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How To Start An Online Service Marketplace: 6 Steps To Take

You may be wondering how to start an online marketplace. 

Makes sense!

The on-demand talent economy and gig-economy provide customers with more high-quality and convenient service options than ever before, while also providing more streams of income for workers.

It’s never been easier to start and create an online marketplace. 

In this post, we’re going to show you 6 actionable steps you can take to start a service marketplace and the factors you should consider.

Before we dive into how to start an online marketplace, let’s quickly go over what a marketplace is!

What Is A Marketplace?

A marketplace is a general term referring to a space where vendors can oversee the buying and selling of products or services. 

There are a variety of different marketplaces, but today we’ll focus on one subset: The online service marketplace. 

An online service marketplace is an e-commerce platform that facilitates the buying and selling of services between a buyer and service provider.

*In this blog, we’ll be using the terms: marketplace, online service marketplace, and service marketplace interchangeably. 

Here are 6 steps on how to start an online marketplace and what you should consider before launching one:

How To Start An Online Marketplace

Step 1. Choose An Industry For Your Online Marketplace

First, you need to decide what services your marketplace is going to provide.

In other words, choose a niche. 

Some of the most successful marketplaces focus on one thing and do it extremely well.

For example, Thumbtack’s business is connecting homeowners with local contractors. Their niche is the home service industry. 

They’re great at facilitating the service relationship for this specific industry, and it could be argued that this has made them more successful. 

Choosing a niche will help you stay focused on serving a particular market to the highest quality.

Step 2. Find Service Providers For Your Online Marketplace

Once you’ve chosen a niche, it’s time to build supply for your service marketplace business. 

And by supply, we’re talking about service providers. 

Tips on how to find service providers:

  • Determine where people in that particular service space “hang out”.
  • Put yourself in their headspace and do some research to understand where you can find these service providers.
  • Once you find them, spread the word by sharing your service marketplace opportunity.
  • This can help build supply exponentially. 
  • Find ways to incentivize them to join your online service marketplace as a service provider.

Individual workers who don’t already sell online will be easier to convince to join your marketplace, because they want the extra income stream and an added bonus for you is that they will bring along their existing customer base.

Where to find contractors and workers:

  • Trade organizations
  • Social media
  • Adverts or marketplaces like Craigslist
  • Leverage your network

After you find your service providers, read our post on ways you can convince them to join your marketplace.

Step 3. Find Customers For Your Online Marketplace

Let’s say you’ve recruited enough service providers. 

How do you create more demand around your marketplace to get people excited?  

Here are just a few ways to build demand around your service marketplace:

Content Marketing

Creating content like blog posts and e-books (to name a few) is an inbound marketing strategy that helps to educate people who may be looking for information related to your particular service.

The key is to continue to add value through your content.

Eventually, you will have built thought leadership around your industry and be the go-to source for information related to that industry.

Email Marketing

By building an email list of potential customers, you can keep sending them valuable content-like offers, share new service offerings, or direct them to recently published articles on your blog.

Most people check their email at least once/day, keeping the lines of communication open are key to activating existing customers because it keeps your marketplace top of mind.

Check out our blog post on how to make your emails stand out from the crowd.


Many marketplaces also identify as communities.

In these communities, users engage with one another on the marketplace platform.

This form of marketing encourages users on the platform to interact with other users, even if they don’t necessarily intend on buying anything.

By positioning a marketplace as a community and not just another business, it makes potential customers feel like they are a part of something bigger.

Paid Advertising

The benefit of paid advertising is it helps build traffic and boost conversions quickly, as long as you’re targeting a specific audience and have specific goals in mind.

In the early stages, this form of marketing can be used to validate your marketplace idea by running ads to see how many people click through before going all in on an idea.

Step 4. Building A Marketplace Platform vs. Buying One

Once you have determined that...

  • Yes, people want your service
  • Yes, there are many service providers interested in listing on your marketplace

...Then you need to decide if you’re going to:

A) Build your own platform  OR  B) Buy an easy to use platform.

Buy a platform

These days there are many inexpensive options for easy to use platforms and software solutions for service marketplace businesses.

MarketBox for example, has a plug and play option which will get your marketplace launched quickly

Marketplace platforms often include field service management features which make the process seamless for service providers to conduct their business with customers.

Build your own platform

In contrast, building a marketplace from scratch can be expensive and time-consuming.


  • You will need to hire a team of developers to code and create the marketplace.
  • These developers will either need to be a team you hire internally or a team you hire externally.
  • Then, you’ll need to determine what features to build for your platform and how they should be designed for optimized user experience.

Deciding this is important because it’ll affect how quickly you’re able to get your service marketplace up and running.

Step 5. Determine Your Unique Value Proposition For Your Online Marketplace

After finding service providers, you must then find ways to incentivize them to sign up to your marketplace because listing their services with you requires work on their end.

This is heavily tied to your unique value proposition.

Ask yourself:

  • What is the value you are going to add to the space you are trying to service?
  • What can you offer these potential service providers that other service marketplaces cannot?

Do your research: 

  • Researching your competition is the first step in finding ways to stand out and be the top choice for service providers.
  • Learning what you may be able to do better for them, in particular to the service they provide could be key to convincing them to list on your marketplace.

It’s also important to determine your unique value proposition for the customers that will use your marketplace as well.

If there is no value being added from using your marketplace specifically, then your customers will leave the platform, go to another platform or try to take the sale offline.

We’ll dive a little deeper into this topic in another article!

Step 6. Be Patient When Starting An Online Marketplace

Probably one of the most difficult things to do when starting a new business: be patient. 

Marketplaces are unlike other online businesses in the sense that they take more time to grow.

Usually, e-commerce websites take about 6-9 months to show signs of growth.

According to Boris Wertz and Angela Tran Kingyens Guide to Marketplaces, on average it can take marketplaces about three years to gain traction.

Keep monitoring signs of growth like repeat customers and continue to listen to the feedback your customers are giving you to truly understand their pain points.

Continue developing your marketplace based on this feedback.

Ready to get started?

Using these strategies on how to start an online service marketplace will help you create a strong foundation for your service business.

Starting with a vertical will help to focus your business and eventually after validating the idea you can expand to other categories and locations.

Next up, building supply and demand are important factors to stacking your marketplace with high-quality service providers and then getting the attention of potential customers.

Deciding how your service marketplace is going to compete with other marketplaces is also crucial. 

Determining your unique value proposition is the key to knowing how you’re going to set yourself apart and attract mobile workers.

Lastly, being patient and understanding that service marketplace businesses are unlike other online businesses is important.

If you were looking for how to start an online marketplace, we hope you found this article helpful!

What online service marketplace will you start?

Book a demo to see how MarketBox can help you start your service marketplace business.

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