How to Create An Online Marketplace Like eBay From Scratch

The success story of eBay is sure to knock your socks off. The sweet darling of the ‘90s, it started as an auction marketplace and still reaps immense revenues of $10.4 billion in the latest financial year. The retailers’ wish is understandable when they consider building a website like eBay.

But what do you start with? How much time and money do you have to spend to create your own online marketplace?

Elogic has been in the ecommerce business for 13+ years, and we’ve seen hundreds of auction sites like eBay appear and disappear every year. If you think that getting into this business is tricky and all good ideas have been taken, get ready to bookmark this article.

Read on to learn about how to build an auction website like eBay step by step and find some action-oriented tips we’ve given to dozens of online marketplaces we’ve created and optimized at Elogic.

What Kind of Website is eBay: All You Need to Know About Multi-Vendor Ecommerce Marketplaces

Before we talk in detail about how to create an ecommerce platform like eBay, it’s crucial to define what it is. 

eBay is essentially an online marketplace, also known as a multi-vendor marketplace. By definition, it is a platform where a customer can purchase various digital or physical products, services from multiple sellers, suppliers, or shops. Unlike traditional ecommerce websites that sell the products of one brand or one niche, eBay works in the same way as Amazon or Etsy.

Read more: Leader in Ecommerce: 7 reasons why Amazon is so successful

Basically, shopping at an online marketplace is like shopping from a few different ecommerce stores at the same time. Customers can pay all vendors in a single transaction rather than visiting each store and placing their orders individually.

The owner of a marketplace should secure a smooth shopping experience for both users and vendors. They’re in charge of customer retention, order management, website optimization, managing financial transactions, and third-party vendor deals.

eBay and its story of success

According to Statista, eBay leads the ranking of the most popular online marketplace in the US to date. 

What has now turned into an e-marketplace behemoth actually started as a hobby in 1995. A software engineer Pierre Omidyar launched an online service called Auction Web placing a few small second-hand items for sale. 

In the second quarter of 1997, Omidyar changed the company’s name to eBay and started investing in advertising. For 25 years, the eBay marketplace has been expanding globally and now includes billions of products across multiple categories. In fact, the auction website scaled so fast that eBay acquired PayPal, Craigslist, Skype, and several other companies over time.

At present, eBay positions itself as an online multi-seller auction marketplace that enables ecommerce businesses and shoppers to sell and purchase new and second-hand items. 

Unlike Amazon that acts as a direct provider of goods, eBay follows a different business model, which gives a certain advantage to vendors:

• Shoppers can set a fixed price on their products or create an auction listing. The latter is particularly useful when sellers experience limited stock and high demand. Shoppers can bid on their selected items, and sellers earn more.
• eBay gives more room to grow. Because the platform needs vendors to thrive, eBay provides more manageable fees and client-oriented services. Sellers can customize their marketplace page and set up their own account policies.
• Sellers get more flexibility and freedom. eBay allows them to control their own shipping fees and return policies.

Wondering about the sources of revenue for eBay? Some of the monetization strategies eBay uses to earn a profit are:

• seller subscriptions
• fees for sellers 
• listings fee ($0.35 extra money for a product, in case the seller posts more than 50 items per month)
• PayPal fees (2.9% on the total deal value and $0.30 fee per transaction)
• affiliate programs
• advertising
• freemium packages (with extra paid services)

How to Create a Website Like eBay: A Step by Step Guide

When eBay ventured in, Omidyar had no alternative but to start everything from the ground up. Fortunately, we live in a world full of modern technologies that make the whole process of developing a multi-vendor marketplace easy with less upfront investment. 

Read more: Ecommerce Website Planning & Development Checklist — Ready, Set, LAUNCH! 

Here are a few steps you need to follow to create an online marketplace website like eBay. 

Step #1: Find your ecommerce niche

When starting a new auction website like eBay, ecommerce businesses should take into account high competition as their biggest challenge. Ecommerce giants like eBay, Etsy, Amazon, and others have already covered multiple market segments and won the trust of millions globally, so to win the competition would be tough.

One thing to do is to niche down. Narrow your ecommerce focus, carry out your competitors’ analysis, come up with a unique selling proposition (USP). Your offer should look more lucrative against the growing competition and be good enough to generate the first movers right after your auction marketplace goes live. 

For instance, Whola, an Aussie fashion marketplace and one of Elogic clients, focused on apparel and clothing collating some best fast-to-market fashion brands. They have a clearly defined target audience, which also adds to their exclusiveness in the Australian region.

Step #2: Choose a monetization strategy

The next step to create a marketplace is to decide on a monetization model. Your online marketplace business model will influence how you will generate outcomes and how your vendors will make money as well. 

Here are the types of online monetization models online marketplaces usually use:

Commission-based model

You can charge a fee for every transaction that occurs on your online marketplace. It is by far the most popular model used by Amazon, Airbnb, and Fiverr. 

Biggest pro: Commission-based marketplaces attract more vendors faster (and thus solve the chicken-and-egg problem discussed in step #3 of this guide) since sellers pay only when their items are actually sold.

Biggest con: your marketplace should provide enough value for the fee you charge, such as insurance, admin process automation, or supported marketing campaigns. Otherwise, buyers will prefer to communicate with suppliers directly without your marketplace as an intermediary.

Subscription-based model

Each seller or customer pays a membership fee to access your marketplace. Such websites don’t charge any transaction fees and help suppliers find new clients.

Biggest pro: The beauty of this model is that you get a predictable income on a regular basis. 

Biggest con: Just like with the transaction-based module, you’ll have to provide enough value for both vendors and shoppers to sign up to your marketplace. Plus, paying in advance might discourage potential clients from using your platform, so you’ll need to invest heavily in marketing.

Listing fee model

Listing monetization strategy charges vendors a fee for listing their items or services on the auction website. You can see it on the example of Etsy. The listing fee can be based on a fixed rate or a percentage of the value of the digital or physical product.

Biggest pro: Merchants with low sales volume that sell just a few pieces of items opt for the listing fee model. The marketplace secures a broad marketing reach, so the sellers basically pay to get their item across to a larger target audience.

Biggest con: It might be harder to solve the chicken-and-egg problem though. You will need to drive a significant number of sellers who will consistently place new product listings to generate income for your marketplace. 

Freemium model

When using the freemium model, you will offer your sellers free and premium features. Craigslist is a perfect case in point. Your users will access the basic features of your marketplace at zero fee (such as free listing publication) but will have to pay for the advanced functionality (like faster shipping). 

Biggest pro: The freemium model allows a marketplace to scale fast and attract more vendors without spending much on costly ad campaigns.

Biggest con: You should make your paid features truly valuable to encourage customers to go premium. If a small number of customers use a premium offer and the rest use the free option, the model will not operate successfully. 

Step #3: Solve the chicken-and-egg problem

The chicken-and-egg problem consists in attracting vendors and shoppers when your platform is still a blank page. After all, why would the customer visit your marketplace if there are no products, or why would businesses register if there are no customers?

The answer to this question might actually depend on your business model chosen during the step #2 of this guide. While building a marketplace from scratch, here are a few things you may do to populate your multi-sided website:

• Get the hardest side first: create value either for your sellers or for your customers to join your marketplace. When you get enough supply or demand, the other side is ten times easier to bring onboard.
• Concentrate on a particular niche: before becoming popular, eBay first got traction with Beanie Babies. Find the small groups of customers that care most about your marketplace and go after them.
• Subsidize the most valuable side of your business: offer generous discounts, bonuses, or perks for something that your marketplace is known for.
• Host events and gatherings: generate community around your business, give your customers direct feedback, and create some buzz about it on social media. That’s how Poshmark set out to build a marketplace website.
• Onboard two sides simultaneously: prompt sellers to bring in buyers and offer incentives for it. 
• Create exclusive access: restrict access to your marketplace and create the fear of missing out. On top of that, you can partner with an influencer or a celebrity to build a strong word of mouth and a flood of signups to your marketplace.

Step #4: Select a reliable domain 

The choice of a reliable domain name is an important step for creating the best multi-vendor marketplace like eBay. 

Read more: How to Start an Ecommerce Business Step by Step 

Choose the name that accurately conveys what your brand stands for. Make sure that your domain name is:

• unique and catchy
• easy to remember
• short and simple to type and pronounce
• include targeted keywords.

It’s also better to avoid using a domain name that is similar or identical to existing popular marketplaces.

For instance, CLÉ, an Arab jewelry marketplace whose marketplace was optimized x2 by the Elogic team , came up with a name that translates as “key” from French. The domain name werecle.com reads as “we are the key”, thus inciting interest to buy and sell luxury, limited-edition timepieces among both vendors and buyers.

Step #5: Define the key features of your online marketplace website

The relevant features for websites like eBay will help you to provide a superior user experience to drive traffic to your auction website. 

Here are the features that are necessary to build an auction website like eBay: 

• Authorization process
• Product catalog and product description
• Inventory management
• Admin dashboard
• Advanced product search
• Shopping cart
• Chat support
• Multiple payment gateways
• Reviews and ratings
• Powerful analytics
• Product images and video
• Shipping options
• Easy checkout 
• Order reports
• Discounts and special offers

Step #6: Choose an ecommerce platform

Since you’re planning to build an online selling site like eBay, you need to decide on the best-suited ecommerce solution. 

Keep in mind: Your future auction website should deal with huge traffic volumes and be able to scale right out-of-the-box to support fast-growing businesses. We suggest staying away from SaaS solutions and hop on the trends of cloud-hosted, headless ecommerce solutions that will allow for unlimited growth and flexibility.

When exploring the process of how to build a multi-vendor ecommerce website, pay attention to Adobe Commerce, Salesforce Commerce Cloud, Shopify Plus, or BigCommerce Enterprise. They all offer different feature sets based on how you see your future online marketplace.

These guides will help you select the right one for your business. 

• Enterprise Ecommerce Platform Comparison: How to Select Between Magento, Salesforce, Hybris, Shopify, BigCommerce, and Oracle
• Magento vs Shopify: Which Ecommerce Platform is Right for Your Retail Business?
• Magento 2 vs Shopify Plus: Impactful Differences Commerce Enterprises Should Know About 
• BigCommerce vs Magento: Who Wins the Fight?
• Magento vs WooCommerce: Which Ecommerce Platform Is The Best Fit For Your Business
• OpenCart vs. Magento: Guide with Comparison Table 
• Magento vs PrestaShop: Platform Comparison for Business Owners
• Magento vs nopCommerce: How to Choose the Right Ecommerce Platform? 

Need help choosing an ecommerce platform? Elogic has 13 years of experience in ecommerce development and over 500+ successfully launched projects across platforms.

Reach out to us for an ecommerce consultation and get your online marketplace to the right start!

How to Build a Multi-Vendor Ecommerce Website Using Adobe Commerce

Before you choose the right ecommerce platform for your online marketplace, here are only a few things that should make you consider Adobe Commerce (formerly Magento) a great fit for eBay style websites:

• The platform offers a flexible and highly customizable shopping cart system with advanced marketing, search engine optimization, and catalog-management tools. 
• It supports multiple storefronts. So if you suddenly decide that besides selling B2C in one country, you wish you sell B2B across countries like eBay, you’ll have no problem launching and managing them from a single admin panel.
• A Multi-Source Inventory (MSI) is built into Adobe Commerce, so you can streamline your inventory management processes and maintain more up-to-date info. 
• A deep product search will prevent your customers from getting lost in marketplace listings.
• Adobe Commerce is SEO-friendly, which should help your marketplace rank higher and even solve that chicken-and-egg problem we discussed earlier.
• You’ll be able to implement product recommendations and personalize your sellers’ listings based on user behavior (a hot trend for all marketplaces!).
• It’s easy to go mobile and build a custom native app or a PWA to bring your marketplace to handheld devices.

…and many more!

Read more: How to build a Magento Website: Step-by-Step Guide

Besides ecommerce consultations at Elogic, you can also hire experienced Magento developers to set up the marketplace environment or build a custom extension for you.

How Much Does It Cost to Build an Online Marketplace like eBay 

The cost of creating an online marketplace will vary depending on your choice of the platform, business requirements, and human resources needed to complete the project.

For instance, if your go-to ecommerce platform is Adobe Commerce, your marketplace will require a lot of custom development. So while calculating the cost of building an online marketplace website, you have to consider the hours to be spent on development and multiply them by a Magento developer hourly rate ($150-200/hour for developers from North America and Western Europe, and $50-100/hour for engineers from South America and East Europe).

Overall, get ready to spend from $10,000 to $100,000 including your website UI/UX design, project setup, integrations, and custom feature development. Based on our experience, the development team delivers the project in a minimum of 3-4 months.

Are You the Next eBay?

Do you have a big idea that could be the next eBay success? Websites like eBay encourage many businesses to create a similar platform. It is understandable as building a successful marketplace yields results with lots of shoppers, a high conversion rate, and great revenue. 

At Elogic, we’ve helped quite a few marketplaces pave their way to success and become the new eBays of their industries. Check out our projects, contact us for a consultation, and launch your marketplace hassle-free!

FAQs

Are there any other websites like eBay?

There are plenty of marketplaces worldwide targeting different markets across countries. Besides eBay and Amazon known internationally, the US consumers buy from Bonanza, Ruby Lane, and Etsy. In Europe, you’ll find Zalando, Conforama, and Allegro. Your marketplace might be on top of the list, too! Just contact us and we’ll build a sleek, functional website like eBay for you.

How to attract vendors to your marketplace?

To solve the chicken-and-egg problem, you can offer them some perks or bonuses for signing up, subsidize the most valuable side of your business, or host online and offline gatherings to get attention. Your business model will also play a role: it’s been proven that commission- and freemium-based websites attract more vendors faster.

How to build a marketplace from scratch?

To build a marketplace from scratch, you’ll need to write a business plan choosing your ecommerce niche, conducting a competitors’ analysis, and opting for a single or mixed monetization model. Then, you’ll need to choose an ecommerce platform and build a website with all the marketplace functionalities and design to attract more vendors and consumers.