After you decide that you want to start an online service marketplace business the next step is determining if you’re going to build your own online marketplace platform in-house, through an agency of developers or buy a ready to use a Platform as a Service (PaaS) solution to create your online marketplace.
There are many pros and cons when it comes to deciding which option you should choose to get your marketplace up and running. You will want to carefully consider these factors when making the decision that makes the most sense for your business.
Factors such as cost, time, customization, maintenance and more, all come into play when deciding if you should build or buy your online marketplace platform.
In this blog post we outline the pros and cons of building versus buying your online marketplace platform to help you make the best decision for your service marketplace business.
Build your own online marketplace platform-in-house
Building an online marketplace platform allows you to completely customize it
When you build your own online marketplace platform in-house, you can build something that suits your needs perfectly. You have the luxury of choosing everything that’s on your dream marketplace features list that you want to include to fulfill the exact vision you want. You won’t have to make concessions based on what other PaaS solutions offer.
Building an online marketplace platform allow you to easily add additional features
Once you have your marketplace platform up and running, you can decide which features you want to add and when. It’s much harder to do this when using a development agency, as they will likely require a large project, or try to batch multiple features together before they tackle the features, resulting in unknown timelines.
Building an online marketplace platform can be very risky
One of the reasons you may want to consider not building your own online marketplace platform in-house is because it can be risky. In terms of timelines, it can take months to develop the ‘minimum viable product’ for your marketplace platform.
Delaying the launch of your marketplace which means you could burn through cash and miss out on revenue from sales.
Furthermore, web development is typically fraught with delays as unexpected issues come up along the way when trying to build out features. Building a platform is a massive undertaking that usually isn’t fully realized at the outset. This could result in delaying the launch of your marketplace which means you could burn through cash and miss out on revenue from sales, potentially allowing competitors to gain traction while your progress is stalled.
Another thing to keep in mind is determining whether or not your team is equipped to solve the problems that could arise from building an online marketplace platform in-house. If you build your own online marketplace platform your team needs to be ready to solve problems as they happen, and this could put a strain on your team if your team is already small.
Building an online marketplace platform can be expensive
When you develop an online marketplace platform in-house there are usually additional ongoing costs that tend to be forgotten about when initially starting the project. To start, most people forget about the hosting costs that you’ll need to pay. Also, you’ll need to keep a developer on retainer at least part time to handle bugs that pop up or to add new features to your marketplace.
Another challenge is that many web development agencies don’t typically handle these kinds of small issues. It can be difficult to find a couple of developers that want to work for a small business, since most want to work for large tech companies or with a team of developers.
Part time developers also tend to put small projects on the back burner compared to their full time job, meaning issues don’t always get solved in a timely manner, causing frustration for you and your customers and service providers.
Building an online marketplace platform can be tricky because a lot of people don’t know what to build
On the surface, many people think it’s easy to build their own software. However, the vast majority don’t actually know what features to include when building their online marketplace platform or how to make each of the features look.
This includes specific features that they should have to make the platform work seamlessly for service providers as well as customers or how to build their platform to convert leads into sales. It’s not as easy as checking out a competitor’s platform and seeing what features they have. There are also a ton of things happening ‘under the hood’ of the system that can’t be seen from just looking at the front-end of a system.
Spending time developing this platform in-house and determining what to include can distract you from focusing on your actual business.
Build your own online marketplace platform outsource via agency
Completely customize your online marketplace platform
Similar to building your own online marketplace platform in-house by outsourcing the work to an agency you can integrate your dream marketplace features list and the vision that you had in mind. This is a marketplace that is completely customized to exactly what you want with less limitations than if you were to rely on PaaS solutions.
You can focus on how you’re going to grow and develop the business while the developers worry about the technical side of building the online marketplace platform.
Launch your online marketplace platform faster than in-house
The developer agency can also build the online marketplace platform faster than if you were to build it in-house. However, while they can build it faster, you’re still at the mercy of their timelines. Their agency will most likely have other clients and projects that they’re working on at the same time which can delay things. Therefore this can still be a slow process compared to PaaS solutions.
Online marketplace platform can become obsolete VERY quickly
Since software becomes obsolete very quickly, you will need to continually tweak your online marketplace software to compete with other marketplaces which can be very expensive. Also, as you get data from customers who use your platform, you’ll want to make updates to the online marketplace platform to improve the user experience. It can also be very time consuming to research the various agencies that can provide these services and in the end there is still no guarantee that the work will be what you want it to be.
Project could go out of the initial scope of work as you update online marketplace platform features
Another thing to take into consideration is that it’s not usually a “one and done” cost when hiring agencies to develop your online marketplace platform. This isn’t a permanent solution that will suit your needs for several years. You will need to continually spend money in order to update the online marketplace platform and most agencies don’t work on retainer, and if they do, the cost can be out of reach for many.
Also, if things go outside of the scope of work that was outlined in the beginning of the project, then you run the risk of going way over budget. This happens a lot and it can leave business owners feeling frustrated, stressed and powerless.
Launch your online marketplace platform slower than PaaS solutions
While, an agency of developers can build an online marketplace platform faster than in-house, you’re still at the mercy of the agency’s own timelines, where they may have other clients and projects that they’re working on at the same time. Therefore timelines can still get pushed and this can still be a very slow process compared to PaaS.
Buy a PaaS (platform as a service) solution
PaaS solutions have many benefits which is why they have grown in popularity recently, but it’s important to keep in mind that not all PaaS solutions are created equally.
PaaS solutions will launch your online marketplace platform faster
Depending on the PaaS solution you choose you can enjoy a quick ramp up time to get your online marketplace platform launched into the market. If you decide to use MarketBox specifically, then it doesn’t take very long to adopt the features for your specific marketplace to give you a custom feel that is right for your business.
A good PaaS solution company will provide you with a lot of support to walk you through the process of getting set up. Again, this varies by company, but if you choose the right PaaS solution company then your marketplace will be up and running as quickly as possible.
PaaS solutions are less expensive than building your own online marketplace platform
Another reason a PaaS solution can be better than other options when you’re building your online service marketplace is that you can predict the costs you will face from day one. There are no costs that can come up as a surprise due to a developer issue, where they end up doing work that is out of the initial scope of work they quoted.
Pay on a monthly basis with no large upfront cost to be concerned about.
Typically when you use a PaaS solution you will pay on a monthly basis, so the cost is spread out and manageable, you know exactly what to expect. There is also no large upfront cost to be concerned about.
Also, hosting costs are something you won’t have to worry about if you choose to use a PaaS solution. Again, do your research to consider price ranges across different PaaS solution companies to see which one gives you the most value when combined with the level of features and customization that will work for your business.
PaaS solutions are less risky than building your own online marketplace platform
Another appealing aspect of using a PaaS solution is that it is low risk. These services usually don’t require a long term commitment which means you can try it out for a while and see how it fits your business. If the PaaS solution isn’t working well for your business needs then you can simply stop using it and try a different company’s solution.
If you decide your marketplace idea isn’t working and you need to pause and regroup, then this is another way to have less strings attached. Keep in mind, that the level of risk will vary between companies. Choose a company that provides great service and that you can trust.
With PaaS solutions you don’t have to worry about data security and system downtime
Having less to worry about when you’re running a business is always better because it allows you to focus on growing the actual business. If you choose a PaaS solution, another thing you don’t have to worry about is data security which helps to ensure your customers feel like their personal data is safe.
Additionally, the potential for downtime is also something you won’t have to worry about if you opt for a PaaS solution versus building your own platform. Keep in mind that PaaS solutions vary between companies and some may not have the same level of data security or prevent system downtime as others do.
PaaS solutions will improve the online marketplace platform software for you
Since software is constantly being improved, purchasing a PaaS solution is also beneficial because improving the software will be the responsibility of the PaaS company you choose to use. You won’t have to worry about hiring developers to do maintenance of the software and make software updates regularly. This will save you time and money in the long run. You can typically also put in feature requests.
There’s a difference between saying you invest in new features, and actually doing it!
Do your research to find out which PaaS companies heavily invest in new features and system improvements, as this will vary by company. Make sure to ask them to give examples of features they’ve released in the last 6 months. There’s a difference between saying you invest in new features, and actually doing it!
PaaS solutions allow you to customize the online marketplace platform for your business
While using a PaaS solution may not have customization features as flexible as building your own online marketplace platform, there are still ways to customize that will give you a lot of the features and personalization that you want. PaaS solutions are usually always evolving and improving their marketplace features list as well. Remember to do your research, some PaaS solutions are more customizable than others. At MarketBox for example, we listen to our customers and are constantly adding new features for customization.
Most PaaS solutions may not fit your business perfectly
Not all PaaS solutions on the market today will perfectly integrate or suit your business needs. But if you do your research and can find one that it a good fit, there are many reasons to try it out. PaaS solutions are becoming more sophisticated in how they integrate into your business and are offering more features for you and your customers.
For example, MarketBox allows you to customize the most critical parts of our software, including the e-commerce booking flow. It’s like having your own custom software, without the long wait time and hefty price tag. It’s a comprehensive all-in-one solution available and can also easily integrate into other software solutions. Remember, every PaaS company varies, so be sure to research to see which company will be able to fit your business the best.
Most PaaS solutions are not user friendly for clients and service providers
Online marketplace platforms can be difficult to use depending on which one you choose. The software can be confusing, and not very user friendly for clients to navigate. The platforms can also have bugs, or make it hard to log back in and book subsequent services. As a result, some of these leads never convert into sales because customers get frustrated and go off platform.
Remember, it’s not just about the sale...the entire process of rescheduling, making additional bookings all need to happen on the software. Sometimes, a company that specializes in this type of software will have seen enough data and platforms to know how to convert more leads into sales and to build a product that will get customers to continuously use the site.
For example, MarketBox has a seamless and easy to use online marketplace platform for suppliers and customers, to keep customers on the platform without difficulties. Consider that every PaaS company is different and there are options that will be more user friendly than others.
Ready to get started?
As we have discussed in this post, deciding whether you should build or buy your online marketplace platform is an important decision. There are many pros and cons to consider so weighing all of these options carefully is going to be the key to your success.