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Julián Gómez
Julián Gómez Jan 29, 2019 11:16:18 AM

Technology is the backbone to any digital business, let alone marketplaces. Indeed, choosing which technology will power the marketplace business is as important as deciding on the revenue model or how to brand the marketplace. A marketplace can be built using several different technology solutions: from open source software that the marketplace’s engineers can code themselves, to a SaaS e-commerce solution like Shopery. This is not a choice to be taken lightly: once you have picked your marketplace technology, it will have a sizeable impact on your budget, your in-house talent needs, internal processes and the overall scaling of your business.


When deciding on your marketplace technology, there are certain factors to bear in mind. Although in many cases the factors for this decision are the same ones facing online store owners, marketplace owners need to make sure they are evaluating a technology that fulfils their marketplace-specific needs, such as catalogue, seller and commission management. In general, the main factors that will drive the decision-making process for marketplace owners are their available budget, the required time-to-market and the availability of dedicated technical know-how within their team.


The marketplace technology you choose will depend on all these factors. Making the right decision means taking a good look at your current situation, finances and skills and leveraging that information to your advantage. To help you on your journey to selecting the right technology, in this article we will explain the pros and cons of the different options available to you. These include:


  1. Developing your marketplace from the ground up
    a) The Internal Build
    b) The External Build 
  2. Building your marketplace from existing software
    a) The Internal Mix-And-Match
    b) The External Mix-And-Match
  3. Leveraging a Saas solution for your marketplace

 

1a) The Internal Build

the internal build - marketplace technology - shopery

This option will work best for marketplaces that have an in-house team of highly experienced developers and need a very high degree of customization. Indeed, platforms like Airbnb, Blablacar, or Drivy took this route as their business models required a completely new set of features that were best-developed in-house. As such, they went for an extensive, proprietary software they coded themselves. Although this option equips you with the highest level of customisation and autonomy over your infrastructure, it is also the lengthiest of all.


A multi-vendor marketplace platform with monetary transactions is far more complex than a simple website. Do not forget that the work does not end when the platform is built: then there is the maintenance and upgrades, which will need to be handled by your in-house team too. As such, this option means you do not have any external technical support. On the other hand, some marketplace owners prefer not to be dependent on anyone else’s software, and this option gives full autonomy over the foundations of your marketplace.


Advantages:

  • Fully customisable.

  • Proprietary technology, not dependent on external software.

Disadvantages:

  • Time-consuming.

  • Need to have, hire and train staff with advanced coding skills.

  • Hosting and maintenance must be handled in-house or outsourced to an agency.


This option would be best for very specific businesses with a tech-savvy team and large technology budgets.

 

1b) The External Build

Another option for building the infrastructure of your new marketplace is to outsource the coding of a bespoke marketplace to a freelancer developer, team or agency. This is a good option for marketplace owners that have a sizeable budget, and want to allocate their time to the non-technological sides of their business. It is also a good fit for those that do not have experienced technical talent within their team. This option comes with many of the benefits as building in-house: fully customisable, build the features you need, no licensing costs or issues, and you will not be held back by an existing software format. Once again though, this route is time-heavy -- an agency could take up to three months to design an ecommerce marketplace platform. That means it is not advisable for marketplaces with a shorter time-to-market.


Advantages:

  • Fully customisable: create the marketplace you envision.

  • Not dependent on or restricted by external software.

  • More time to focus on the business side of the marketplace.

  • No need to hire and train an in-house technology team.

Disadvantages:

  • Expensive cost of ownership: although specific budgets vary, a typical project ranges 70.000€ to 150.000€ in set-up costs only.

  • Long time-to-market.

  • Need to contract agency to manage hosting and maintenance.


This option is best for a company with a large budget that needs time to focus on business aspects of the project, while retaining marketplace technology.

 

2a) The Internal Mix-And-Match

internal mix and match - marketplace technology - shopery

Any mix-and-match approach means either paying for proprietary software, or leveraging open source software, or ecommerce platforms like Magento Community Edition, PrestaShop, or Open Cart, and then building on top of it. The customisation stage could be carried out either in-house or externally. This internal approach will be most attractive to companies that have talented coders in-house but face significant time or budget constraints. They can use this talent to create additional features within the marketplace, or simply tailor the design, look or feel of the marketplace to give it a unique brand identity. The mix-and-match solution, combining an existing marketplace technology solution with customisable add-ons and amendments, can be easier than coding from scratch in-house. On the other hand, it does come with the need to renew license fees, maintain technical support, and of course the need to have sufficient technical knowledge in-house in the first place.


Advantages:

  • Faster than building from the ground up.

  • Cheaper than outsourcing coding for the entire site.

  • A high level of customisation and tailor-made functions still possible.

Disadvantages:

  • Need to have, hire and train staff with advanced coding skills.

  • Hosting and maintenance must be handled in-house or outsourced to an agency.

  • Potential compatibility issues between modules and add-ons.

  • Maintenance across different software versions can be difficult or time-intensive.


This option is best suited to marketplaces with experienced coders who want to combine a customised feel from a speedy setup and ease of a solution.


2b) The External Mix-And-Match

This approach takes the same form as the previously mentioned ‘Internal Mix-And-Match’ approach. However, in this option, external developers are used to customise a selected marketplace platform rather than carrying out this work internally. This proves a popular choice for organisations that want the benefits of both an off-the-shelf platform and a tailor-made self-build, but that don’t have the technical talent internally to construct such this more complex infrastructure for themselves. This is a middle-ground approach: cheaper than hiring an agency/programmer to build it from the ground up, though still on the higher end of the budget spectrum.


Advantages:

  • No need to have, hire or train staff with advanced coding skills.

  • Cheaper than coding from the ground up.

  • Customised marketplace platform.

Disadvantages:

  • Still very expensive: it could reach tens of thousands of dollars.

  • Hosting and maintenance must be handled in-house or outsourced to an agency.

  • No service-level agreement and can perform poorly.

  • Potential compatibility issues between modules and add-ons.

  • Potentially lengthy time-to-market.

  • Dependent on external software.

  • Limited scalability.


This option is best suited for a company with a substantial budget but limited technical knowledge in-house. It could be the right option for marketplaces looking to combine the benefits of existing software with purpose-built features, with the time to outsource a complex solution.

 

3) The SaaS Solution

marketplace saas solution - marketplace technology - shopery

SaaS means Software-as-a-Service, in which software is licensed to a user over the internet.. In this approach, the provider of the SaaS marketplace platform hosts and maintains the software, meaning far less work for the marketplace owner. They provide technical support around the clock and manage updates and monitor the performance of the marketplace. This means that your technological infrastructure presents a far smaller burden on the owner of the marketplace. SaaS marketplace technology solutions do not require any lengthy set-up or designs, so the overall time-to-market is much faster. These all-inclusive customisable solutions provide back-end development, updates, maintenance, and back-end solutions. This means there is no need for the marketplace owner to allocate in-house human resources, or large sums of financial resources to hire external programmers.


Within SaaS, we find DYI SaaS, in which the marketplace owner uses existing templates and a feature-rigid back-office (resulting in limited customisation capabilities) and project-oriented SaaS like Shopery, which allows for increased customisation in terms of design and features on top of the SaaS solution itself.


Advantages:

  • Quickest time-to-market.

  • No need to have, hire or train staff with advanced coding skills.

  • Hosting, maintenance and technical support included.

  • Allows marketplace to focus fully on growing the business.

Disadvantages:

  • Potential limitations when it comes to specific types of customisation.


This option can work for any type of marketplace, but particularly one that has a small-to-medium budget, zero-to-little technical skills, and wants to focus fully on growing and scaling the marketplace.

 

Conclusion: The Rise of SaaS

At the end of the day, there is no one-size-fits-all and finding the right technology for your marketplace will depend on your specific needs. However, what is for certain is that, as the marketplace industry continues to consolidate, technology providers are gaining a clear understanding of the needs and wants of marketplace owners. This allows providers to offer SaaS solutions that meet a variety of needs with an easy-to-implement, cost-effective solution.


Indeed, due to their unique versatility and scalability, SaaS-powered marketplaces are set to become increasingly widespread. They have the capacity to integrate back and front-office solutions, automate seller onboarding and cataloguing, provide logistics integration and manage payments. As such, they’re a particularly effective choice for businesses looking to set up a marketplace within a constrained time period. This means they are ideal for brands, ventures and retailers who lack their own IT teams, or those that need to kickstart the marketplace business without investing heavily into the project. Finally, the rise of these powerful solutions enables marketplace owners to focus their time and energy to building a high-quality marketplace with exceptional user experiences, and outsource the rest.

 

Topics: Technology

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