4 Considerations before building your marketplace
However, deciding to launch a marketplace is the first step in a much bigger process. For the growing number of organisations across industries recognising the power of the marketplace model, the question quickly becomes: how do you reach marketplace critical mass quickly so that you can reap all the benefits?
As with many marketplace initiatives, business leaders must choose between building their proprietary, tailored solution or finding a technology partner to accelerate the process. In this article, we will look at four key factors that can determine the success of a new online marketplace: time to market, expertise, scalability, and cost & risk. In each case, the choice between building a new online platform or partnering with a technology platform can have significant short-term and long-term impacts.
1. Time to market
To accelerate time to market – and time to value – for a new marketplace, organisations must clearly understand the capabilities they’ll need at launch. This includes connections and integrations with every part of your ecosystem so that every aspect of the marketplace operates seamlessly, from order management to payment processing, customer support, and more. In addition, without a high-quality product assortment, the marketplace will not attract new customers. New marketplace operators must also have a strategy for recruiting and onboarding third-party sellers.
While businesses can develop individual plans for launching their marketplace, partnering with consultants and technology providers brings a proven framework to the process. As a result, the marketplace operator is free to focus on the strategic value of the marketplace to the business – accelerating time to market and return on investment.
2. Knowledge and expertise
Large-scale digital transformations need highly specialised talent. When organisations start a new initiative without the right experts, they can quickly realise that they have yet to anticipate specific technical challenges. For example, how will commissions be structured and managed? How will financials be reconciled between the organisation and hundreds of third-party sellers? How will existing processes and workflows be impacted? Without extensive experience with these transitions, business leaders can overlook key details and run into costly stumbling blocks after launch. Bringing in marketplace technology and operations expertise can help anticipate these hurdles before they become problems.
3. Function and scalability
When an organisation launches an online marketplace, its potential can grow in terms of inventory, level of quality, or user base. This sudden scaling is the key advantage of the marketplace model. As a result, the operator can offer more goods to their customers and rely on their distributed network of sellers to handle the logistics. However, this expansion brings a new challenge. As soon as the marketplace is live, marketplace operators must be prepared to handle a sudden, exponential increase in first-party data. How will they ingest it, where will they store it, how will they harmonise data across first-party and third-party products, and how will they analyse it to deliver key insights to the business?
Marketplace operators must also be prepared to manage both the seller and the customer experience. For example, how will they communicate data insights to their sellers? What tools will they use to manage returns and incidents? How will they manage taxes and payments?
Each of these questions represents a challenge that must be addressed before launching an enterprise marketplace. Technology partners offer the infrastructure needed to support key functions while maintaining the flexibility to expand and ingest new data inputs. However, building a similar solution from scratch demands incredible engineering resources — time, talent and money.
4. Cost and risk which is avoidable
Launching an enterprise marketplace touches every part of an organisation. Once live, maintaining it requires more resources in both headcount and budget. Working with partners makes it possible to outsource most of the work needed to integrate and oversee the marketplace. Technology providers like NovaFori are responsible for continual maintenance and enhancements, ensuring that your marketplace is always up to date from a technology and security standpoint. A marketplace platform is also invaluable for managing risk, particularly as more third-party sellers are onboarded onto a marketplace. Every third-party seller will reflect on the marketplace operator and its brand. Setting and maintaining clear quality standards ensures a strong, unified brand experience. Without the ability to manage this process at scale, marketplace operators must solve it manually, adding significant manual work to the business and potentially jeopardising a carefully protected brand.
These four factors demonstrate the massive amount of resources required to build and operate an online marketplace in-house. While some of the world’s largest organisations may have the money and talent to develop their solution, the process will still take months or years, while competitors may have already raced ahead with their marketplaces.
The most effective and affordable way to launch a new marketplace is with an experienced, knowledgeable technology partner. Enterprise marketplace experts like NovaFori are backed by learnings from launching and scaling marketplaces worldwide. As a result, those organisations can simplify and accelerate the development process while still offering the flexibility needed to tailor a solution to each operator’s needs. Reach out to NovaFori’s marketplace experts today to learn how NovaFori can work for you.
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