How to build a P2P Marketplace at zero cost
5 options and how to determine which one is the best way for you to start and scale your online marketplace
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It’s not a secret that the Peer to Peer Economy, including On-Demand services, the Sharing Economy or Collaborative Consumption, are projected to massive growth within the near future. New online marketplaces connect supply and demand and save the consumer time as well as money. While there are many new marketplaces out there, even more potential market space is up for grabs.
You probably know this though and are reading this article to find out how much money you will have to spend in order to start your own online marketplace.
The title said zero cost… can that be true, or was it just clickbait?
It’s true. You don’t have to invest any money into starting your marketplace.
There are several ways to go about creating your platform and this article will cover them with their pros and cons. We shortly introduced to some options in “How to start your own online Marketplace”. In this article, we will take a closer look.
Overall, there are two main aspects to consider when you first start your marketplace:
- Building the platform, starting with a MVP (Minimum Viable Product)
- Spreading the word about your new marketplace in order to get first users and receive feedback from them
Neither of these are easy tasks and they require much time, money and/or effort.
To get a proper idea of how much money you should spend to turn your idea into a reality, let’s have a look at the 5 options. While doing so, I will also provide you with advice and key questions you should ask yourself to determine which option is the best one for you.
First, these are some of the most important questions you should consider when trying to decide which option to choose:
- What’s your budget both initially and per month for at least one year?
- When do you want to launch your MVP and start validating your idea by getting feedback from your first users?
- How much time per week do you need to spend on getting the word out and market your idea online and offline and how much of your budget will it take up?
1) Hire a developer to build a custom marketplace from scratch.
As you might guess, this is the most expensive option. The exact cost will depend on the skill level of the developer as well as the hourly charge. But, unless you have more money than you can spend, we believe that there are much better options for you out there.
2) Buy an off-the-shelf, custom developed product.
This sounds like exactly what you need, right? This option is really great if you don’t have the time to wait for a developer to build your marketplace from scratch, but want to go all out and have a platform that has all the features you might ever need, right away. If you want to create a platform at the level of AirBnB from scratch in a few weeks for example with campusonfire, it costs you $250K to $1Million for the development alone, plus another $25K to first build the architecture and from $20K/month for maintenance. That’s assuming you already have a brand.
3) Build the marketplace yourself.
If you don’t have that much money to invest and want to learn how to code, you might be thinking about building the marketplace yourself. However, even if you are a skilled developer, this is a big task. Creating a two-sided marketplace is difficult. And while writing the code will take up all of your time and a lot of time, you won’t be able to focus on spreading the word or building the business itself. But, if you have nothing but spare time, maybe this option is for you.
4) Find a developer to be your Co-Founder.
This is a common approach especially by students who want to start their own online business. This works great if you know that you work very well in a team with the developer you have in mind. Depending on his or her skills, it will still take a considerable amount of time before you can launch your MVP.
Issues with having a developer as a Co-Founder usually arise later on, and are more likely if you partner with him or her mainly just because of their coding skills. Running a business together requires much more than coding skills. Good communication, great team spirit and common goals are important in order to succeed as a team. Unfortunately, oftentimes goals vary and opinions might differ concerning which direction should be taken. Of course, these challenges can arise in any team of founders, however, if the developer is only in the team for this one specific skill, things tend not to work out so easily. One reason might be the fact that once the marketplace is build, maintenance doesn’t take up a full time job and the developer will have to take on other tasks within the team, which he or she might not necessarily be qualified for.
5) Use a marketplace provider to build a customizable platform.
These types of service providers known as ready to-go solutions are starting to establish themselves in many different regions of the world. This shows that there really is a demand for new online marketplaces. Advantages they offer include requiring no coding skills and allowing you to quickly create a MVP.
Since VQ Marketplace offers exactly this kind of solution, we might seem a little biased. But we don’t believe our solution is the right one for everyone. Instead, I hope this guide helps you to determine which option is the best for you.
So, which marketplace provider should you choose?
Different providers have varying expertise and foci. Some specialize on enterprise solutions, others allow individual founders to start up. Here are some questions you should ask yourself when choosing a marketplace provider:
- Which features are really vital for my MVP?
- To which extent am I planning to customize the platform they offer and is this possible at low cost/time?
- How much time do I want to take to create a solid user base and validate my idea before deciding to really go forward with the business?
- In which language would I like to communicate with the team and which providers speak that language?
- Do I want a hosted version of my marketplace or run it on my own server?
There are many marketplace providers starting up or running established businesses all around the globe at this point. Most of them only cost around $100 to $900 per month, depending on the number of features, users or transactions. Some of them even offer a free trial period of 30 days, which sounds nice. However, if you want to collect valuable feedback from users before spending money on your platform, you will need more than 30 days to make a decision.
At first, you don’t want as many users as possible, as quick as possible. Instead, building a solid and happy user base with which you communicate intensively should be your priority.
After all, it’s better to receive valuable feedback from ten heavily involved users rather than trying to reach hundreds of users without hearing from them, without knowing what they don’t like yet or what more they need from you.
We understand that these aspects need to be your priority in order to create a successful online marketplace. We believe that you already have enough on your plate to start off with and we want to make it as easy as possible for you to accelerate and run a successful online marketplace.
We want to create the best conditions for you to grow, therefore, we offer a Freemium package to start your marketplace. This means that while you are engaging with your first 100 users, the platform is completely free. No cost, no risk, no coding required.
But isn’t there more to it than just opening the platform?
What about spreading the word, that comes with some cost, right? Yes, that’s true. However, it is possible to keep the cost to a minimum in many areas. Plus, with the money you save by starting your marketplace for free, you have more of your budget left to invest in marketing, designing a logo or investing in other items or services specific to the niche your marketplace will be operating in.
Let’s have a quick look into marketing your idea at zero cost
This assumes time is not an issue for you since you choose an option of building a marketplace which allows you to focus on running the business itself. Social Media plays a very important role nowadays and the great thing about it: it’s free. You don’t need to run expensive ads to start off with. More importantly, you should create good content by writing a blog and sharing your articles on the social media channels you chose. Writing a blog on Medium or WordPress is free. Additionally, you can go out and talk to people offline. “Customer Conversations” not only allow you to get the word out, they also enable you to collect feedback about your product. And, they don’t cost money.
Taking a look at the bigger picture
Finally, you should also consider possible future developments when choosing how to build your marketplace and which provider to go with. In the long run, the supply side as well as the demand on your platform needs to be flourishing in order to offer your users good reason to engage in transactions on your marketplace rather than going somewhere else.
So, you are probably wondering how, on top of everything, you will be able to establish a big user base. Good question. Answering this will be an entire new post, but what if your marketplace provider had already built a network of marketplaces with user bases that you are allowed to just tap into as well? What if you could build your platform with a provider that focuses on leveraging these network effects, thereby minimizing the risk of failure for your startup and offering you a network which helps you solve one of the most important tasks you have to master in order to run a successful platform?
Let us know what you think about it! And if you want to learn more about the VQ Marketplace Ecosystem that we are planning to establish, I recommend this article.
