Marketplaces have become one of the most sought-after growth strategies for online retailers, dramatically expanding product selection and brand footprint while substantially increasing sales and revenue. In fact, marketplace sales now account for more than 50 percent of online transactions, with a growth trajectory that’s on track to reach nearly 70 percent by 2022.With such a booming opportunity, the decision to add a marketplace is a no-brainer for many organizations. But, whether to build in house or partner with a platform provider is less clear for some. While the DIY route is certainly possible, it’s not always prudent, and choosing to go it alone can have a significant impact on project success and your ability to fully capitalize on the opportunity.
If you’re on the fence about whether to build or buy your marketplace platform, there are four critical factors to consider. Here, we’ll examine the build vs. buy scenario for each, to help you make the right decision.
1) Time to Market
With such a tremendous growth potential, getting your marketplace off the ground quickly is critical. But for many companies, the gap between the opportunity and the reality of the DIY route is a substantial barrier. Developing and launching your own marketplace is a time-consuming process, even for companies with ample resources. It could take years to launch, and for every day that passes, you miss out on sales, and run the risk that your competition beats you to the punch.
On the other hand, partnering with a packaged solution provider closes the gap very quickly to get new revenue flowing much faster than the DIY approach. By taking advantage of a pre-built solution, you can drastically reduce your time to market while delivering a fully-developed, cutting-edge platform that delivers on customer expectations from Day 1.
How quickly can you close the gap?
2) Functionality and Scalability
A successful marketplace requires perfect synchronization of a lot of moving parts. It must not only integrate with your existing eCommerce operations, but also serve the needs of sellers and meet ever-growing customer expectations. Satisfying all three is extremely complex and most companies underestimate the full scope of the project. They start with a minimum viable product (MVP) and then spend an exorbitant amount of time and money making upgrades.
The process is extremely resource intensive, and lacking marketplace expertise, many teams overlook critical functions like seller onboarding and management, IT scaling and API integration, and audience-specific customizations. As a result, your MVP results in a negative customer experience from the beginning, which hurts your reputation and your chances for success.
Instead, when you buy a full-featured marketplace platform, you get a turnkey solution that provides complete functionality out of the box. Rather than struggling through setting up your own seller onboarding and management system or wading through complex compliance and tax challenges--not to mention the risk of getting something wrong--you get the solution you need with substantially less effort, and your sellers and customers benefit from a top-notch experience, which elevates your reputation and market share.
Do you have what it takes?
Does your team have what it takes to build a successful marketplace? The complexity of development requires highly specialized skills that are in extremely high demand. And, in today’s tight employment market, hiring the right talent isn’t an easy task. It’s a question of not only whether you can find the right people, but can you afford them? Training your existing team is an option, but that takes additional time and money, which increases your time to market and your budget—neither of which you can afford if you plan to capitalize on the opportunity before your competitors beat you to it.
Finding an established marketplace technology partner solves the talent problem, allowing you to tap into their team of experts who have honed their expertise over hundreds of successful marketplace implementations. By choosing an experienced partner that’s already done the heavy lifting of sourcing the most experienced development experts, you get a seasoned team of professionals who are dedicated to the success of your marketplace.
4) Cost and Risk
With all these considerations, the cost and risk of a DIY marketplace are extremely high. Not only is it difficult to predict how much it will cost, but with such a long timeline, needs and expectations often change along the way, forcing continuous innovation, even before the project is launched. Not to mention the fact that it doesn’t end when the marketplace goes live. Maintenance and enhancement are an ongoing process, which drives up the total cost of ownership (TCO) for a DIY solution.
Forrester’s take: It will be harder than you think
Partnering with a marketplace provider ensures you have access to the latest state-of-the-art features and technology without the time, money and hassle of building each upgrade yourself. As technology evolves, the onus to stay ahead of the game is on your marketplace partner, who needs to do so in order to maintain their own competitive advantage. That means they bare the brunt of major innovation on the platform, and you get to reap the benefits.
Is building even a viable option?
The reality is that most companies simply do not have the time or resources it takes to build their own marketplace. And, even those that do may be putting themselves at substantial risk in doing so. As one multinational consumer electronics retailer learned, just because you can, doesn’t mean you should:
“We started to build out a marketplace on our own by developing partnerships for products that we viewed as complementary to our traditional categories. The partnerships took a huge amount of energy, and we didn’t achieve our growth goals. When we looked at a marketplace partner [Mirakl], we saw a simpler and more cost- effective approach to expanding our offerings dramatically.”
How Mirakl gets it done
Partnering with Mirakl to launch your new marketplace gives you the advantage of working with an experienced solution provider that dramatically accelerates time to market, delivers full functionality and scalability at launch, and substantially lowers your cost and risk.
Rather than doing all the work yourself, and taking years to do so, we do 80 percent or more for you, covering all the bases from seller onboarding and management to SLA management, quality control, security, tax compliance and more. With over 700 features, 100 customizable APIs and unlimited scalability, we’re adding new functionality and capacity every week that guarantee your success.
With Mirakl, brands like Siemens, J.Crew, Kroger and Catch Group have launched a complete marketplace solution in just four months. In fact, by implementing a Mirakl Marketplace you could be enjoying 162% ROI and $412 million in revenue growth in the same time it takes to build your own. As an added bonus, instead of putting your resources to build, you focus your resources on promoting your new marketplace, further enhancing your success.
Plus, with an entire team of 80+ experts who have honed their expertise over hundreds of successful marketplace implementations, Mirakl has you covered every step of the way—from strategy and execution to performance measurement and optimization. That means we have your back; You’ll get peace of mind and the confidence of knowing that your platform is backed by a dedicated team who is committed to your success.
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Written by Maya Pattison
VP, Corporate Marketing at Mirakl