How to create a Service Marketplace in 2023
Building a service marketplace can be a great opportunity for entrepreneurs, here is the why and how.
Service marketplaces are all the rage these days, providing us with a better way to access the service economy. These marketplaces are going beyond simply connecting us with freelancers and private individuals who offer their services and are now entering more complex industries and services. This makes the need for trust even higher. One of the most important aspects of these marketplaces is creating a seamless and cohesive customer experience, while also providing value for both the suppliers and the demand side.
For those of us using these services, it can feel a bit overwhelming with so many options at our fingertips. But it’s also exciting - like walking into a candy store and seeing all the different flavours. This all started with the digital transformation of services and has brought us to an era of service marketplaces.
What Is a Service Marketplace?
In case you’re still not sure what a service marketplace is, it's essentially a website or app where you can buy and sell services. It’s a place where freelancers, private individuals, or companies in various industries can advertise their services and get hired by people who need their help.
The most successful service marketplaces cater to a specific market and redefine how we manage our lives.
The most successful service marketplaces cater to a specific market and have redefined how we manage our lives. For example, services like Upwork and Fiverr have changed how companies find freelancers for gigs, while also making remote work more accessible to millions of people worldwide. Uber and Airbnb have disrupted how we travel, created more jobs for gig workers, and given homeowners a way to earn extra cash on the side. You can even find country-based marketplaces like YesBoss.no or ones that focus on specific services like Mayple, which is for marketing services globally.
How the service marketplace business model works
So how do service marketplace entrepreneurs make money? Many marketplace business models are suitable for service platforms. The most popular models include commissions, membership or subscription fees, listing fees, lead fees, freemium, and featured listings and ads.
Marketplaces like Fiverr and Upwork, for instance, make money by taking a percentage out of each transaction that happens on their website, known as a commission. It’s an effective monetization strategy and the most common revenue model for service marketplaces.
Key features
First up, user profiles. These are key for building trust and credibility - both buyers and sellers want to know they’re dealing with a real person. Make sure you have fields for things like descriptions, testimonials, certifications, and pics - these will all help sellers build a reputable brand on your platform.
Consider listings and searchability. Depending on what services you’re offering, your listings will look different. But whatever the case, make sure buyers can easily search and filter through them. You want to make it easy for them to find what they’re looking for.
Bookings are another thing to think about. No matter what kind of service is being offered, a solid booking management system is essential for your marketplace’s success. Providers need the ability to control their availability and workflow. Check out Upwork and Fiverr - they let users decline gigs or turn them off to prevent unexpected bookings.
Then there are payments. This is a crucial factor that’ll determine how successful your service marketplace will be. Your site will usually take a commission from each transaction and pay the seller after deducting it. So make sure you set up a transaction flow that’s as seamless as possible.
The last one is Reviews. These build trust and are essential to making sure everyone feels safe on your platform. You, as the marketplace’s owner, can use feedback to kick off any users who aren’t playing nice and are harming other users’ trust. So be sure to keep an eye on this!
Examples of Service Marketplaces
Here are some of the most well-known and successful marketplaces:
Upwork is one of the biggest service marketplaces for freelancers. You can use it to find writers, designers, web developers, and more.
Mayple: Marketing only related services. You can use it to delegate most of your marketing services to an expert from the platform. Candidates are strictly vetted and monitored in terms of their results
Talkspace is an online therapy portal. You can use it to connect with a therapist who matches your needs instantly. The marketplace makes mental health care more convenient, accessible, and affordable.
Fiverr: Similar to Upwork, but used to be a cheaper option and suited better for smaller projects
Why Should You Create a Service Marketplace?
Did you know that in the USA, for example, the consumer service economy is worth a mind-blowing $9.7 trillion? There’s so much potential for anyone wanting to get into the service industry game.
If getting a slice of that pie isn’t enough to tempt you, here are some of the top benefits of creating a service marketplace.
No need to be a professional: You just have to attract sellers and buyers, you don’t need to do the actual work of providing the service. This means you can create a site for something like personal training even if you’re not a professional trainer.
Easy to build: There are plenty of marketplace software providers that can help you launch your website quickly and easily. Check out Sharetribe, Shopify with Multi-Vendor Marketplace Extension, and Arcadier, Marketsy.
Could be more profitable than e-commerce: Services don’t involve shipping and inventory like physical goods, which means fewer costs and more $$ for you and your sellers.
Beat the competition with a narrow focus on services: Successful service marketplaces like Upwork and Thumbtack are popular because they make finding and buying services faster and cheaper, at the same moment they do a super wide variety of services, which is harder to vet and check. By creating a service focused on a narrower niche, you can outmatch your competitors.
What is the plan, step by step?
Idea validation
MVP - build Minimum Viable Product
Improve based on customers' feedback
1) Idea validation
Try to spot marketplace ideas by analyzing the services you encounter at work or in your free time. Look for
fragmented markets
inefficiencies
underused assets
services where you can add a layer of trust
2) Build Minimum Viable Product
When creating a product, it's important to learn from your customers constantly. To get started quickly, focus on the core features of your service marketplace and test them in real life.
Your MVP should have the essential functionality that users love, but nothing more. You don’t want to waste time and money on anything that's not essential in the beginning. Instead, use your resources to market your platform, learn from your users, and grow your business.
There are different ways to develop a marketplace website.
Sharetribe is a popular marketplace software that has all the necessary functionality you need to get started quickly.
Fleexy team offers Marketsy, a ready-to-go solution for services marketplaces that can be infinitely expanded as you grow.
Kreezalid also offers a service marketplace option, although their process may not be as straightforward as other providers.
it is possible to set up a marketplace with a website builder like WordPress
3) Improve based on customers' feedback
If you want your service marketplace to succeed, the first step is to get your idea out there as quickly as possible. But as your business grows, you’ll learn more about your users and what they need. You might find they’d appreciate additional features that are tailored to their specific needs.
The best way to understand your users is to offer them something to use and ask for their feedback. From there, you can add powerful, customized features to your service marketplace that can boost customer lifetime, prevent platform leakage, and grow your business.
It’s important to be able to adapt to changes so you can make strategic decisions that grow your brand, platform, and user base in the right direction. Choosing the wrong technologies in the beginning can cause issues, so it’s important to pick something that allows for growth, like Marketsy. By embracing the process of building, learning, and improving, you will be able to take your service marketplace to the next level.
Conclusion
Building a service marketplace can be a great opportunity for entrepreneurs. By focusing on the essential features, choosing the right technology, and adapting to changes as the business grows, anyone can create a successful marketplace. Whether using popular marketplace software or building a custom solution, getting started quickly and learning from real users is crucial. With the right approach, building a service marketplace has never been easier.