March 19, 2021
7 minutes to read
All businesses start somewhere. If we turn our heads backwards and take a look at the most renowned names in the marketplace industry like eBay, Zappos, Etsy, Airbnb, Uber — none of these companies were very big back in the day. In the early development stages, all they had were niche- or region-limited digital products, each with basic functions and little-to-no investments at all.
That's what the concept of Minimum Viable Product (MVP) actually stems from — having a bare-bones version of a final product that is functional enough to fulfill a specific user's problem, and cheap enough to keep a startup afloat.
In this blog post, we will answer the questions around how to build a marketplace MVP, what features an online marketplace MVP should have, and what business benefits come with the marketplace MVP.
The term MVP was first defined in 2001 by Frank Robinson, co-founder of consulting agency SyncDev. Almost a decade later, it’s been widely popularized by Eric Ries — American blogger and author of the book 'The Lean Startup.'
According to Ries, MVP is the first version of a product that allows a company to test and validate its business idea with the help of feedback from early adopters, i.e. first users. All this with a minimum amount of effort.
The benefits of such a developmental approach have become even more apparent when we look at the statistics — 90% of new startups fail, with the top three reasons for failure being budget problems, incorrect market choices and lack of research. Failure rates could be significantly lower, however, if more startups started to market their products with an MVP version first.
Aside from the market research and feedback collection, the advantages of building a marketplace MVP are as follows:
Saves time and money. The primary goal of any startup is to limit expenses as much as possible, and MVP helps do exactly that. Instead of continually wasting time and pouring money into a 'black box' of new updates and custom features, it lets you come up with a product that you can start testing on early adopters right away.
Assists in creating an effective promotion strategy. Promoting new or innovative products is hard, especially when you don't have real-life case studies to learn or get insights from. MVP, on the contrary, serves as a starting point for marketing campaign development, analysis and further adjustments.
An efficient way to raise funds. When it comes to product development, most startups rely on investment capital. Having an MVP in your arsenal makes pitching your idea to potential investors a lot easier.
Lets you estimate product scalability. Let's not forget that MVP is actually a working product — limited, but working — so it is a way to validate your ideas in action, physically test business concepts, and figure out how to scale from there.
Development of a minimum viable product for a marketplace comes with its benefits as well as its pitfalls. On one hand, it requires startup owners to outline the core features and business goals from day one.
On the other hand, teams need to correctly understand the nature of online marketplace MVP development techniques, and the outcomes they should be looking for.
Here's a shortlist of key aspects that startups need to keep in mind when developing an MVP for a marketplace:
With ongoing digitalization in today’s world, there's almost nothing left that you can't sell or buy online. Some platforms, like Amazon, sell products in product marketplaces. Some, like Uber, offer services in service marketplaces. Some, like Oodle, combine both of these to create hybrid marketplaces, and some, like Kickstarter, connect startups and investors in project marketplaces.
For each particular type of marketplace there will be a unique feature set; however, the key components will remain pretty much the same:
So, how to create a marketplace MVP? Here are five steps that a company needs to take to develop a marketplace MVP.
Market analysis is important and can't be overlooked. Even if you believe that your project idea is the most innovative and 'one-of-a-kind,' do your research first. The simple belief in the project uniqueness should never serve as the justification for your project development.
Examine the market size, figure out the number of companies that are already out there offering similar (or even the same) types of products, define their strong and weak points. Assess users' geography and buying preferences.
Studying best practices will spare you the need to try to 'reinvent the wheel' for your startup company. Taking what works best and applying it — not blindly following but wisely adjusting, of course — in your own business is a tried and true tactic. As good as it may be to learn from successful case studies, getting insights from startup post mortems is even more important.
Looking at companies that have previously failed will help you avoid the same mistakes while validating your MVP for an online marketplace. Here are a few most prominent marketplace failure examples and the reasons behind them:
User flow represents how users interact with your platform and how they get from point A (opening a platform) to point B (making a purchase) seamlessly. In order to provide that experience, map out all the steps that users should take on your platform to reach the final goal.
Keep in mind, also, that the user flow will be unique for each page of your marketplace. This will help to better shape a hierarchical structure of different components in the future, define entry/exit points, and understand what functionality works best and what features of an online marketplace MVP should be added in the next update.
After studying market and competition, figuring out what users' needs are, and prioritizing marketplace features, you are all set to develop a marketplace MVP. Just a reminder — this is not a full-fledged product, so don't strive for the best quality possible by investing resources into neverending redesigns and work scope adjustments. Your goal is to develop a product that is handy and engaging enough to pique the user's interest.
The next step you want to take is to gather or identify a development team that will be able to create an online marketplace MVP and deliver to your expectations.
Hiring a reliable contractor for marketplace mvp development with an already assembled team will save you much hassle, so we advise you to try that option first. Especially if you are at the early stages of your startup development and don't have enough financial resources to accommodate 20-30 specialists under one roof, pay rent, salaries, taxes, etc.
Make sure that you look for a trustworthy partner with relevant expertise in your market niche.
Once the MVP for a marketplace is developed, you can start collecting customers' feedback and analyzing the results. This is actually not the last but, the very first step of your product development. From here, you will begin to conduct various tests, add new features, adjust marketing strategies, and attract new users.
This is where the principles of MVP and Lean Startup Methodology start to really unfold: you build, test, measure, learn, and build again.
Read also about MVP development for online marketplaces.
As you see, MVP for the marketplace is not just about chopping out all possible features and rolling out a product as soon as possible. It is actually an extremely important asset that keeps startup owners from making lots of mistakes and jumping off their planes without a parachute.
Minimum viable product for online marketplace is a foundation for your short- and long-term goals that helps you move forward and improve your product.
If you want to get more information on how to develop a marketplace MVP or are curious as to how much the development of a custom MVP would cost, how long it can take, etc., reach out to us. At WTT Solutions, we are always ready to offer a helping hand to those businesses who are willing to test new ideas but not quite sure how to do that effectively.
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What is Marketplace MVP and Why is it Important?
What You Need to Know to Create an Online Marketplace MVP
Key Features of a Minimum Viable Product for a Marketplace
How to Build a Marketplace MVP: Step-by-Step Guide
1. Research your market and competition
2. Study best practices and failed cases of launching online marketplace
3. Map out the user flow for your product
4. Develop and launch MVP for Marketplace
5. Analyze the results
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