How much does it cost to build an eCommerce marketplace

 Updated On: 23th October’2024

According to Statista, global eCommerce is today a $4.1 T industry and is all set to cross US $ 8T in just 2 years, indicating surging growth of online retail. Given the market scenario, starting with an eCommerce marketplace is a lucrative business opportunity. However, to get started with this business, the first question will be ― What is the real cost of starting with an eCommerce marketplace business? Is it just building and launching an eCommerce marketplace platform?

Before they launch an eCommerce business, many entrepreneurs think that all they need to do is contact an eCommerce development partner to build a robust online platform. Once they launch the eCommerce marketplace platform, they are all set.

However, the ground reality is different. Running a successful eCommerce marketplace business comes with multiple dependencies. With finite investment capital, you need prudent fund allocation. To make informed decisions, have a holistic understanding of the overall project. Read ahead, as we share the real cost of eCommerce marketplace business. 

Factors that impact the cost to build an eCommerce marketplace

To figure out a cost estimate of the business, understand the variables that will impact the overall cost to start an eCommerce marketplace business.

All variables that impact the cost to build an eCommerce website are as follows: 

1. Requirements from the eCommerce marketplace platform:

From an MVP marketplace launch by a startup to a sprawling business like Amazon, and everything in between, eCommerce marketplaces can vary in scope. This variation encompasses:

• Included features. 
• Third-party integrations. 
• Planned scalability. 
• The need for additional services

Since these can vary, the cost of an eCommerce website also varies. However, these costs can be optimized. The way to optimize costs is discussed later in the blog.

2. Business model of the eCommerce marketplace business 

The business model of your marketplace is all about how it operates, what type of users you have on the platform, what are the roles of each of these users, and what is the motivational value for each of these users. For instance, the role of the business in a P2P platform like Etsy is lesser than in a B2C platform like Amazon. Hence, investment to onboard users is lower as well. So depending upon the business model of the eCommerce business, the cost to develop the website will vary.

3. Regulatory compliances needed: 

The legal requirements vary from state to state and from one country to another. Moreover, these requirements will also vary depending on the chosen operative industry. For instance, if you want to start a B2B pharma marketplace, the compliance requirements will be higher. Hence, depending upon the regulatory compliances required, the cost estimate of the eCommerce website will vary as well.

4. Server requirements 

Your eCommerce marketplace platform will either be on-premises or hosted over the cloud. In both these scenarios, the server capacity and technology will be required as per the projected scale of the eCommerce business. Accordingly, the cost of the eCommerce website will vary.

5. Operational infrastructure: 

Finance, logistics, customer support, and other, eCommerce marketplace owners are responsible for setting up this infrastructure. However, what you want, and to the extent that you want to do it, will vary. Since the operational infrastructure is a direct outcome of the business model you choose to follow, these vary, and hence the cost of the eCommerce website varies.

6. Location and expertise of the developers

The location and expertise of the location of developers you partner with affect the quoted hourly rate, thus impacting the cost of developing the eCommerce marketplace.

7. Urgency of the development

The faster you ask for the eCommerce development of your eCommerce site, the more resources are required. Hence the cost estimate will go up.

 All these factors hinge on your go-to-market strategy. And that in turn depends upon market considerations and competitors. Moreover, an additional variable here is the strategy adopted to develop an eCommerce platform.

But before we discuss that, let’s first take a look at the total cost of launching and running a multi-vendor eCommerce business. This will give you an analysis of how much investment capital you can allocate for building the eCommerce platform.

Cost factors involved in starting an eCommerce marketplace business 

Your business will start to churn profits after you have achieved break even. However, business will need investment, right when you start moving in the direction of starting with the business. This is even earlier than the first sale on the platform. Let’s take a look at these costs that come with starting with a multi vendor eCommerce business.

1. Cost of managing legalities of the eCommerce business

Your eCommerce business will be a legally registered business operating under the governance of your country’s authorities. So, there are several legal considerations in an eCommerce marketplace business. Managing these legalities adds cost to launch the eCommerce business. Discussed below are some of these.

→ Legal registration of the business & Domain

The first thing to set the ball rolling is registering your company name and the website’s domain name. Depending on your choice, the website domain can attract varying costs. The price for the domain name you desire can be checked online. Depending upon the price, you can decide between the desired name or prioritize according to the budget.

→ Facilitating transactions on the platform

Offering secure transactions on the platform is a legal imperative. To do that you need to offer the services of secure payment gateways to your users. Any financial fraud will be debilitating legally and to your brand equity.

→ Managing finances

Taxation is a key operational factor for smooth business operations. Moreover, in a marketplace business, you will be operating far and wide, across regions, offering multiple product categories. Managing efficient tax compliance will be a key legal imperative in the eCommerce business.

→ Compliance with data protection laws

Another key legal cost implication is compliance with data protection laws like GDPR or CCPA. Your eCommerce platform should be safe to protect user data and it must ensure that the users’ information is controlled.

→ Protecting intellectual property

This factors in protecting intellectual property about copyright and genuine products. eCommerce marketplace platforms can run this risk of offering counterfeit or spurious products. You will need measures to control this.

→ Creating documentation

Documentation for platform policies, user agreements, and privacy policies is essential. These documents should be detailed and comprehensive. Often, consulting a legal authority for these makes sense.

2. Platform development costs:

Coming to the most apparent cost i.e. the cost to develop the platform. This can include the number of digital assets you want to include for your business. The digital assets are of primarily two types. These are as follows:

→ Web apps: 

These are applications that run on users’ browsers. In simple words, the eCommerce website that we browse on any device on a browser like Google Chrome is a web application. These are the starting points for your online business.

→ Mobile application: 

According to eMarketer, retail commerce via mobile phones in the US will be around 44.6% by the end of 2024. Outrightly, mobile apps are not imperative, and an eCommerce business can function without them. But to maximize the reach of your business, consider adding native mobile apps. Investing in mobile apps can lead to a higher reach for your business, eventually leading to more revenue possibilities.

So the overall development cost will depend on the number of digital assets you choose to create.

3. Platform implementation costs:

There will be costs to implement the eCommerce platform. This includes the following two things:

→ Hosting costs:

Web hosting is the service that stores your website data, including all files, images, media, and other data on a server. When your users wish to access the website, their browser communicates with these servers to view the website on their devices’ browsers. There are many types of hosting. Starting from shared hosting to VPS, cloud, managed, or even dedicated hosting. These plans include incremental space, speed, and many other features.

eCommerce websites generally need better plans. Shared or VPS hosting is unlikely to fructify. For these reasons, cloud or dedicated hosting are the more popular choices.

Since each of the hosting services comes with incremental costs, the total cost of launching the eCommerce marketplace platform will vary depending on the hosting services opted for.

→ Configuring the platform

It’s one thing to have your website’s design and layout ready, it’s different to take this design and fill it up with all the relevant data and content. Your company’s logo, the brands that you’ll be featuring, everything brings along a cost as you start adding more and more pages to your multivendor marketplace website.

4. Brainstorming & consultation 

Launching an eCommerce marketplace business needs a well-structured plan. There are multiple considerations, and a robust go-to-market strategy gives direction to the efforts, guiding your business to define itself in the market. This would include the what, where, and how of each business function.

If this is done internally, involving all the stakeholders, the investment is man-hours and time-related. However, if you choose to outsource this process externally to eCommerce experts, their charges will be an additional expenditure for the business, adding to the cost.

5. Data management 

User Data is an integral part of any online business. It is pivotal, especially for eCommerce. Online businesses generate a wealth of data. This is a treasure trove, that if leveraged properly can drive impactful business decisions. But to use this data, it has to be mined and managed properly. Data management is thus a key business function to prioritize for eCommerce business success. Managing data adds to the cost overheads of the business.

6. Business plan restructuring

You might be expecting brainstorming and strategizing at the start of an eCommerce business. You want to put the best foot forward and create a market impact. While this is important at the start, business strategy is a continual business function to help your business stay one step ahead in a dynamic business environment.

Moreover, based on your analysis, if pivot points are identified in the business, there will be investment to orchestrate any restructuring or realignment. These can include strategic realignment, changes in the eCommerce marketplace platform, cost/overhead management, restructuring revenue streams, workforce changes, CX enhancement, and more. All of this leads to investment of time and resources, adding to costs.

7. Workforce costs

This includes the cost of the personnel that takes care of your multivendor marketplace daily. From keeping your website up and running, addition and editing of new and existing content on the website to everything that revolves around an eCommerce marketplace incurs a cost.

8. Data interface costs 

To make the data available across all channels of an eCommerce marketplace business, data interfacing has to be done. This can include integration, allowing all stakeholders to exchange data between various systems. Costs involved in data interfacing can include integration costs, data mapping, data storage meeting security and compliances, and more. However, these costs are higher for larger eCommerce businesses. Smaller eCommerce businesses can assess ROI for their business.

9. Target operating model (TOM), governance & maintenance

→ TOM is the blueprint for the operations of your eCommerce marketplace business. It details a battle plan which details structure, systems, processes, and manpower management. Moreover, targets and KPIs must be set to measure performance. TOM is an investment at the start of an eCommerce marketplace strategy.

→ Governance is the execution of the TOM. Effective governance ensures that the operations of the eCommerce business are aligned with the blueprint set during the TOM.

→ Maintenance of the eCommerce platform includes all activities directed towards maintaining platform health. This can include monitoring the performance of the website, checking for security and online threats mitigation, taking regular backups, auditing technology aspects, auditing seller performance, and last but not least managing the content.

10. Marketing costs

Marketing introduces your eCommerce marketplace business to prospective consumers and sellers. Moreover, it also enhances repeat businesses from the existing user base. Marketing efforts add up to to the cost of the eCommerce business.

Optimizing costs of launching your eCommerce business

If you go through all the costs associated with launching an eCommerce business, one thing must be evident. With each step, you have a choice to define the extent of your engagement at that step. And each of these steps is equally important to the business. For the given investment capital, if you overinvest in any of these, you limit your purse towards the others.

However, a successful eCommerce venture will rely on the successful execution of all of these. So you must optimize costs for each of these. Since the eCommerce platform will be the obvious fulcrum of a business, overinvesting in its development is a common judgment error. This often leads businesses to cut corners elsewhere.

So what can you do about this?
How can you build a modern eCommerce platform without overinvesting? Let’s discuss this below.

Optimizing costs to develop eCommerce marketplace platform

This is a variable under your control. There are two approaches to build your eCommerce platform―the cost to develop will depend upon upon the approach of your choice.

→ Approach 1: The traditional approach

If you are unaware of all the options, the first thing would be to approach an eCommerce development company or hire a team to develop the eCommerce marketplace platform from scratch. This process entails the following steps:

• Designing the front end of the platform
• Developing the backend functionality
• Including necessary features
• Developing control panels for each user
• Integrating payment gateways and business APIs

Developing the platform from scratch would mean going through these steps as per your requirements. Moreover, how the development team approaches the process will be subjective to their approach. Broadly, the platform needs to be conceptualized, coded, and thoroughly tested for each step.

This entire process will be billed per hour. Moreover, the hourly rates vary depending on the expertise and location of the team. So this process is highly variable and incurs high costs, adding expenses and unpredictability, high costs, and time to the process.

→ Approach 2: The alternate approach:

However, there is a way out of this process. Turnkey eCommerce solutions available in the market give a quicker and more affordable approach. These are solutions with pre-built functionality. Depending upon which ones you choose, these can either be a low-code option that will need customization or no-code solutions that have readymade capabilities.

If you choose to use turnkey solution, the platform development costs will come down to a fraction of the total cost. However, to what extent that happens will depend upon the turnkey solution you select.

Moreover, once you decide to build an app for Android or iOS or both, the cost of your mobile app will vary depending upon some other factors too such as developers’ experience and the complexity of the app. However, just like web apps, there are readymade solutions for mobile apps. If you choose these solutions, you will be undercutting the costs significantly.

Yo!Kart: All-in-one solution to optimize costs to launch your eCommerce marketplace platform.

Optimizing costs means getting essentials in an efficient, built-to-purpose package. That is the core advantage of Yo!Kart.

It is a leading turnkey solution for building an eCommerce marketplace platform OOTB. It has readymade capabilities meaning that just by installing the software, you have a highly functional eCommerce marketplace platform. Moreover, is a comprehensive eCommerce marketplace software for eCommerce businesses who want to have a multi-vendor setup. Yo!Kart offers class-leading features that can transform your eCommerce game big time:

But apart from just the capabilities of the software, Yo!Kart can optimize the costs with a 360 degrees approach. It offers holistic benefits.

Yo!Kart optimizes costs of launching an eCommerce marketplace platform, in the following ways:

• Optimizes platform development costs: As a readymade turnkey solution, it bypasses the expensive custom development process.
• Optimizes meeting online business legalities costs: Yo!Kart is GDPR compliant out of the box, and is also pre-integrated with popular payment gateways. Moreover, it also offer integrated APIs of business solutions that aid business functions like shipping, finance, marketing, and more.
• Optimizes platform implementation costs: Yo!Kart is offered with free installation, so there is no costs involved there for the business.
• Optimizes marketing costs: Yo!Kart is offered with built-in modules for marketing that include email marketing tools, affiliate modules, advertisement module, and more. This helps online businesses to effectively market the business with the readymade capabilities of Yo!Kart.
• Optimizes platform management costs: Yo!Kart is built with highly efficient workflows, robust CMS, and an ecosystem that supports effective management, significantly reducing man hours dependencies for the business.
• Optimizes brainstorming and consultation: While Yo!kart itself comes with detailed reports and analytics that aid in data-driven business decisions, it is also supported by an Agile team, that offers various services including business intelligence and digital marketing. Yo!Kart plans also include free digital marketing services.
• Optimizes meeting complex scenarios: Yo!Kart is backed by an Agile team for customizations. If online businesses need complex business requirements, they can be met with customizing Yo!Kart to include purpose-built functionality.

So, YoKart is an all-inclusive marketplace software that not only removes the hassle of developing a marketplace from scratch but also comes with multiple features to perform other business functions as well. There are multiple other tools that either directly facilitate multivendor operations or efficiencize processes for optimum resource utilization. Moreover, the services offered by Yo!Kart’s support teams further add value to the cost-effectiveness of the solution.

Wrapping up

The real cost of launching an eCommerce marketplace platform is more than just building the eCommerce platform. The business comes with multiple operational dependencies. Building the eCommerce platform takes around 5-10% of your total investment capital. Each of these is equally important to business success.

Yo!Kart optimizes different cost implications of a multi-vendor marketplace. It is a complete and well-built package, which eases eCommerce operational dependencies and gives business owners a robust eCommerce platform to start and scale.

FAQ

Q 1. How much does it cost to launch an eCommerce marketplace?

Ans: The development cost of an eCommerce platform can be highly variable if you choose to custom develop the platform. It will depend on the business requirements, additional services, location and expertise of the development partners, the need for additional services, and more.

However, if you choose to use a tunkey solution, you can undercut these costs, and also add predictability to the process.

Q 2. How much should I invest in developing eCommerce marketplace?

Ans: As a ballpark estimate, the development of the eCommerce website is roughly just 5-10% of the total investment required to launch your eCommerce marketplace website, so choose accordingly.

Q 3. How do I optimize the total cost to launch an eCommerce marketplace?

Ans: Readymade software with 360 degree functionality, can optimize multiple aspects of starting with an eCommerce business. One such leading software is Yo!kart.

Q 4. Which is the most affordable online multi vendor marketplace software?

Ans: Yo!Kart comes with multiple features out of the box, and is pre-integrted with multiple business APIs and payment gateways. Moreover, it is offered with a one time payment price policy with no recurring or hidden costs. Hence it is one the most affordable online multi vendor marketplace software.