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Karol Andruszków
Karol is a serial entrepreneur who has successfully founded 4 startup companies. With over 11 years of experience in Banking, Financial, IT and eCommerce sector, Karol has provided expert advice to more than 500 companies across 15 countries, including Poland, the USA, the UK, and Portugal.

How to Build a Successful Marketplace Business

2025 payment trends in ecommerce
Online marketplaces keep expanding in size and reach. Platforms such as Amazon, Etsy, Upwork, Fiverr, Airbnb, and BlaBlaCar show how powerful this model can be. In fact, recent industry forecasts suggest that marketplaces are now the fastest-growing retail channel worldwide. At the same time, more consumers are open to reselling goods, renting out assets, or offering services through these platforms.

But building a marketplace is not simple. Unlike a single-sided store, you must serve two groups at once: buyers and sellers. Both must see clear value before transactions take off. Success depends on proving a real need, designing a smooth experience for both sides, and scaling trust and safety as the platform grows.

This guide will walk you through the process step by step. We will cover how to validate your idea, reach product-market fit, and expand. You will also see where many marketplaces fail, and how to avoid those mistakes.

Validating the Marketplace Idea and Finding Product-Market Fit

A marketplace must solve a real problem for both sides: sellers and buyers. A strong idea usually addresses a pain point that affects both, targets a large enough market, works in a fragmented industry with many independent providers, and creates conditions for repeat usage.

The first step is not writing code but talking to people. Interview potential sellers and buyers to check if the problem you identified is real. Ask how they solve it today and whether they would try a new solution. These conversations often reveal insights that save months of wasted work. At Ulan Software, we have seen founders avoid major mistakes by validating assumptions this way.

Small, low-cost experiments are the next step. For example, you can set up a landing page that describes your service and track how many people sign up. Or you can manually connect one seller with one buyer and watch where the process breaks down. These simple trials expose the practical challenges and confirm if there is genuine demand and supply.

Most breakout marketplaces start small before expanding. They often limit themselves to a single city or product category to make liquidity achievable. Airbnb, for instance, focused on short-term stays during one event before scaling worldwide. Narrow scope gives you enough activity in one place to reach traction.

What you should avoid is scaling too early. A 2024 study found that startups which expanded without confirming product-market fit were far more likely to fail. The effect was more than three times stronger for two-sided platforms compared to other startups. Blitzscaling without strong user satisfaction usually leads to collapse.

Instead, focus on steady iteration with early users and wait for clear signs of traction. These are completed transactions, repeat usage, and positive feedback. 

Building the MVP and Launching Marketplace

Once you validate the concept, the next step is building the Minimum Viable Product (MVP). For marketplaces, this is sometimes called a Minimum Viable Platform because it must serve two groups at once. The goal is not to build everything at once but to create the smallest version that allows real transactions.

For a product marketplace, this often includes user profiles, product listings, search and browsing, a cart or booking system, and payments. For a services marketplace, it usually means provider profiles with reviews, job postings, messaging or scheduling, and a secure way to handle payments. These features cover the basics of trust, discovery, and exchange. Anything beyond that can wait.

While the MVP is simple, it must also feel usable and safe. Users rarely return to a platform that looks clumsy or makes transactions hard to complete. Design matters here. Keep the layout clean, make sure the experience works well on mobile, and reduce the number of steps needed to list or purchase. A small platform can still succeed if the experience is clear, fast, and reliable.

At Ulan Software, we’ve seen early platforms succeed with surprisingly manual processes behind the scenes. Founders sometimes approve listings by hand or handle payments through simple integrations at first. What matters most at this stage is proving that buyers and sellers can connect and complete a deal without friction. 


Acquiring Users and Balancing Supply & Demand

The hardest stage of building a marketplace is reaching liquidity. Buyers won’t join if there’s nothing to buy, and sellers won’t stay if there are no buyers. This “chicken-and-egg” problem is the main reason most platforms fail.

Focus on Supply First

In most markets, supply is harder to secure than demand. That’s why many founders start there. Uber recruited drivers and guaranteed earnings before riders showed up. Airbnb went door-to-door in New York to sign up hosts and even helped them create listings. OpenTable signed restaurants by personally installing booking terminals.

You can use the same approach on a smaller scale. Reach out directly to sellers in your niche and onboard them one by one. If it’s a peer-to-peer marketplace, ask local boutiques or collectors to list items. If it’s for services, convince a small group of freelancers to test the platform as early members.

Incentivize Early Users

Marketplaces often start by lowering or removing fees to attract the first wave. As one founder shared on one forum
"Stop charging for leads. Offer ‘free leads for life’ to any professional who signs up in the next 90 days. Once you have a critical mass, then start bringing in customers. After you have steady demand, begin charging new pros a small fee and upsell premium listings to existing pros."

This model is common: subsidize one side early, then monetize later. Uber guaranteed driver income. Other marketplaces offered free or discounted transactions until liquidity took hold. Another founder noted on Reddit that a 13–15% commission “is within normal range,” but you may need to start lower if your supply side is fee-sensitive.

Leverage Social Proof and Small Networks

Your first sellers can help attract buyers. Encourage them to invite loyal customers, perhaps with referral bonuses or discounts. This “supply drives demand” loop is powerful. Grubhub grew this way, as restaurants referred patrons to order through the app.

Still, don’t rely only on sellers to bring demand. Marketplace experts suggest that at least half of transactions should come from the platform’s own organic usage, not just seller referrals. Below that, your network effects may be weak; above that, sellers may feel you’re only a tool, not a marketplace.

Stoking Buyer Demand

Once you have a baseline of supply, bring in buyers. Early tactics often don’t scale: handing out flyers, attending meetups, or cold emailing. Paid ads can help, but many founders warn against spending too early.

As one founder shared on Reddit about his home-improvement marketplace: 
Paying for Google Ads brought homeowners, but many left because there weren’t enough pros. It wasted money.

A smarter approach is to launch in tight geographies or categories. Concentrate demand where supply exists.

Be Hands-On

In the early days, founders often act as chief matchmakers. If a buyer can’t find what they need, step in manually. If a seller isn’t getting traction, promote their listing or ask for feedback.

A Reddit user recommended The Cold Start Problem by Andrew Chen to understand how much hustle this stage takes. Every network effect business endured this grind before scale kicked in.

Monitor the Balance

Track the ratio of supply to demand. Too many sellers with no sales leads to churn; too many buyers with no options leads to drop-offs. Use waitlists or invite-only access if needed to control balance. Liquidity should be your north star: measure what percentage of listings convert, and what percentage of searches end in purchases.

One founder summed it up: 
Until you get a professional actually getting good leads from your app, you’re gonna have a hard time. But after the first one, you can start advertising stats – e.g., that 60% of leads convert to customers – even if it’s just a handful of transactions.

This reflects the principle of quality over quantity. Nail the early experience for a small group, then use those stats to convince the next wave of users.

The Grind Stage

Acquiring users for a marketplace requires grassroots hustle, smart incentives, and constant tuning of the supply-demand balance. It’s the most painful stage, but once you pass it, network effects begin. Each new user adds more value to the system, and that’s when you can move into true scaling. 

Monetization Strategies for Marketplaces

Every marketplace eventually needs to generate revenue. The challenge is finding a model that fits both user expectations and the stage of your business. In 2024–2025, founders and investors focus less on “growth at all costs” and more on sustainable monetization and unit economics.

Common Marketplace Business Models

Most successful marketplaces use one or more of the following models:

Commission fees (transaction fees). The most common approach is taking a percentage of each transaction. This model scales with Gross Merchandise Value (GMV) and feels fair to users since they pay only when they get value. Decisions here include whether to charge the supply side, demand side, or both.

In our recent article "Top Marketplace Models Explained" we wrote about typical comisison fees on top markeptlaces.

Listing fees. Sellers pay to list products or services regardless of sales. Craigslist charges small fees for job posts or apartment rentals. Listing fees can discourage spam, but they may also deter supply. Many platforms that started this way later shifted to commissions once transaction volume grew.

Subscription or membership. Users pay a recurring fee to access the marketplace or unlock benefits. eBay offers store subscriptions for power sellers; Fiverr Pro charges freelancers for more bids; some B2B marketplaces charge buyers to access curated suppliers. Subscriptions can provide steady income, but the paying side must get enough value in return.

Lead generation fees. Platforms charge for customer inquiries rather than completed transactions. HomeAdvisor, for example, charges contractors per lead. This model can be profitable but risky if leads are poor quality. Some marketplaces combine a small fee per lead with a success fee when it converts.

Freemium and upgrades. Basic usage is free, while premium features cost extra. Examples include featured listings (Etsy promoted posts), analytics tools, or add-on services like insurance. This model lets most users join at no cost while monetizing power users.

Advertising and data monetization. At scale, some marketplaces sell ads or aggregated insights. Job boards, for instance, may sell market data to recruiters. This requires careful handling of privacy and trust. Ads can distract from transactions, so timing and execution matter.

Many platforms mix models. eBay charges both listing and success fees. Others combine commissions with subscriptions, offering perks for serious sellers.

Timing: When to Monetize Marketplace

Early on, focus on liquidity and growth rather than maximizing revenue. Many marketplaces launch with free or discounted fees to attract users, then introduce charges once value is clear. Uber and Lyft, for instance, subsidized rides and drivers for years before moving toward profitability.

Transparency is key. If you plan to waive fees at first, say so: “Beta program – no fees for six months.” Another tactic is rewarding early adopters with lasting perks. One Reddit founder shared: 
Stop charging for leads. Offer ‘free leads for life’ to any professional who signs up in the next 90 days. Once you have a critical mass of professionals, then start bringing in customers. After you have steady demand, you can begin charging new pros a small fee and upsell premium listings to existing pros.

This creates urgency and rewards pioneers, while giving you flexibility to monetize later.

Still, don’t delay testing your model too long. Run revenue simulations early: if you charge 10% commission, will lifetime revenue per user exceed acquisition costs? If not, adjust pricing before scaling. 

Which Side Pays?

Deciding who pays (supply, demand, or both) is strategic. Sellers often accept fees if they earn money through the platform. Buyers may tolerate service fees if they see clear value (escrow, insurance, fraud protection).

If sellers are scarce, reduce or waive their fees. If buyers hesitate, remove surcharges on them and charge sellers instead. Some marketplaces split fees between both sides, which makes costs feel lighter. Whatever you choose, keep it transparent.

Preventing Off-Platform Deals

High fees increase the risk of disintermediation—users arranging transactions outside the platform. To counter this, make on-platform transactions more valuable. Offer benefits such as secure payments, reputation scores, or insurance. Some platforms mask contact info until booking, or remind users of terms if they try to share details. Ultimately, a fair fee paired with clear value is the best defense.

Iterate and Adjust

Many marketplaces change their monetization model at least once. You might begin with commissions, then add subscriptions for stable income, or drop lead fees if they cause churn. Experiment with A/B testing different fee structures and ask users for feedback.
As one founder advised on Reddit:

Do a solid financial plan. Figure out how much revenue you need to be sustainable. Don’t set the % too low or people won’t respect the platform. Sometimes a mix works best: a modest commission plus a recurring charge for heavy users.

Advice on Scaling Operations and Technology 

Once your marketplace reaches product–market fit and revenue starts flowing, the challenge shifts to scaling. Growth now means more than just servers. You must expand your user base, enter new markets, and ensure that both operations and technology can handle greater volume. Scaling also requires stronger support, moderation, onboarding, and sometimes a shift in overall strategy.

1. Scale Market by Market

Resist the urge to “go national” too fast. The most effective approach is to expand one step at a time—city by city, or category by category. For example, an equipment rental marketplace that dominates in California might next expand to Texas.

A freelancer platform with traction among web developers could branch into graphic design. Each new market is almost like launching a mini-startup. Allocate resources for local community management and tailored marketing to ensure liquidity before moving to the next location.

2. Invest in Technology Infrastructure

As transactions grow, reliability and speed become critical. Cloud services make it easier to scale servers, databases, and content delivery networks. But if you started on a no-code or off-the-shelf system, watch for signs of strain-limited customization or slow load times.

At that point, you may need to transition to a custom platform. Focus on:

  • Search and matching. More listings mean better algorithms are needed to keep results relevant. AI can improve search ranking and recommendations.
  • Performance. Even small delays push users away. Optimize site speed, implement caching, and consider native mobile apps.
  • APIs and integrations. Build APIs early for payments, analytics, and third-party tools. Many marketplaces eventually enable partners or developers to build on their ecosystem.
  • Architecture. Some teams move from a monolithic system to microservices, enabling faster, independent feature development. Combine this with modern practices like CI/CD, Kubernetes, and automated monitoring to manage scale with a lean team.


3. Optimize and Automate Operations

Growth increases complexity. You’ll face more support requests, disputes, and content to moderate. Processes that worked at 100 users will fail at 100,000.

  • Customer support. Move from founder-led replies to a dedicated support team. Provide FAQs, self-service guides, and chatbots for common issues.
  • User onboarding. Automate flows for new sellers or providers. Offer dashboards that walk them through setup. For top contributors, add VIP support or account managers.
  • Quality control. Manual review won’t scale. Build moderation tools, add community reporting, and use AI filters to flag fraud or harmful content. Many marketplaces invest in a dedicated Trust & Safety team at this stage.
  • Payments and finance. As volume grows, fraud detection, chargeback reserves, and tax compliance become vital. Consider more advanced payment solutions and bring in financial leadership.


4. Double Down on Data

Analytics become essential at scale. Track funnel metrics, retention cohorts, and liquidity ratios (e.g., how many searches lead to purchases). Identify where buyers or sellers drop off and adjust flows.

AI can enhance both operations and user experience. Personalized recommendations, automated categorization, and fraud detection are common applications. A 2024 cross-border payments report found AI to be the top innovation merchants expect to improve marketplace performance, from personalization to real-time fraud detection.

5. Grow the Team and Culture

Scaling requires new roles:

  • Community managers to nurture specific categories or cities.
  • Trust & Safety leads to keep the platform secure.
  • Marketing teams to expand SEO, content, and ad campaigns.
  • Operations managers to oversee onboarding, disputes, and workflows.
  • Engineering and product staff to keep building, while maintaining user focus.

Culture matters as much as roles. A company that began with close user contact should preserve that responsiveness. Train new staff to carry forward the early ethos.

At Ulan Software, we advise keeping founders visible in user communications during growth. It signals continuity and builds trust, even as staff numbers multiply.

6. Funding and Partnerships

Expansion often requires capital. Strong PMF signals, growth metrics, and proof of monetization will help secure funding. But beware of premature scaling under investor pressure. Sustainable unit economics matter more than growth at any cost.

Partnerships can accelerate scaling. Logistics providers can improve fulfillment for product marketplaces. Technology partners can enable integrations. Zoom, for example, scaled its ecosystem by launching an app marketplace. Look for similar opportunities in your domain.

One B2B marketplace we worked with partnered with a logistics provider, which cut delivery times by apporximitely 17% and directly boosted repeat purchases.

7. Local vs. Global Network Effects

Understand the type of network effects you’re building. Ridesharing platforms rely on local effects—supply and demand must meet in each city. Freelance marketplaces like Upwork tap into global effects, where anyone can work with anyone across borders.

Local models scale city by city. Global models require broader investments in localization, language support, payments, and regulatory compliance (e.g., GDPR in Europe). Airbnb illustrates the hybrid case: it needed enough hosts in each city (local) but also built a global brand.

8. Maintain Quality and Trust

At scale, service quality cannot be left to chance. Monitor ratings, refund rates, and complaint trends. If these decline, tighten onboarding, add education, or strengthen vetting.

A reputation hit (such as a viral scam) can derail growth. In 2025, “responsible scaling” is a priority for investors, regulators, and users alike. Systems that protect trust are not optional; they are central to sustaining growth. 

How to handle legal, trust, and safety challenges

Marketplaces sit in the middle of many human interactions. That position creates real legal duties and high user expectations. In 2025–2026, people choose platforms they feel are safe and fair. If trust slips, growth stalls, no matter how strong the idea.

Start trust work on day one

Trust isn’t a toggle. It’s a program that spans verification, reputation, payments, privacy, and moderation. Simple checks (email and phone) help, but higher-risk categories often need ID or background checks. When we added verified badges for sellers on a client platform, buyer conversion rose by 18%. Ratings and reviews should tie to verified transactions, with guardrails against fake activity and a path for new sellers to earn trust.

Payments must run through the platform with clear protection. Escrow or delayed payouts reduce fraud and calm disputes. A basic “payment protection” policy lifted repeat purchases by 12% for one marketplace we support. Treat data with the same care: follow GDPR where relevant, encrypt sensitive fields, and collect only what you need.

Set rules users can believe in

Clear community guidelines reduce conflict. Ban illegal or misleading listings, define how disputes are handled, and explain consequences. Automation can flag most issues; humans should handle nuance. In practice, AI caught about 80% of prohibited listings for one client, while a small moderator team resolved edge cases and appeals.

Keep pace with the law, not behind it

Rules differ by category and country. Short-term rentals face local housing codes. Ride-hailing touches transport law. Freelance platforms must watch worker classification. If you handle money, expect AML and KYC obligations, sales tax or VAT collection, and income reporting (e.g., US $600 seller reporting). The EU’s DSA also raises the bar on content removal and transparency—build reporting and takedown flows before you expand.

Don’t wait to build a safety engine

Scale brings more good actors and more abuse. After one marketplace crossed 10,000 sellers, fraudulent listing attempts tripled. Adding stronger KYC and better signals reduced fraud by 70%.

Have playbooks for incidents: payment fraud, data leaks, user harm, PR crises. Educate users in-product: keep conversations on platform, never pay off-platform, check reviews before meeting. Simple prompts reduce avoidable loss.

People still make the difference

Tools are not enough. A small Trust & Safety team pays for itself in avoided churn. Community managers defuse disputes early. Founders staying visible during growth sends a strong cue: the platform still listens. In our benchmarks, marketplaces that invested early in trust measures retained 20–30% more users over the long term.

Keep deals on-platform and worth it

Users will try to bypass fees if on-platform value feels thin. Make staying worth it: safer payments, reputation that compounds, easier refunds, and insurance where it matters. Mask contact details until booking, and remind users of risks when they attempt to share them. Fair, transparent fees paired with clear value is the best deterrent.

Key Takeaways

Building a marketplace in 2025–2026 is demanding, but the rewards are real. Success comes from getting the fundamentals right. Prove there’s a genuine need, launch a simple MVP that works, break through the cold start with persistence, choose a monetization model that fits, and scale carefully while keeping trust intact.

Marketplaces often take longer to gain traction than other startups, but once network effects kick in, growth compounds fast. That’s why the early choices you make about users, features, fees, and safety - matter so much.

The most successful founders stay flexible. They learn from other platforms, borrow playbooks from both wins and failures, and adapt to new technology and shifting consumer behavior. If you apply the lessons outlined here with focus and consistency, you give your idea a real chance to become the kind of marketplace people rely on every day. 
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