How to Build a Marketplace Quickly and On Budget

Strategy & Best Practices

How to Build a Marketplace Quickly and On Budget

By Rebecca Muhlenkort / August 23, 2024

Today, software companies are increasingly recognizing the value of creating online marketplaces. These platforms can significantly enhance customer experience by offering a wide range of first but also third-party solutions that integrate seamlessly with their core products. However, building and maintaining a B2B marketplace is no small feat.

This blog explores the key challenges and how leveraging specialized marketplace development platforms can streamline this complex process, making companies more competitive. You'll also discover Alteryx perspective on their path to creating their own add-on marketplace.

Why partner marketplaces matter more than ever

The concept of an add-on marketplace is not new, but its importance has surged in recent years. As businesses seek to provide comprehensive solutions to their customers, having an ecosystem of compatible add-ons has become essential. These marketplaces enable software companies to offer additional functionality to their customers without having to develop every feature in-house. This drives innovation and expands the product's value proposition, ultimately creating stickier customers.

US B2B e-commerce will reach an estimated $3 trillion by 2027. -Forrester

Buy vs. build? The biggest challenges in building a marketplace

The challenge is that creating a robust add-on marketplace to support your partner ecosystem, can be extremely complex. It demands significant resources, technical expertise, and strategic foresight, making it a daunting task.

1. Drain on internal resources-Creating a marketplace from scratch requires a substantial investment of time, money, and human resources. The development process involves designing a user-friendly interface, ensuring robust security measures, and building a backend that can handle transactions and integrations with third-party applications. For many companies, this can mean dedicating entire teams to the project for several months, if not years.

Alteryx, a global leader in the analytics space, is an example of a company that recognized the immense challenge of building a custom marketplace in-house. Megan Harron, Head of Alteryx Marketplace, noted that transitioning from their community-powered tool and workflow gallery to a full-scale marketplace would have required a team of over ten people and significant funding to achieve their goals.

2. Monetization and transaction management-One of the core purposes of a marketplace is to facilitate transactions, yet integrating secure and efficient payment systems can be particularly challenging. To monetize, companies need to build or adopt systems that support various payment methods, handle currency conversions, and ensure compliance with international financial regulations. In addition, establishing a seamless checkout flow that integrates with the existing community webpage can be complex and time-consuming.

3. Partner and customer management-Managing relationships with partners and customers is another critical aspect. This includes onboarding new partners, verifying their products, and providing continuous support. Additionally, the marketplace must be able to scale with the growing number of partners and products, maintaining performance and reliability.

Alteryx faced this exact issue. Their previous system had a sharing mechanism but lacked the verification and support requirements.

"What's happening is our partners are either offering these add-ons without our help and verification or they aren't offering them at all because they lack the resources to distribute them." -Megan Harron, Head of Alteryx Marketplace

Harron, continues: "Our previous system had a sharing mechanism, but it didn't have any of the verification, support requirements, or transactional pieces we needed for it to scale."

4. Time-to-market-Developing a custom marketplace can take years, during which time the market dynamics can change, and new competitors can emerge. Companies need a solution that allows them to launch quickly and iterate based on user feedback.

Get to market 6x faster

Given these challenges, many software companies are turning to marketplace development platforms, such as the AppDirect platform. These platforms offer pre-built solutions that can be customized to meet specific needs, significantly reducing the time and resources required to launch.

For Alteryx, using AppDirect was a game-changer. Harron managed to build a demo marketplace during the AppDirect free trial period, which she showcased in company-wide meetings. The trial proved so successful that the company decided to move forward with AppDirect, launching their full marketplace six times faster than an in-house build would have taken.

Top benefits of a marketplace platform

• Accelerated marketplace launch-Platforms like AppDirect provide ready-made solutions that can be quickly customized and deployed, allowing companies to get to market faster. This agility is crucial in staying ahead of competitors and meeting customer demands promptly.

• A path to monetization when the time is right-Even if a business isn't ready to monetize its marketplace initially, having built-in monetization features ensures a seamless transition later on. Features might include tools for payment processing, subscription management, and analytics. These will simplify financial operations and ensure secure transactions.

• Scalable-As your marketplace grows, platforms like AppDirect offer scalable solutions that can handle increased traffic, more transactions, and a larger number of partners and products. This scalability ensures that the marketplace remains robust and reliable as it expands.

• Enhanced partner and customer management-These platforms also provide tools for effective partner and customer management, including onboarding tools, product verification, and support features. This helps in maintaining high standards and fostering trust among users and partners.

The right marketplace platform can significantly streamline the process of launching and managing a marketplace, enabling companies to launch faster, monetize effectively when they are ready, and scale efficiently.

What's next?

Interested in learning more about how AppDirect can help you build your own add-on marketplace? Explore the full Alteryx case study or discover other ways your company can increase its market reach.

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