Today, the ability to make a purchase in 1 click means nothing extraordinary. Still, in 1999, it was a sensation. The sensation caused by Jeff Bezos and his website, Amazon, now loved by millions of buyers and suppliers. Six figures of digital transactions, product listings, and new users prove the platform's success and constant growth.
In 2018, Amazon's stock value rose to make the marketplace worth $1 trillion. The store that was started in the garage has become the second company after Apple Inc.
Wondering how to build a multi vendor marketplace like Amazon? In this article, we will cover the main points to take into account when creating a similar e-commerce platform.
Amazon: 25 years of success and counting
The story of the retailer began in 1994 when Jeff Bezos and his ex-wife MacKenzie opened an online bookshop. They ran their business in the garage and three years later, the enterprise grew up to second distribution commerce.
Having started with a single niche, the company later covered multiple categories of goods, from CDs and DVDs to clothing.
In 2004, the e-commerce giant began to expand its boundaries and extended it to China. Today, Amazon has 10+ separate websites worldwide, including localized sites for Australia, Germany, Turkey, and others.
In 2007, Amazon launched mass production of its own electronic book named Kindle.
In 2012, the company bought Kiva Systems, a manufacturer of warehouse robots based in Massachusetts, thus showing that automation is their priority. Delivering products faster became a reality.
In 2019, Amazon has above 600,000 workers onboard, occupies more than 250 million square feet of real estate. The online giant operates in various branches, from books to cloud web services, and believes that the customer is of the highest importance.
Why is Amazon so popular?
Four principles in work
The company follows the main four principles in their work that make the platform trustworthy.
- Customer obsession rather than competitor focus
- Passion for invention
- Commitment to operational excellence
- Long-term thinking.
We have focused like a laser on customer experience, and that really does matter.
- Jeff Bezos
Today, we are wondering: how to build a multi vendor marketplace like Amazon? Such marketplace serves customers both via online and physical shops offering a wide variety of selling items. Thus, more and more shoppers can buy the desired products at a reasonable rate on Amazon.
Like all large companies, the platform analyzes the behavior of its customers and gathers statistics for every user. In such a way, Amazon makes their purchasing experience as smooth as possible.
User-friendly web design
Amazon’s website design is not about innovations and bright colors. First of all, it stands for convenience in use. The company’s focus is to provide maximum value to its visitors and not distract from searching and buying goods.
Here are some approaches that the brand used when building the multi vendor marketplace.
High-quality photos and videos create an atmosphere of presence and real purchase. This way, customers view the desired product from different angles in a native environment.
Detailed descriptions give users over-all information about the product they are interested in. Specifications, item overviews, and key features are of high importance.
- The mobile-friendly approach increases the number of purchases made via smartphones. People find goods on social networks and want to buy them as soon as possible.
Convenient payment methods
Amazon offers its customers multiple payment gateways, thus making their shopping experience even more seamless. The platform works with credit and debit cards, such as Visa, MasterCard, American Express, Discover, Diners Club, and JCB.
Besides, users can make a purchase with the help of gift cards in different denominations that can be used for certain items only.
Amazon.com Store Card and Amazon Prime Store Card are used for most items available on the platform, some physical stores, and for purchasing from sellers who have included these cards as a payment gateway.
With special attention to its customers, Amazon encrypts all their personal, debit/credit card and banking information, thus making all transactions protected and secure.
How does Amazon make money?
Amazon is one of the most profitable companies in the world. According to Statista report, the net revenue growth of this brand has increased from 3.02 bln USD in 2007 to 70 bln USD in Q3 of 2019.
How does Amazon generate such a profit?
The key to success is choosing relevant business models and implementing them properly. Below we have gathered the most widely-used and effective monetization strategies used by Amazon.
Making the largest part of Amazon’s revenue, vendors are the key partners of the platform. The amount charged varies depending on a plan.
This type of income includes the following varieties of fees:
Per-item fees are paid for each item sold. The rate is $0.99 for an individual plan.
Referral fees are charged from vendors on a product sold. This type of fee varies by category.
Shipping fees are collected by the platform depending on the category of an item. Amazon applies shipping rates on media products sold by vendors with the professional plan and to all goods sold by individual sellers.
Closing fees are charged for each media item sold, i.e. books, software, DVDs, computer games, etc.
2.High-volume listing fees
For each ASIN listed on the website, sellers pay $0.005 every month. The online peer to peer marketplace charges those suppliers whose number of items published is above 100,000.
The retailer has a strong advertising policy. With its help, vendors increase their revenue by placing ads of their stores and goods on the platform.
With Amazon Prime subscription, buyers pay $119 per year and get a lot of benefits. For example, they get free 2-days shipping for most of the goods listed on the website, unlimited streaming of movies, and special offers. Besides, the e-commerce platform provides students with discounts for becoming the Amazon Prime member.
The following statistics show the rise in the popularity of this paid service.
Kindle eBooks help to generate profit in two ways. The first one is purchasing its products and content, including Audible. The second one is buying Amazon Prime.
How does it happen? Kindle comes with a free 30-days Amazon Prime trial. So, Kindle owners get used to the service and end up buying it.
6.Amazon web services
At the moment, with Amazon web services being the source of primary income, the company takes one of the leading positions in the cloud market.
As Statista shows, in the 2nd quarter of 2019, AWS generated a profit income of almost $8.4 billion.
How to attract users to a website like Amazon?
A well-structured platform with tons of complex features and relevant monetization strategies is only the first part of Amazon’s success. The second requirement is to attract both sellers and buyers to start the transaction turnover.
This is a common challenge for multi vendor marketplaces like Amazon. It is called the chicken and egg problem because one party cannot exist without the other. Actually, there are a lot of smart ways to solve this issue. We will discuss the ways the well-known company acquired its users.
In terms of attracting sellers, the process was pretty simple. Back in 1995 when the platform launched, there were far fewer online websites working as online stores or e-commerce platforms. Amazon chose the strategy of concentrating on a niche market of books. Zero competition, few sites, word of mouth, and little marketing investments led to acquiring first hundreds of vendors that were more than enough to start.
If you are considering building a multi vendor marketplace like Amazon you should ask yourself a question of how you are going to attract your buyers. Amazon has been implementing different approaches to get new consumers and some of them work through the present. It is much more interesting when it comes to the acquisition of buyers. Let’s take a look at the core techniques to get new buyers and make them stay on the platform.
- Customer service
The e-commerce platform makes customers its top priority. It offers buyers quick delivery, and secure purchase and returns policy.
- Wide variety of selling items
Amazon sells a great number of products in different categories, thus making the shopping experience even more convenient, as there is no need to leave the site where you can buy everything.
- Optimized checkout process
As has already been mentioned, the retailer provides its customers with the ability to make a purchase in 1 click, simplifying the checkout process and saving its users’ time greatly.
- Customer loyalty
Amazon Prime has become a silver bullet for the company, as it greatly increases its clients’ loyalty. Free shipping on dozens of items in only 2 days, special offers, free ebook download, and other opportunities to build trust in the platform.
- Discounts on purchases
Amazon offers discounts on a regular basis. Of course, this strategy is built to get more potential buyers receiving their loyalty. Still, the tactics work.
How to build a multi vendor marketplace like Amazon?
We have discussed the main peculiarities of the retail giant. Now, it is time to dive into the process of building a website like Amazon.
First of all, you need to choose the right technology stack for the future development process. The difference between various programming tools lies in the platform’s performance, web page response time, and website stability. All these factors affect the visitors’ user experience making them stay longer or leave your website.
While building a website like Amazon you should choose the right tech stack which may be quite difficult. Still, it plays an important role in your platform’s success and can greatly reduce your time and money to build a multi vendor marketplace like Amazon.
As a rule, technologies used are divided into two groups: means from the server-side and means from the client-side. At Codica, we recommend you take into account the following tech stack.
The client-side or front-end technologies:
- Hypertext Markup Language (HTML) and Cascading Style Sheets (CSS) point a browser how to show a web page’s content.
The server-side or back-end technologies:
- A programming language and framework are applied to build the basic logic of your marketplace. At Codica, we work with Ruby and Ruby on Rails, respectively. With their help, we build scalable, fast-loading, and secure online platforms. Besides, we also apply automation frameworks such as RSpec and Capybara for testing.
- A database is used to keep the necessary information about your marketplace website. We opt for PostgreSQL (SQL data storage), Redis, and Amazon Web Services (AWS), as they help us develop reliable platforms.
- A server works with requests that come from customers’ devices. When developing an online marketplace, we use Nginx and Puma because they are perfectly combined with Ruby on Rails.
|Tech stack for building a multi-vendor marketplace like Amazon|
|Front-end technologies||Back-end technologies|
|HTML||Programming language and framework||Database||Server|
|CSS||Ruby and Ruby on Rails||PostgreSQL||Nginx|
|Capybara||Amazon Web Services (AWS)|
At Codica, we believe that with the above tech stack, you will surely build a fast-loading, user-friendly, reliable, and secure website like Amazon.
You may also like: How to Build a Website Like Airbnb: Step-by-Step Guide
Core features for a marketplace like Amazon
Marketplace functionality is everything that visitors use on your website to reach their goals and satisfy certain needs. Amazon is a giant marketplace platform with dozens of features, but there is no need to implement everything at the start.
Your e-commerce platform should include the basic functions that will surely make the purchasing process easier and customers’ experience seamless.
What features should you consider when building a multi vendor marketplace like Amazon?
Profiles contain all the necessary information, both about suppliers and buyers. The vendor panel includes specific data, such as shipping and payment methods used by a seller, their product listings, etc.
Buyers’ accounts are mostly about personal information, the ability to view previous orders and wishlist.
The administrator panel is a must-have functionality for the business holder. With its help, the owner of an e-commerce platform customizes settings individually for various groups of suppliers. These settings include shipping and payment methods, fees. The administrator can also manage sellers’ listings, filters, and categories.
Advanced search is a vital feature for any multi vendor marketplace as it makes navigation easier and less time-consuming.
The product page should provide customers with comprehensive information about each selling item. High-quality photos and videos, detailed descriptions make your platform look reliable.
The shopping cart of a multi vendor marketplace like Amazon contains the products chosen. It is the space where a buyer can change the number of goods they want to buy, delete them, view payment methods, shipping prices, etc.
Payment methods allow buyers to purchase via different types of cards and multiple gateways. With a wide array of payment options, you will give your customers the possibility to choose the one that suits them best.
Ratings and reviews help buyers come to well-thought purchasing decisions on multi vendor marketplaces. Besides, the functionality makes your website more trustworthy as you provide users with both products’ and vendors’ ratings.
Wishlist is a strong marketing strategy as this feature allows customers to save products they are likely to buy. When buyers share their wishlists with their friends or family, it sends free traffic to your online marketplace. So, let vendors create extra possibilities to drive engagement to the platform.
Notifications allow both buyers and sellers to reach a certain web page as fast as possible. It works pretty simply: you get a notification, click on it, and immediately shift to a certain page. This way, it greatly boosts user experience and accelerates many processes.
Shipping is a must-have function that helps consumers choose the most relevant and convenient delivery option set by sellers.
Have a great idea of a custom multi-vendor platform? Let’s get in touch to discuss the details.
How much does it cost to build a website like Amazon?
To begin with, Amazon is a complex platform, which took many years to evolve. However, let’s try to get an approximate cost to create a multi vendor marketplace website like Amazon.
We should take into account the required functionality, as well as the rates of the software development provider that will help build your marketplace website.
These are the most significant aspects that will influence the required budget. The table below shows approximately what is the cost to develop an Amazon-like website.
|How much does it cost to build a multi vendor marketplace like Amazon?|
|Features||Time, hours||Cost, $45/hour|
|UX/UI Development||42 hours||$1,890|
|Authorization and Security||72 hours||$3,240|
|User Profiles||42 hours||$1,890|
|Home page||84 hours||$3,780|
|Search and filters||96 hours||$4,320|
|Product page||42 hours||$1,890|
|Reviews & Ratings||48 hours||$2,160|
|Shopping cart||64 hours||$2,880|
|Buyer panel||120 hours||$5,400|
|Vendor panel||230 hours||$10,350|
|Admin panel||164 hours||$7,380|
So, if you are wondering how much does it cost to build a website like Amazon, our rough estimate is a minimum of $49,950. To calculate this number, we used an average hours rate for Eastern European development agencies, which is $45/hour.
Amazon is a perfect example of a successful e-commerce website transformed from a narrow book-selling platform into the complex and most visited marketplace in the US. It would not be easy to build a website like Amazon and repeat the success of the company which has been occupying the market for 25 years.
However, you can still succeed in platform creation and launch. Follow the mentioned above principles and guidelines, then customize your product to make it unique and stand out from the crowd.
Are you looking for an experienced development partner that knows how to build a multi vendor marketplace like Amazon? Codica team has built multiple custom marketplace websites, and we will gladly help to create yours. Check our ready works or contact us to discuss your project.