Choosing the Marketplace Technology That's Right For You

A look at the advantages of marketplace commerce systems and whether an open-source or a SaaS solution is best for your business needs.

Multi-Vendor Marketplaces Are Here

Marketplace models are emerging as front-runner solutions for retailers refocusing their efforts to online channels. They offer a flexible but still highly unified approach to sales, meaning businesses can identify new ways to grow, to connect with their customers, and to diversify their product offerings with relatively low risk.

Leading companies have already built the technical infrastructure to deliver strong experiences to their vendors and customers, which is why businesses yet to enter this space need to act quickly to avoid being left behind. And the key decision they need to make to unlock this value is whether to invest in a custom marketplace build or to purchase an out-of-the-box solution.

The good news is, with modern e-commerce technologies, the task of developing a multi-vendor platform is not as daunting as it once was. Businesses have the choice of developing a platform from scratch, utilizing an open source partner, or implementing a SaaS solution. Each path has advantages and disadvantages, and understanding those can help you determine what solution will work best for your business — and what infrastructure you’ll need to get there.

Advantages to the Marketplace Model

With so many avenues and options emerging for this retail space, there’s a lot to consider when exploring a marketplace solution. How do you know if a marketplace is the right approach for your business, and if it is, what technology should you employ to implement it? To begin with, let’s take a look at the key advantages of a marketplace commerce model:

Variety & convenience

Many consumers return to a marketplace more than once a month because of the convenience it affords. Even though the margin on marketplace products is lower, the added variety of products on offer is what brings consumers in, keeps them happier while there, and facilitates bigger spends overall than single-offer e-commerce experiences. 

Deeper relationships & increased trust

Customers frequently return to marketplaces when they need to make follow-up purchases of the same product, making this an excellent channel for expanding connections to your customers. As a brand becomes a centralized source of complementary products, instead of a siloed source for singular items, customer trust grows and you get the advantage of improved customer experiences without adding significant overhead costs.

Better product discovery

When a marketplace is centered around a specific product ecosystem, customers are able to find more products they’re looking for, generating bigger baskets for you.

Easy comparison

Complementary products can be difficult to find on large marketplaces like Amazon and aren’t available at all in traditional e-commerce instances, but on a hosted marketplace are easily surfaced and can maximize customer experiences and spend.

High conversion rates

Because of the ancillary products available, marketplace conversion rates tend to be 2-3 times greater than traditional e-commerce alone.

With so many benefits, it’s easy to see why marketplaces are emerging as a crucial retail opportunity space— and why they’re likely to remain so for a long time to come. But knowing you need a marketplace and knowing what type of technology will get you to the outcomes you’re looking for are two different things. Let’s take a look at the options for bringing your business into the marketplace commerce space.

Open-Source or SAAS?

When launching a marketplace, it’s hard to know exactly what you need. Should your business opt for an open-source approach, based around plugins and modules? Or should you choose a SaaS solution with a wide array of services built to solve specific needs? Or do you need to build a tool from scratch to get the exact right mix of features for your business? Ultimately, your choice of marketplace technology depends on a range of things including: your available technical skills and code customization needs; your marketplace business domain expertise and ability to wrangle a bespoke or highly-customizable option; and the budget available to support the many aspects of bringing those elements together.

1. Open-source solutions are used by companies who want to handle all aspects of their product development, launch, and optimization. These companies are usually in no rush to enter the market.
2. SaaS solutions, by contrast, let an organization delegate the technical aspects of implementing a marketplace to a third-party vendor, which frees them up to focus on core business functions as well as accelerating their time-to-market.
3. Custom-build solutions give full control over personalization, compatibility, security, and scalability. This path is not for everyone — developing a marketplace from scratch requires a large investment and technical skillset.

Of the three, custom builds are the least accessible option for most businesses. Unless you have a strong technical team prepared to restructure processes operationally and extend capabilities technically, and the in-house marketplace business expertise to direct those efforts you should not pursue a custom build. But open-source and SaaS technology approaches both offer a viable path forward for most businesses, so let’s dig in on the pros and cons of each.

Open-Source Solutions

(e.g., Sellacious, CS-Cart, MarketplaceKit, & Magento)

The value of open-source solutions comes from the ability to define development criteria, identify a core feature-set, and deliver bespoke functionality to sellers and customers. But most open-source solutions on the market aren’t specifically designed for marketplaces— they’re single-seller commerce modules repurposed into marketplace solutions. That means to deliver fundamental marketplace functionality, businesses have to invest in a suite of paid plugins and modules (or commit to developing those functionalities themselves).

The source code provides a technical scaffolding that can be refactored to support business needs and some core foundational features are delivered out-of-the-box (but even they will require configuration and adaptation to fit the specifics of your marketplace model). Because these missing components are essential for delivering value to customers and vendor partners, they can rapidly expand scope, which increases technical governance, operational development costs, and time-to-market.

In light of that, open-source technology is best for businesses that want the ability to modify and customize source code to create the experiences they need. With an open-source solution you can build and develop the necessary infrastructure to empower vendors and diversify your product offerings without limitations. But with so many modules and plugins necessary to deliver minimal marketplace value—including resources for installation of applications, technical development, hosting, outsourcing, and upgrades—the cost and effort of maintenance and optimization can quickly exceed that of SaaS solutions.

What Solution Is Best for You?

Marketplaces are, from a technology standpoint, somewhat more challenging than e-commerce sites to implement. But the return on investment is worth the effort. Businesses entering the marketplace arena now are making a key investment in technology that will enable them to grow their revenue through partnerships and access to new consumer verticals, while also increasing customer satisfaction with the brand.

When determining the best path for your business, consider what your operational priorities are and assess your go to market strategy from there. Open-source solutions are best for companies who want to handle every single aspect of their product development, launch, and optimization, and who aren’t in a rush to enter the market. SaaS solutions delegate the technical aspects to a third-party so your team can focus on the core business concerns, accelerating time-to-market. For those with an existing e-commerce infrastructure, a headless SaaS solution is ideal — transforming an e-commerce site to a multi-vendor marketplace with little to no development effort.

Although a SaaS solution may seem more costly than going with open-source, the overall cost of ownership and the improved customer and vendor experiences you get with SaaS, make the upfront investment well worth it. Talk to Myplanet today to learn more about your options. The time to build your marketplace solution is now.