Cost to Build an E-Commerce Marketplace in 2022

How much does it cost to build an E-Commerce Marketplace in 2022?

The introduction of the marketplace model of eCommerce was an evolutionary milestone in the eCommerce industry. The model allowed traditional entrepreneurs to tap into E-Commerce channels without investing in eCommerce store development, which made the ease of entry into the online market unprecedentedly viable for everyone.

Amazon, the biggest multi-vendor marketplace on the planet, is enough to explain how this model works and how it allows millions of third-party sellers to set up their storefronts and access their customer base without investing in proprietary website and infrastructure development.

If you want to develop a similar marketplace website and wondering how much it costs to build an eCommerce marketplace, this article will help you as a one-stop guide. We will discuss the fundamentals of how to start your own E-commerce Business in the marketplace model, different ways to build your marketplace, and their cost factors in detail.

Factors That Influence The Cost To Build An ECommerce Marketplace

Majorly, three factors differentiate a marketplace development project from place to place and time to time:

• Nature of unique requirements
• Ability to invest upfront or in parts
• The business model of the marketplace

Nature Of Unique Requirements

What are your requirements for your marketplace website? There are two types of requirements in any E Commerce development project:

• You need common features that are present in currently functioning websites in the market.
• You need unique features that are not present in any popular website in the current market.

If your required features are common, there is a high chance that some ready-made multi-vendor marketplace software is present in the market with them already. All you need to do is test out the popular website builders from reputed brands and analyze which one fits more into your requirements.

However, if any of your required features are not present in any of the turnkey solutions in the market, go for the ones that are most close to your needs and analyze if you can customize any marketplace software solution to add those features. Now, you can achieve this customization by coding the features into the solution, or by finding a ready-made module, extension, plugin, or add-on that you can install into the marketplace software.

Nevertheless, if either of the above two options is out of the question, the only option that is left now is opting for development from scratch. You would need to contact a reliable software development company, submit your requirements to them, and wait for a quotation.

Which Ecommerce Development Option Is The Best?

I personally do not prefer development from scratch as there is hardly a marketplace feature that you can’t find in a ready-made marketplace software by default or through low-level customization. Moreover, the cost to build an eCommerce marketplace from scratch jumps exponentially in development from scratch as compared to using a marketplace website builder. We will compare the cost in the later parts of the article.

Ability To Invest Upfront Or In Parts

Even though you find perfect marketplace software as per your requirements, you might still find yourself if big dilemma choosing between two options:

• Should you invest upfront/ do you have money to invest upfront?
• Should you invest in parts/ can you do with a limited control?

Thing is, it depends on the types of solutions you choose. You can opt from two types of eCommerce solutions to build without development from scratch: Open-source eCommerce platforms and SaaS-based eCommerce platforms.

If you opt for open-source options, you will need to make some upfront investments to either purchase the source code or purchase different modules to customize the marketplace. However, if you can’t invest a big amount upfront, you can opt for a SaaS eCommerce platform, which asks for a monthly recurring fee for as long as you want to keep using the software.

Open-source solutions

There are two types of open-source eCommerce platforms.

Free open-source ECommerce platforms:

The source code of such open-source eCommerce platforms is available to download openly on the internet. You can download the source code, install it on a web server of your choice, and set up your eCommerce store with stock features. However, hardly any free eCommerce platform comes with marketplace features by default. You will need to purchase a marketplace module, extension, plugin, or add-on to make your stock eCommerce website a multi-vendor marketplace.

Popular free open-source ECommerce platforms: Magento community edition, PrestaShop, Open-cart, WooCommerce, Drupal Commerce, etc.

Premium open-source marketplace platforms:

Premium open-source solutions ask for a one-time payment to purchase the source code. Once you purchase the source code, you can install it on a web server and set up your marketplace website on the go. The difference between free and premium solutions is the later offers multi-vendor marketplace features by default. You need not purchase any additional modules or extensions.

Examples: Since they are proprietary, I shouldn’t give any specific example of the premium open-source solutions. Any premium solution that meets your unique requirements would be best. Most of the time, the vendors of such solutions sell the names of clone scripts such as Amazon clone script, Airbnb clone script, TaskRabbit clone script, Thumbtack clone script, which we will discuss in next cost factor- business model.

SaaS E-commerce solutions

The SaaS eCommerce solutions are the ready-made options recurring fee instead of the upfront purchase cost. You can subscribe to any popular SaaS solution closest to your requirements. Based on the collection of features and other requirements, they will quote you a monthly fee. The best part is you need not worry about website hosting, website security, and payment methods, as SaaS vendors take care of all these under your monthly plan

The only limitation of this option is you don’t really own your marketplace and there is very limited customizability because you don’t get access to the source code. Eventually, you grow over-dependent on the SaaS vendor for every minute customization. Moreover, as your website grows, the monthly rental increases with it. In short, it’s no different than selling on Amazon, as you still rely on the third-party to run your marketplace business.

Which option is the best?

It depends on your investment budget and the kind of control you wish on your marketplace business. If you seek absolute control, can wait for some time, and afford an upfront investment, you should go for open-source solutions (free or premium). However, if you are a one-man army, can’t invest upfront, and have no issues giving your control to a vendor, SaaS could be a good option for you.

The business model of the marketplace

The choice of multivendor marketplace software depends massively on the kind of business model you are going to follow. Consequently, the choice affects the overall cost of your project.

For example, if you want to build a simple B2C or B2B multi-vendor marketplace to sell physical goods, you have all the options available at your disposal. You can choose free, premium, open-source, or SaaS options. However, if you are looking to build a rental marketplace or a P2P marketplace like eBay, you might not have all the options and the only option available in such a case would be to go for a premium open-source Airbnb clone script or an eBay clone script.

Cost Estimation of All the Options

Here we will go through a high-level breakdown of cost estimation to build a marketplace based on all the options we have discussed. Please note that irrespective of the options, we are considering that each of them will possess the following mandatory features of a simple marketplace website:

Note: The cost varies from place to place, from time to time, and base on requirements. Here we have considered only the essential factors. The cost of maintenance, which includes CDN, security patches, transaction fee, commissions, and taxes, etc. are not included in this estimation.

Free open-source eCommerce platform:

Premium open-source/ clone script:

Software as a Service (SaaS):

Development from scratch:

Development from scratch is a relative process and we cannot estimate the cost without an analysis of the actual set of requirements, preferred technology stack, cost of hourly development, and the number of resources required. However, the overall breakdown is similar to that of open-source solutions (free and premium), except the cost of source-code and the cost of customization will now act as a single cost of development from scratch.

If we take hourly development cost as low as $50 per hour, a team of 10 resources will take at least 400 hours of development, 100 hours of testing and bug fixing, which will approximate around $150,000. A similar kind of estimation will happen for developing iOS and Android mobile apps too, which makes the overall cost of the project not less than $300,000 for a medium-scale marketplace developed from scratch.

Don’t re-invent the wheel

Spending thousands of dollars to develop repetitive things from scratch is never a wise choice. The best options are using the multi-vendor marketplace software(open-source or SaaS) and focusing more on business development. Don’t re-invent the wheel but purchase the wheel from the market and invest in building a cart on it. Unless, you are going to introduce some unique business model, for a minute fraction of what you would invest in development from scratch, you can build a massive multi-vendor marketplace using ready-made solutions.