Starting a new multi-vendor marketplace venture might seem daunting at first. Creating a business plan, setting out a budget and hiring a team might feel like a mammoth undertaking to begin with. Thankfully, there are plenty of tools and pieces of wisdom out there to make things much easier.
That means that knowing how to invest wisely in your marketplace is now more easier than ever. And what’s more, you won’t have to cut corners when it comes to quality. Here are some steps for how you can make the most out of your budget and set your platform up for success.
The main costs of starting a marketplace
To start off, here are some of the principal costs that must be accounted for when starting a new multi-seller platform.
Your marketplace team is the pillar of your business. Typically, it is composed of four main areas: marketing, operations, product and engineering. The budget allocation here will go towards the team’s payroll. The first step is knowing where to dedicate the most resources. For example, a marketplace starting in a competitive space might want to have a larger marketing team to position itself as a leader faster. To balance the budget, the owner could then decide to cut engineering costs by using SaaS solutions such as Shopery to build out the platform, instead of a pricy team of developers.
Whether you are in a very specialised niche or not, marketing is one of the big costs to factor into your marketplace budget. It enables you to test the project with potential buyers, put the business plan to the test, and establish your position in the market. The budget for marketing will go towards ad costs and campaigns — that can be Facebook ads, Google ads, influencer advertising, inbound marketing, print advertising, etc. Keep in mind that you need to attract both vendors as well as buyers to your marketplace, so these costs need to be factored in.
Technology constitutes the foundation of your actual marketplace. To identify what type of solution you need, you’ll need to outline the requirements for your marketplace. Do you require a quick time to market? Do the services or products you provide require a heavily personalised UI? All of these things will dictate whether your marketplace has to be coded from scratch by a team of developers, or whether you leverage free open-source platforms to spend less on coding, or if the customisable templates of a SaaS platform will have you covered. SaaS services usually charge fees monthly or yearly.
How to spend your budget efficiently
Being completely clear about the main areas of your business you will need to budget for is a great place to get started. The next step is investing wisely. Here are a few tips for how to make the most of your marketplace budget.
Focus on MVP
Amazon initially focused on delivering books and Facebook started out building its social media platform solely for Harvard students. Most of the world’s largest companies began by launching a Minimum Viable Product (MVP). By creating a first platform that catered for a specific niche with limited features, these companies earned valuable feedback early on that helped them grow and become the giants they are today. The takeaway: don’t spend all your money and wait too long trying to create a world-beating marketplace from the get-go. Instead, launch an MVP of your marketplace as soon as you can and then learn and evolve quickly.
Invest wisely in your marketplace
Here are a few ways you can invest wisely in the main marketplace areas we mentioned above:
Hiring a cross-functional team is a great way to cover early-stage cross-functional initiatives, such as validating your value proposition, creating a go-to-market strategy, and launching the marketplace platform and business.
Outsource marketing and operations
So many companies these days outsource their marketing and operations to external agencies and marketing specialists. These companies usually have an in-built team with accumulated years worth of knowledge and can often be contracted on an affordable plan.
An affordable, comprehensive technology
Leverage marketplace SaaS solutions to build a customisable platform instead of starting from scratch with a team of developers. SaaS solutions, like Shopery, allow you to launch your marketplace quickly and affordably with no added upkeep costs and a set of highly customisable templates.
Use effectual thinking
Effectuation is a great theory that can provide some guidelines for your marketplace’s launch. The theory, based on Professor Saras Sarasvathy’s interviews of a group of extremely successful serial entrepreneurs, outlines an effective method for successfully adapting objectives to inevitable changes throughout the entrepreneurial process.
As the video above explains, “the best entrepreneurs balance decisions between the resources at hand and affordable losses.” The effectuation process diagram — found here — is a useful guide for testing your USP on your customers and key partners, enabling you to adapt your idea as you go.
It is certainly advisable to adapt your budget as you grow your marketplace business. Through effectual thinking, customisable technology solutions, and wise investment in your platform, you can greatly improve your chances of a successful marketplace launch. If you are looking for a comprehensive guide on the entire marketplace launch process, check out our Marketplace Launch Guide here.