How much does it cost to build an online marketplace?

“How much is the web development cost for building an online marketplace like Airbnb or Clarity? I have no web development experience, so will need to hire others for this.”


I get asked this and similar questions frequently. Choosing the best development strategy and platform for right now does not mean you have to begin developing the best platform.

Note: Based on the context of this question, I assume money is or was a concern.

So, here is what I would do:

Begin by creating an MVP with WordPress. This has not always been an option, but these days you can build anything on WP. And a lot of these marketplaces have out of box themes for them. This route allows you to test your idea inexpensively until you are confident and have product market fit – at which time you can go about raising money or custom developing your marketplace.

Take AirBnB for example. There is a WordPress theme built to function almost exactly as AirBnB. I am currently using this theme as a directory site and it’s solid. If you mentioned AirBnB because it is the closest to what you’d like to create, then this theme should work for your needs. You can customize it easily and inexpensively.

Go to market, prove market acceptance, gather a fewhundred profiles and then begin development on a custom version (Ruby, React.js…). Here are the reasons a startup should seriously consider proving concept (launching) on WordPress:

  1. They’re almost done, mobile friendly and reliable. You can read reviews before downloading to find out how reliable and customizable it is.
  2. You can go far on one codebase. If part of your marketing strategy involves content, you will want a WordPress blog (at least). But if your site is not WordPress, you will be forced to install a blog theme onto another domain (a subdomain). This approach is not ideal for SEO and UX. Having your platform on WP means your blog is on the same domain.
  3. You do not need dev support for minor adjustments. Dev time/costs can strangle growth. Your team needs to be able to quickly spin-up landing pages and forms. This is easy on WordPress.
  4. The marketplace themes typically have a bulk upload option. This will allow you to get thousands of listings added to your directory in a matter of days. If you have a large database or need one built, check out MigrateMarket.com.

The downsides… First, WordPress is not a platform you want to scale with. As soon as you have proven market acceptance, and have raised the money, you will want to build your own version, either from scratch or using an existing codebase (license or open source). Second, if you don’t know what you’re doing, your site can be vulnerable to intrusions. I suggest running on WP Engine (with sites like Huffington Post and NY Times…) as they prevent successful attacks and keep 99% uptime for you.

Total cost for the theme, the install, customization and VA’s time: < $500

(For a platform similar to Clarity, I don’t believe there is a WordPress replica (yet). They used custom bootstrap, so check out CMS themes available here.)

So you’re off and running. Now you have your MVP platform to start selling, and bots starting to index your pages (speed this process up by submitting your URLs under Google’s search console).

The important thing to realize here is that this is not your end-all-be-all. This allows you to get up and running, work out your sales process, find your early adopters and build up your search rankings.

The next step, as soon as you’ve proved your marketplace idea is competitive and/or in demand (from both user types), is to begin your custom build. For this, I still recommend going with a slightly out-of-box solution. Check out these two options:

Sharetribe.com (for more e-commerce buying/selling platforms)

Growthclick.com (for more service-based business platforms)

Both options above will give you a stable and scalable code-base to work off of – and you can either license the code for one purpose or buy it out completely. Sharetribe also has an open sourced code you can use if you are confident in your dev team.

Total cost for this option will either run you $10K-$50K, or $2-$500/month.

The most important thing to take from this answer is that, particularly for marketplace startups, there are cheaper tested/proven options available that you can and should consider before beginning a custom build. Especially if you have yet to prove market acceptance.

In any case, your first platform is going to be your “beta.” Whether you hired someone to build it from scratch, gave away a ton of equity and waited months, or decided on an out-of-box solution like the aforementioned, you are still in the proof of concept phase.

My point is, right now you should be focusing time/costs/bandwidth on registration growth and pushing as many transactions as possible through your beta as possible. Get what you “need to have,” not what you “want to have.” At this stage, you will discover the important questions and KPI’s you need to know before going all in on a shiny new custom project or apps:

  1. What are our true Customer Acquisition Costs? Include the costs to develop/maintain marketing assets like landing pages and apps.
  2. Do our customers need a native app experience, and will that app pay for itself by increasing sales / avg sale price, or reducing attrition (avg costs per year to maintain a $100K app is $20K/year).
  3. What features or sections simply don’t add value? Often times, companies will launch with more than their customers need in terms of features, sections etc…

If you are launching or building your marketplace, check out my service: http://migratemarket.com/ – my team builds, launches and migrates user databases. We’re local, fast, discrete, secure and we backup everything.

I hope this was helpful.

Alex

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