How to Start an Online Marketplace
Thinking of starting an online marketplace? This guide explains some key legal and commercial decisions to ensure your online marketplace is successful.
Online marketplaces are websites that facilitate shopping from many different sources. While global online marketplace giants such as Ebay, ASOS and Airbnb have a huge presence in the Australian market, e-commerce is quite new to Australia. E-commerce is rapidly becoming the major force in retail business.
In 2018 alone, e-commerce produced a revenue of more than $18 billion, making it a great time for your business to expand into an online marketplace. One obstacle is not knowing where to begin. However this guide will tell you how you can get started today with your online marketplace.
Identify what your online marketplace will sell and your target market
Before starting your marketplace, it’s essential to identify what it is you want to sell, and your target market. We recommend that you make sure you are aware of all the online marketplaces currently offering a wide variety of services. Once you are satisfied that there are no marketplaces currently providing similar services, you need to identify your target market.
Conducting market research is crucial to understanding the needs of your target market as well as finding and analysing possible competitors in your chosen industry. It is particularly useful if you have experience or a solid understanding of your target market. Market research generates invaluable information. It will assist you in providing a service that is unique and stands out to future customers.
When you have decided what your marketplace will sell, you should make sure your service is moulded to fit your target markets certain characteristics. Think about their age, their interests, location and income.
You want to make sure your first customers are satisfied with your marketplace. Then, it’s more likely they will tell their friends or family about their positive experience using your marketplace. You can monitor customer expectations by establishing a review system that allows customers to review the supplier and provide feedback.
Build your online marketplace website
Your website will be the first point of contact with your customers, so it’s important for it to be user-friendly, aesthetically pleasing and professional. There are multiple ways you can create your online marketplace to best suit your ideal design. If you are highly skilled with technology or are an experienced coder, you could use online marketplace software and platforms to assist you build your online marketplace.
However, we recommend hiring an established company to design and structure your marketplace for you. These companies provide great in-built services such as installing PayPal transactions. They also can monitor your server and provide continual technical support.
Launching your online marketplace provides you access to a global market, however, there are some legal requirements that you need to comply with when starting an online marketplace. As you will be selling products online, your website requires a terms and conditions of use. You should specifically tailor these to your business. Comprehensive terms and conditions protect your business from potential disputes as well as providing certainty about your customers’ rights.
These requirements ensure transparency with your customers and can help minimise any future disputes.
As e-commerce continues to grow, launching a user-friendly online marketplace gives your business a great opportunity to grow. Successful marketplaces connect parties who otherwise may not have been able to conduct business together.
It’s important you are aware of these commercial decisions and your legal obligations to ensure your online marketplace is successful into the future.
James is a Legal Tech Intern at Lawpath. He is currently studying a Bachelor of Laws and a Bachelor of Business, majoring in Finance at the University of Technology Sydney.