One of the most critical decisions you’ll face when embarking on the journey of building an online marketplace, is selecting the right technology stack. This choice is often a balancing act, with each option presenting its own set of challenges and considerations.

In this post we will touch on:

  • the pros and cons of the two main tech approaches to marketplace development 
  • whether you should use different technology for different stages of marketplace evolution 
  • how assumptions affect tech choices 
  • the main building blocks of a custom marketplace
  • whether AI can help design a marketplace tech stack
  • Confirmation bias in software selection

The Balancing Act: Turnkey vs Custom Marketplace Solutions

Challenge number one is usually whether to go DIY with a no-code or low-code turnkey solution or commit to a custom development process in partnership with a software agency. Each of these approaches have pros and cons that need to be weighed up against each other.

No-code/low-code turnkey solutions offer speed (rapid development and deployment), relatively lower upfront cost, and accessibility (they require less technical expertise to get started). These advantages are offset by a number of downsides. The most common of which include lack of flexibility (i.e. not suited to all user flows and business models), lack of scalability (as your marketplace grows, these solutions might struggle to keep up), and lack of extensibility (limited options to add new capabilities or functionality such as APIs). 

For an in-depth analysis of all the major pitfalls of using an off-the-shelf turnkey solution for your marketplace project, have a look at our blog post, 6 ways turnkey software solutions can kill your marketplace startup.

Custom development, on the other hand, allows you to pick and choose which technologies you want to use to build your marketplace platform. This neatly counters all the downsides of turnkey solutions: flexibility to use technology best suited to your business model and user flows, scalable technology that is designed to grow with your business needs, and unlimited extensibility to add features and functionality that best suit your users.

Another important advantage of a custom tech stack, which is often overlooked, is its strong support for a product-focussed development process such as the Lean Startup Method. This Build-Measure-Learn Loop – a combination of hypothesis-driven experimentation, iterative product releases, and validated learning – can significantly increase your chances of success.

However, like all good things, implementation of a custom tech stack can be quite resource thirsty. In terms of time, development takes longer, which can delay your go-to-market deadline. Budget-wise, it requires a higher initial investment. And you will need the requisite expertise, i.e. a team with the necessary technical and business model skills.

Tech Stacks for Every Stage of Marketplace Evolution

It’s important to point out at this stage, that choosing a tech stack for your marketplace is not necessarily a zero-sum game. In many instances it does make sense to use different technologies for the various phases that your marketplace project will traverse.

Product-solution fit: Prioritising speed and affordability

A low-fidelity MVP (minimum viable product) can be a valuable tool in the early stages of developing an online marketplace.  By creating a simple prototype, landing page, or mockup, you can test core assumptions about your target market and if they are interested in the problem you’re solving before investing heavily in development. This helps ensure you’re on the right track and limits your chances of heading down an expensive rabbit hole.

Popular technology options include WordPress, Magento, and Sharetribe.

Product-market fit: Balancing flexibility and agility

High-fidelity MVPs are useful tools for validating product-market fit. They allow testing of usability, business and revenue models, and iterating based on user feedback. Custom marketplace development is best suited for high-fidelity MVPs due to its flexibility for unique user flows and features. That includes the ability to test core functionality and features without the one-size-fits all clutter of turnkey solutions, which can obfuscate user feedback signals.

Popular technology choices include Node.js/Express, React, MongoDB and Stripe.

Scaling your online marketplace

At this stage high-performance and security are paramount. Marketplaces at the growth stage are best served by technologies like cloud-native architectures and microservices. Microservices not only allow for flexible scaling (the ability to adjust resources for individual features), but also makes large enterprise applications more resilient to failure. That means, even if one microservice fails, the whole application won’t crash.

We cover some more key aspects of building a scalable marketplace infrastructure – automation, flexibility, efficiency – in this post: 5 ways to set your marketplace infrastructure up for scalable growth

Future-proofing your marketplace platform

Whatever stage your marketplace is at, it’s important to balance current needs (and resources) with potential growth. Some ways to navigate this challenge include:

  • Modular Architecture: Choose a tech stack that allows you to add or modify features without overhauling the entire system.
  • Scalable Technologies: Opt for technologies known for their scalability, such as cloud services that can adjust resources based on demand.
  • Community and Support: Consider the community and support around a technology. A strong community can be a rich resource for problem-solving and hiring talent. If you chose custom software, your development partner should offer structured support that includes close collaboration and easy communication.
  • Performance Benchmarks: Evaluate technologies against performance benchmarks relevant to your marketplace’s needs.
  • Continuous Evaluation: Technology evolves rapidly. Regularly assess your tech stack to ensure it still aligns with your business goals and industry standards. A good development partner should assist you in this.

Assumptions Matter: Aligning Tech with Your Vision

For online marketplaces, selecting the appropriate technology stack is akin to a chess grandmaster choosing the opening moves that will dictate the entire game. There are some key assumptions that play a pivotal role in technology selection. It is critical to map each one to the most suitable technology.

Target Audience: Who are you serving and what are their needs?

The cornerstone of any successful marketplace is a deep understanding of its target audience. 

Take Etsy, for example, a thriving online marketplace for handmade goods.  Etsy’s core demographic skews towards creative individuals who value a user-friendly platform for showcasing and selling their crafts.  Consequently, Etsy’s tech stack prioritises intuitive UI/UX frameworks like React, allowing for a seamless user experience that caters to both vendors and buyers.  

In contrast, a B2B marketplace for industrial supplies might prioritise back-end technologies like powerful databases (e.g. PostgreSQL) to handle complex product catalogues and integrate seamlessly with existing enterprise resource planning (ERP) systems used by its corporate clientele.

Business Model: How will you generate revenue?

The chosen tech stack must also align with the intended revenue streams. For instance, a marketplace like Airbnb, which relies on transaction fees levied on bookings, would prioritise secure payment gateways like Stripe to facilitate seamless financial transactions.

On the other hand, early-stage subscription-based marketplaces like United Pet Care (connects per owners with vets) and Shippo (a shipping marketplace) will want to experiment with different pricing models, which often have to support multiple currencies. They will want to make pricing changes quickly and avoid complex billing logic and compliance hurdles. ChargeBee, an easy-to-implement recurring billing application, solves this by offering seamless integration with payment gateways and other applications such as CRMs and accounting software.

What data security and privacy requirements do you have?

In today’s data-driven world, robust security and privacy measures are paramount for online marketplaces.  This necessitates the selection of technologies that prioritise data encryption and user authentication.  For instance, a healthcare marketplace handling sensitive patient data might opt for secure back-end technologies like Java, known for its robust security features.  Additionally, strict adherence to data privacy regulations like the General Data Protection Regulation (GDPR) in Europe is crucial to maintain user trust and avoid hefty fines.

Fortunately there’s been an explosion in dedicated security applications that integrate with marketplace platforms. PerimeterX is a behaviour-based bot management solution that protects websites, mobile applications and APIs from automated attacks. Forter provides real-time fraud prevention solutions to ecommerce platforms, while Sift offers end-to-end protection for customer journeys from login to checkout.

You can learn about building trust in your marketplace with compliance and anti-fraud mechanisms here.

Will your marketplace need to integrate with other systems?

Most online marketplaces don’t exist in isolation.  They may need to connect with external systems for various reasons.  For example, marketplaces that facilitate payments between buyers and sellers will have to integrate with payment processing platforms like Stripe Connect to streamline invoicing and other aspects of the payment processes.

To ensure seamless data flow and functionality, the tech stack should be built with integration capabilities in mind.  API (Application Programming Interface) compatibility with relevant third-party systems is a key factor to consider during the selection process. Don’t forget that integration capabilities also include the ability of your development team to execute the integration. This is especially true of a complex system like Stripe Connect for marketplace payments.

Building Blocks of a Custom Marketplace

A short summary of the most popular tried and tested tech stack for custom marketplace development would include:

  • Front-end Technologies: UI/UX frameworks (React, Angular), Content Management Systems (CMS) and APIs.
  • Back-end Technologies: Programming languages (Python, Java, Node.js), Databases (MySQL, PostgreSQL).
  • Cloud Providers: AWS, Azure, Google Cloud Platform.
  • Other Essential Tools: Payment gateways (Stripe, PayPal), search and analytics platforms.

For a more comprehensive breakdown of custom marketplace technology you can check out this list. It conveniently analyses each software option in terms of its use cases, marketplace benefits, popularity, and identifies some major platforms that use it.

Tech Genie or Pandora’s Box? Can AI help design your marketplace tech stack?

AI-powered tools are emerging that can help with tech stack selection. However, these solutions have limitations. They obviously have a limited understanding of your business, since there is no discovery process. As yet, AI can’t fully grasp your unique business goals and user challenges.

There are also ethical considerations with regards to Data Privacy. You should carefully evaluate the data privacy practices of any AI-driven solutions you utilise.

Beware Confirmation Bias in Software Selection

Confirmation bias occurs when people tend to seek, interpret, and remember information in a way that confirms their pre-existing beliefs or hypotheses. In software development, confirmation bias can lead founders or product owners to overlook valuable feedback or user requirements.

This is best illustrated by a description of two types of founders. Founder one, a sales and marketing guru, stubbornly went it alone and built an art marketplace with Magento, a turnkey ecommerce platform builder. This turned out to be a bad decision as Magento did not offer enough flexibility to support their concept’s user and business flows. The whole platform had to be rebuilt with custom software.

In contrast, founder number two, who wanted to build a carbon credit marketplace, is a technical type who was comfortable mapping use cases to technology, with commensurate results. This resulted in a custom approach that better served users from the start.

Selection is just the start of your Marketplace Tech Stack

Evaluating and choosing the most suitable technology for your marketplace concept is only the beginning of the process. marketplace tech stack is just the start. Your tech stack should evolve with your marketplace, which includes ongoing maintenance and optimisation. A good marketplace development partner should be able to offer a seamless transition from technology selection to maintenance and optimisation.