find the right balance between buyers and sellers.
Need help answering this classic marketplace question? Contact us to get started with workshopping out a strategic approach for your marketplace.
2. Understand Your Take Rate (And Why It’s So Important)
Another question you’ll face in a marketplace is defining your service fee or take rate, which is the percentage your platform charges per transaction. If your take rate is 20%, and someone spends $100 on your platform, you take $20.
The math is simple. But the impact? Huge.
Even a small percentage change can drastically influence whether people choose your platform or go elsewhere. A high take rate can easily deter buyers and sellers from joining, while a low one may put you out of business. It’s a tricky balance that you won’t fully optimize until your app is in users’ hands and you’ve measured your marketplace’s true operating costs.
To get a better grasp of the take rate, we suggest financial modeling different take rate scenarios and pressure-testing them with data. Oftentimes, marketplaces make money elsewhere to offset lower take rates. For your marketplace, you might explore other revenue streams, such as:
- Subscription models: Monthly or annual payments for using the marketplace
- In-platform credits: Credits to be purchased for accessing certain marketplace functionality
- Advertisements: Opportunities for buyers/sellers to promote themselves across the marketplace
- Gamification: Marketplace rewards and offers for buyers and sellers
- Personalization: Adding paid customization to buyer/seller profiles and experiences
Start thinking about your marketplace take rate today if you haven’t been!
3. Build in Stickiness
Great marketplace apps aren’t just functional; they’re addictive.
So what makes users come back to your app again and again? That’s your stickiness factor.
We’ve seen gamification work in some verticals, but it’s overused and is not always the answer. In fact, the most effective approach is often the simplest: understand what your users value most, and double down on them.
Stickiness can be fueled by:
- A unique process designed for buyers and sellers
- Push notifications
- Loyalty rewards
- In-app messaging
- Personalized content
- Saved preferences and reordering features
User retention is a critical part of app development, and often it’s “out of sight, out of mind” for your end users. Without it, even the most beautifully designed marketplace will struggle with high churn rates and revenue loss.
4. Design with Intent (Not Just Style)
Let’s talk about app design.
“Modern” design doesn’t always mean slick interfaces and minimal layouts. For example, we found that Asian markets prefer information-dense screens over minimal white space. Western audiences often expect cleaner, more focused interfaces.
Design preferences are deeply cultural. If your app doesn’t feel intuitive to your users, it won’t matter how polished it looks. Spend time researching user behavior and design your marketplace around that, especially during the discovery phase of app development. For help with localizing your marketplace, explore our Local IQ™ service or connect with our team today.
5. Avoid Over-Designing and Solve the Root Problem
There’s a big difference between modern design and over-design.
We’ve seen this mistake time and time again: founders and teams try to pack every feature imaginable into the first version of their marketplace. The result? Confusion. Performance issues. Frustration from users who want you to fix their problems. And overspending.
The best apps solve a root problem really well. Before you add that new filter or calendar integration, ask yourself: Will it help solve the primary issue for your buyers and sellers? If not, put it in the backlog or toss it out.
This way of thinking is common sense app development.
6. Test. Learn. Refine.
Here’s the truth: building a successful marketplace app takes time, iteration, and a lot of humility.
We’ve been through it with our partners. We’ve tested pricing models, experimented with designs, and scaled user growth. And we learned, and we’re still learning with every app we develop and every client we partner with.
Whether you’re building your first marketplace or trying to refine an existing one, treat your app development as an ongoing learning journey.
The Bottom Line
Building a successful marketplace app is one of the toughest challenges in app development. It’s not just about writing great code or designing beautiful interfaces; it’s about solving real problems and making it easy for buyers and sellers to transact.
Here’s what to keep in mind when building your marketplace:
- Understand which side of your marketplace to prioritize first.
- Deeply understand your take rate and test it with real users.
- Build stickiness into your app with intentional user experience.
- Design for your audience, not just for style.
- Keep it common sense. Focus on the core problem before expanding.
Additionally, you don’t need to know or do everything so long as you keep moving forward, learning, and iterating.
At Uplancer, we help businesses do exactly that. If you’re ready to take your marketplace to the next level, get in touch with us today. We’d love to help.
