5 Key Questions to Ask When Building Your Marketplace or On-Demand Platform

Claire Murdough
June 7, 2016
Minuten Lesedauer
5 Key Questions to Ask When Building Your Marketplace or On-Demand Platform
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Some of the most wildly successful startups grew from the seedling of a marketplace or on-demand platform model. Amazon is now valued at $240 billion. After being rejected by 7 investors, AirBnb is currently worth over $25 million. Uber set the pace for on-demand ridesharing and continues to set new precedents for the gig economy. Instacart reworked and scaled an entire industry.

What do they have in common? It's simpler than you might think. At one point, they all had to answer questions as basic as: How can we plan to build it? What technology stack will we use? Once it’s built, how do we plan to attract audience(s)? How will we cater effectively to each party once they do visit? Further, how will we cater well enough to keep them coming back in a way that doesn’t throw supply and demand off-kilter? 

Building a marketplace or on-demand platform requires a delta of decisions. But amid the churning chaos, there remain a few constants to think about as you take on the challenge. These are considerations that every marketplace or on-demand service – from Etsy to Instacart – have encountered and answered.

5 Key Questions to Ask When Building Your Marketplace

Before we get started, understand that this list assumes you’ve gone through the process of choosing your database host. That in itself is a detailed process and could fill a volume of posts. But let us know if you’d be interested in seeing more information on things like that. We’re happy to go into detail there in another post. Now onto the questions.

1) How will you safely process transactions?

Payments are the crux of any marketplace platform. They support the financials of your business, they enable your audience(s) to complete necessary agreements that loop them into your service, and they position your company for growth. And with (presumably) thousands of payment transactions processed between buyers and sellers or you and buyers or sellers, you need a dependable way to process them safely and securely. Ideally, while also offering an exceptional user experience to your customers. 

For those who choose to build their own payments processor (very few people), there’s a mountain of compliances to meet and technology to build. For those seeking to integrate a third-party payment processor (most people), you have a small army of options to consider. Let’s focus on third-party payment processors for this post. 

Two of the big payment processing competitors are Stripe and Braintree. While there are some differences between the two, both are considered to be developer-friendly and reliable options. They also both cater well to the marketplace or on-demand service model.


Stripe, for instance, has an excellent campaign around how they serve marketplaces. They’ve even branded their marketplace service under the name “Connect,” which you can see here.  As Stripe puts it, they’re “Everything marketplaces and platforms need to get users paid.”

Stripe is appealing to modern markets as it’s become synonymous with smart and powerful payment processing. Companies like SquareSpace, Instacart, DoorDash, Lyft, Kickstarter, and Shopify are just a few of their customers.


Braintree is another popular option. They, too, have a campaign specifically aimed at marketplaces which you can see here. Similar to Stripe, Braintree allows you to integrate payments into your application and it caters heavily to developer-friendliness. In Braintree’s words, “We make it easy to pay and get paid through your unique marketplace.” For those unaware, Braintree was acquired by the payments processor giant, PayPal, in 2013.

When assessing a payments processor, you’ll want to look at what the integration looks like, how easy or difficult it will be for your customers to use, whether or not they have the proper compliances (like PCI), what protections they have fraud against fraudulent purchasing, their pricing, their fees, and all that good stuff. 

A few other things to keep in mind when assessing your payment processor are:

  • Are you considered a higher-risk marketplace? Not every payment processor covers every compliance requirement for higher-risk marketplaces. You may need to search for a processor that accepts high-risk companies.
  • What currencies do you plan to process? Location, exchange rates, and localized protections are a top concern for international businesses.
  • Will your target users recognize the payment processor's name with good feelings? Though both Stripe and Braintree are familiar names in tech industries or among developers, they may not be recognized by consumers. That’s where PayPal’s (an old name in the industry) acquisition of Braintree might be a pro for your company. Conversely, if you’re a marketplace catering to an extremely tech-savvy audience, Stripe’s innovative reputation may be the more appealing brand name.

Keep in mind that choosing a payments processor isn’t always a “one or the other” decision. Lyft uses both PayPal and Stripe.

2) How will you facilitate contracts or agreements?

Every marketplace has hundreds (if not thousands) of touch points that require a legally-binding signature to complete agreements. 

For example, there are W-9 forms you may need filled when hiring contractors or vendors. Or there may be purchase contracts that need to be created and signed directly between sellers of services or products and their buyers. Investor tax forms between investors and your marketplace or platform might be yet another example. That short list doesn’t even include normal day-to-day company paperwork like employee onboarding or sales contracts you’ll need signed for your business operations. 

And while it’s OK enough to get one or two documents signed using traditional signing methods, completing big bundles of paper agreements by printing and scanning and faxing isn’t efficient or scalable. 

Legally-binding electronic eSignatures are the best solution for marketplaces who want to grow their platform. When documents are embedded into your site, the entire signing experience becomes seamless for your users or customers, reducing friction and time to revenue. 

Instacart, a personal shopping marketplace, uses eSignatures to onboard new customers onto their platform. This eliminates the paper portion of paperwork (think printing, signing, scanning, filing, etc.) and embeds the signing process into the online flow of their application. 

Beyond making it easier for customers to complete necessary contracts, eSignatures have helped Instacart become the business they are today.

This is a favorite quote from Max Mullen, co-founder of Instacart:

“If we couldn’t collect eSignatures we couldn’t be in this business. It would just be too cumbersome at scale.”

Here’s more information about how Instacart is using the Dropbox Sign API to grow.

3) How will you successfully onboard your sellers and/or providers?

Most sellers and providers have a more difficult time adapting to marketplace models compared to buyers or consumers. The imbalance makes sense. Much of the population is intimately familiar with making purchases or consuming goods using web and mobile apps. A study by Burson-Marsteller shared that  “86.5 million Americans (42% of the adult population) have used an on-demand service.”

Independent sellers or providers, on the other hand, aren’t quite so well-versed in how to sell their product or service. For example, sellers of an item on Amazon may have a harder time understanding how to do things like write compelling product descriptions or take appealing pictures of their product. 

The challenge of onboarding suppliers or sellers is one that’s faced by all marketplaces, and ignored by some. But those who are aware enough to build supplier onboarding into their marketplace strategy have an advantage. 

ThreadFlip – now a partner of the Le Tote marketplace – is a good example of a marketplace who learned about supplier onboarding the hard way and adapted based on their learnings:

“[We] shifted our strategy when we saw a dramatic difference between our buyer and seller net promoter scores. Sellers clearly needed more support. In response, we built dashboards to track how much money top sellers have been bringing in over the last 7, 30 and 90 days.” Source

The Etsy marketplace is another example of a company heavily invested in a great onboarding system for sellers on their platform. They’ve created a seller’s manual, improved the onboarding flow on their website, and created a comprehensive seller onboarding program. This program includes resources for how to best name your store to attract clients, tips for writing product copy, and more.

Other ways to improve your onboarding experience include providing onboarding videos, offering starter guides, and creating onboarding “buddy programs” – where current sellers are incentivized to team up with new suppliers and help them get through the first steps. 

To see real life examples, you can take a look at the onboarding flow of Shopify and Etsy here.

4) What will attract the right people to your marketplace?

A primary (and obvious) goal of a marketplace or on-demand service platform is to generate enough revenue to sustain and grow the platform. That is, of course, easier said than done. 

It’s absolutely crucial to understand – early on – what value you can realistically provide to your audience(s). In other words, what’s going to keep the right people coming back to your marketplace over another option? How will you get relevant audiences to recognize your brand as one of unique or “worthy” value? 

Is it by creating a high-level of trust with your consumers or sellers? Is it by offering the proper channels to the highest quality products? Is it, as Uber started out with, a price point lower than the existing market competitor (taxis in that instance)? 

If you’re stuck, providing reliability in any of the services mentioned in sections 1 through 3 is a good place to start. Bigger thinking like this encourages you to address how you’ll position yourself as the better solution when compared to a competitor or existing solution. 

Here's an example. Etsy positioned itself as “More than a marketplace,” choosing instead to focus on the mission to  “reimagine commerce in ways that build a more fulfilling and lasting world.”

Keep in mind, simply attracting people isn’t enough. You’ll need to consider which types of people you need most at any given time. If you attract only sellers and no buyers, you’ll be left with frustrated sellers and an empty marketplace. Alternatively, a marketplace filled with buyers and few sellers may increase demand, but also increase buyer’s frustration with the lack of supply.

5) How will you invest in innovation without eliminating yourself as the necessary facilitator of your service?

Another driver of marketplace or on-demand service models is to create a better, faster, or easier experience for buyers, sellers, and – in many cases – both. The goal, however, shouldn’t be reached at the risk of you becoming a disposable piece of your own puzzle.

It’s essential to keep both parties interested by providing unique value over time. If to do this, you fail to create a sustainable model.

Some of the most successful marketplaces have fallen prey to this. Most of you are probably familiar with an often cited victim: Homejoy. Homejoy’s original model connected home cleaning professionals to those seeking cleaning services. 

Their platform created an easier, faster way to introduce two parties to one another. They achieved their initial aim of solving the market pain point of sourcing reliable cleaning professionals. But there was a critical chink in their armor. Once customers seeking services were connected with service providers, they could both easily take their relationship offline. Homejoy, the original middleman and facilitator, was all too easily cut out. 

If that seems all too avoidable for your marketplace, remember that this is not an isolated example. Dozens of marketplaces have fallen prey to the very same challenge. It’s essential to think about how you’ll invest in value to your platform (through things like integrations).

Simple doesn’t mean easy

If these questions seem basic or simple, keep in mind that everyone from the Ubers to the Amazons have confronted and answered these questions. Further, simple doesn’t always mean easy. To address and answer foundational questions early in the process means to avoid confusion and lost energy later on down the road. 

If you're interested in learning more about how to integrate the eSignature portion of a marketplace into your business, visit our marketplace page that shares how you can integrate eSignatures into your platform or have a look at our documentation.

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