How to Build an Online Services Marketplace

Global village, ocean of talent, or the universe of opportunities — however you want to call it, we’re sailing away from the physical world toward the digital. People shop on mcommerce platforms, consume digital goods, and work and communicate on mobile devices. The digital shift is palpable, and the demand for online services is at an all-time high.

Building an online services marketplace can be an inspiring business opportunity, letting you tap into an increasing number of markets.

person buying goods and services online
Guide to Building an Online Services Marketplace

What Is an Online Services Marketplace?

As a business owner, you’ve probably used talent sourcing platforms such as Upwork or Fiverr for hiring. You’ve called for an Uber for your commute or booked an apartment at Airbnb.

But online services can also be pretty much anything where the product is a service. You can sell online fitness lessons, live meditation sessions, or product management courses.

How services marketplaces work

In an online services marketplace, service providers list their offerings. Buyers browse the app and hire a service provider to get things done. The marketplace charges commission (either from the seller or buyer or both) to facilitate the service delivery.

Online services marketplaces bring service seekers and providers closer.
Online services marketplaces bring service seekers and providers closer.


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Why Build an Online Services Marketplace in 2021?

In 2019, consumers spent close to $10 trillion on services, but only 7% of the services have been digitized, according to the Bureau of Economic Analysis. And while the pandemic has driven a lot of the services spending down in 2020, ecommerce and digitally delivered services grew to change the status quo moving forward.

The pandemic increased the demand for service digitization. People look for online classes, coaching sessions, and online on-demand services online. Also, as the economy is bouncing back, people are expected to spend more on services like travel, hospitality, and food delivery.

Share of the service sector will see the biggest spike in terms of consumer spending. Source: Delloite

Even workplaces are adopting hybrid work models with gig workers as an important part of their workforce. In 2020, on-demand services and the gig economy saw a 33% growth rate — much more than the US economy itself. COVID-19 and The Great Resignation have spurred the need for online services marketplaces.

Here are some of the benefits of an online services marketplace app:

Little inventory required: No inventory or stock is required for operating a service marketplace. You earn commissions on every successful service order fulfilled by service providers.

Types of Online Services Marketplace Apps

an online services marketplace is one of many types of marketplace apps out there. And just like ecommerce marketplace apps, service marketplace apps are evolving with time. 

Services marketplaces evolve in complexity and customer value. Source: Andrew Chen

The marketplace business model is perfect for digitizing the consumer service industry. It allows entrepreneurs to scale operations faster without investing a lot in inventory or backend operations.

Here are some common types of online services marketplaces:

Various on-demand marketplace apps

On-demand apps offer the convenience of getting (and paying for) specific services directly within an app. You can order groceries, rent a car, or book personal health services. According to CBInsights, 23 out of 310 companies valued at over $1bn (unicorn club) belong to the on-demand marketplace segment.

taskrabbit screenshot
On TaskRabbit you can hire help for general errands. Source: Play Store

Some popular on-demand online services marketplaces include TaskRabbit, Thumbtack, and Urban Company.

Fitness and healthcare marketplace apps 

Fitness and healthcare marketplace apps have revolutionized the wellness industry. A fitness marketplace app helps people adopt a healthy lifestyle. A fitness marketplace gives users direct on-demand access to professional trainers, nutrition experts, and doctors.

Such marketplace apps play a crucial role in forming healthy habits and maintaining an active lifestyle.

WeStrive helps people stay connected to a personal trainer of their choice. Source: Play Store

WeStrive, a fitness marketplace app, gives users access to a personal trainer for a monthly subscription fee.

Coach.Me is a habit-building marketplace
Coach.Me is a habit-building marketplace that brings coaches and users together while sharing fitness activities and tips. Source: Play Store

Edtech service marketplace apps

Edtech marketplace apps let coaches, teachers, and experts sell courses to a global audience. The marketplace groups courses into categories and gets a small commission every time a learner joins a course.

Anyone can launch and sell their expertise as a course on Teachable. Source: Teachable

Edtech marketplace platforms like Teachable allow private teachers, subject experts to launch their courses and programs easily.

Freelance services marketplace apps

Freelancing apps like Upwork and Fiverr are some of the best examples of an online services marketplace. Millions of freelancers and business owners interact with each other to complete projects and get work done.

Today, there’s a niche marketplace app for every kind of specialized professional service. Businesses enjoy the benefits of on-demand talent support, whenever required. Professionals (whether individuals or agencies) can connect with companies and get paid for their services.

Hyperlocal delivery and aggregator marketplaces

Cab hailing services, delivery startups, and food delivery services all come under aggregator marketplace apps. They build a network of service providers locally or regionally and provide doorstep services to the end consumers. 

UberEats, Zomato, Lyft, BlaBlaCar, and Instacart are all great examples of aggregator apps that offer taxi rides, food deliveries, grocery supplies via a mobile app.

Developing an Online Services Marketplace

Building an online services marketplace is an opportunity to tap into a growing remote services delivery market. As the demand for online services grows, so can the popularity of niche online services.

Here’s what to do to build a services marketplace app: 

#1. Research and discover a problem to solve 

The success of any business depends on a single factor — finding a problem that needs solving.

You need to discover a niche where there are readily available providers ready to help people. You should ideally build a service marketplace that has all or some of the following capabilities: 

  • Saves time: Where do people waste the most time every day? Can there be a service that utilizes the resources that are already out there to help people save time? 
  • Increases trust: Can you help people delegate some of their critical jobs to third-parties and still maintain utmost security? 
  • Offers convenience: Is there any activity or problem that’s hard to tackle for an average person? Can you make the problem-solving process smoother? 
  • Reduces cost: What service is costly in a region? Can an app that facilitates contact between users and professionals bring down the cost of a service?
  • Brings experts to a single platform: Is there any area of a consumer’s life that experts in a niche can improve? Can you bring these experts together and make it easy for users to get in touch with them?

#2. Plan your development journey

Because there’s always the risk your marketplace won’t get enough traction, you should always opt for an MVP instead of investing in a full-fledged mobile marketplace. For example, maybe to start connecting experts with customers, including features that make that contact easy will be enough to properly validate the idea. However, you don’t even have to build an MVP to check if there’s a need for a specific service.

If you choose to develop an MVP, make sure to:

  • Pick and choose the features that will solve pain points of all end-users 
  • Build the first version and ship it fast. But don’t compromise on quality 
  • Create a continuous user feedback loop to make your app better with every iteration

An MVP will help you validate the market demand and refine your concept without wasting resources.

gymondo
Gymondo built an MVP to validate the market demand before full-scale development. Source: Nomtek

Gymondo launched their MVP quickly on iOS and Android before investing in developing a big scope. Early market validation with the MVP helped the app cross over a million downloads on Android. Soon after release, Gymondo also became one of the top 10 sports apps in Germany. 

A large part of the success was the team’s willingness to quickly build and launch an MVP and iterate based on user feedback.

Example features of an online services marketplace

sample list of features for an online services marketplace app

Building a mobile application is a complex process: besides features, you also need designs, a business plan, and emplyees to manage operations.

FAQs — Online Services Marketplace

What is the business model of an online service marketplace?

An online services marketplace generally charges commission from service providers on a successful sale. Some platforms even charge a commission from the end-users. Paid subscriptions and membership fees are also viable revenue streams for a services marketplace.

What are the top online services marketplaces out there?

There are millions of service marketplaces out there. Some of the most popular online service marketplaces are Upwork and Fiverr. Uber, Instacart, and Lyft are some other service marketplaces that have been disrupting hyperlocal service ecosystems. 

What features should an online services marketplace have?

Any online service marketplace should have features for service seekers and providers. Seekers need personalized suggestions, search filters, an online payment facility, and live tracking of orders. Service providers look for features that will help them grow their online sales. Customized listings, promotional coupon codes, personal profiles, and earnings dashboards are some of the features that can attract service providers. 

How to promote an online services marketplace?

The best way to start promoting an online services marketplace is to build a community of people experiencing a problem your marketplace solves. By evangelizing the problem, it’ll be easier for both consumers and service providers to discover your platform. From there you can start promoting your marketplace by offering exclusive coupon codes to service seekers. You can also launch a referral program or promise zero commission on the first few orders for providers (or to members of your community).

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