This post was most recently updated on March 24th, 2023
Do you want to sell online? And you still think the most accessible and proven way is an online store? World practice shows that it is far better to trade products than traffic or unique data. There’s a myriad of successful examples, such as eBay, Amazon and many others.
These are big marketplaces, you might think. And in your mind, you can calculate how much it costs to run such a project. Don’t be hasty. The eBay company began its journey as an online auction of unwanted items. The first item was a broken laser pointer, and two years later, a million-dollar item was sold. The point is that big marketplaces always start small.
Furthermore, you will learn how much it costs to run a niche marketplace and why it is more profitable than an online store.
by Artur Potulny
The Trend of Niching the Market
The niching of the Internet trade market is an irreversible process. The data on the Internet is increasing every year. Their number is so increasing that it is increasingly difficult to find a product/service through Google. All over the world, niche resources are being created that structure a particular segment of goods and services. A classic example is Booking.com.
One site contains a large rental market. Marketplace Etsy.com has united around those who create the handcraft and who want to buy it. Niching comes to Ukraine as well. A successful example is Svitstyle.com.ua , which started as a price-aggregator that directed the user to the websites of clothing, shoe and accessories shops. Over time, the company came to the business model of a niche marketplace. From service marketplaces, known as Kabanchik.ua on providing and searching services. Or, for example, Rabotniki.ua known as an aggregator of data about builders.
These are all niche sites that structure a segment of goods or services. Today, they are few. But the e-commerce trend is rising. The number of online buyers is growing every year. Online stores are increasing. Internet penetration in Ukraine in 2017 was almost 65%. Buyers are increasingly asking questions like where’s cheaper, closer, more convenient, or even where’s anything available? A marketplace is a place where you can find answers to the questions above and find the right goods and the right seller along with a convenient interface. It is enough to maintain your marketplace properly to make it a niche one. Almost any niche will grow along with the overall growth of the Internet consumer market.
It is likely that the user will not install the site as an application. According to a recent survey in the United States, 88 percent of those surveyed are willing to download up to 38 apps, and only 10 percent are willing to see more icons on their phone. Yes, in the case of pre-orders of sushi, mail services, or shopping on the marketplace, there is a high probability that the application will. But in other cases, no.
- site development
- site technical support
- traffic generation
As the head of a website development company on Magento for more than 9 years, I know for sure that the cost of creating a marketplace is not much more expensive than the average Internet store. Its functionality is the same at 80 percent. Also, having a small start-up capital, you don’t have to do a completely customized project from scratch. As a start, you can take the functionality of a typical average Internet store. Reach it to a marketplace using a ready-made module costs between $200 and $1,000. A module is an extension that will add to the store the ability to sell goods from different vendors, and the latter will make their office manage their goods.
Also, I always suggest clients do not prepare the whole function sheet at once. It is very likely that after launching, your target audience will be in need of 2-3 functions instead of the 10 you wanted at the very beginning.
My advice is to create a minimum viable product (MVP) and start receiving traffic. Statistically, 80% of startups fail within the first year because they try to make things right. Your business model should be running from the very first day. The generation of traffic will allow attracting new merchants (suppliers), and as a result, start earning.
Then you’ll study the user’s flow and on the basis of this knowledge, improve the site’s usability. Thus, you’ll have to finish only 20-30% of the existing functionality. By the words ‘to finish’ I meant the customized development cost starting at $1000. But the perk is that these costs will become available by the time your website’s already given a profit. Technical support will cost you $500, depending on your market attendance.
The first step passed. The site has been launched. Let’s proceed with the next one and its traffic generation. The marketplace has a number of benefits.
- First, Google will love the marketplace faster than an Internet store.
The resource, which is updated more often and contains more information, is easier to promote.
- Secondly, the marketplace business model itself is the sale of traffic.
And often the resale of traffic. You make SEO-optimization and buy advertising in bulk and always in bulk, since it’s always cheaper, then sell it to retail merchandise. The cost of generating traffic is included in the cost of placing on the resource. You can also buy “through” ads on the grounds where the audience of your niche lives.
Niche marketplaces can increase their attendance relatively quickly. Gold.ua is a successful example of that. In 2017, it reached the top 20 in the Marketplace Rankings of Ukraine and stands alongside such giants as Rozetka and Prom. His attendance was over 650,000 a month.
TA bit more recent project is Rabotniki.ua. The traffic has risen twice as much in 2 years period. In 2015, the site was visited by 150,000 people per month. Today it is around 280,000 people per month.
Soon, traffic and unique data are going to get the highest added value. It’s possible with confidence to occupy a free niche of marketplace/aggregators by selecting a brightly selected target audience. There are so many free niches, not only in Ukraine but also in the near abroad. Start small, create a site, choose a ready solution for typical online shops, ain’t a customized project. A quick and dynamic start will draw attention to your product, both from the audience and from potential suppliers of goods/services. And there you are! It’s in the bag (OR the deal is yours)