Essential Features for a Thriving Online Marketplace

Note: We've updated this article in March 2023!

Not all marketplaces are created equal. Some succeed in attracting and retaining users, while others struggle to survive. What makes the difference?

Having product-market fit and a viable go-to-market strategy is crucial, but it isn’t everything. If your platform doesn’t offer your buyers and sellers a convenient way to connect and exchange goods or services, they’ll go to your competitors instead.

Whether you are planning to launch a new marketplace or improve an existing one, these features will help you create a platform that delivers value, satisfaction, and growth for your users and your business:

This article is part of our series on starting an online marketplace business. If you need additional information related to this article, please contact us.

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We organized these features into 3 broad categories:


Essential features for buyers

Powerful product discovery

Product discovery is a cornerstone of a successful online marketplace. It’s not enough to have the right products on the platform - you must ensure your customers can easily find what they’re looking for without spending too much time searching.

So, while advanced search capabilities are important, product discovery also includes personal recommendations and tailored suggestions to surface the right products to your users at the right time. Additionally, incorporating ratings and reviews into your marketplace allows your customers to make informed purchasing decisions, fostering trust and confidence in the platform.

An intuitive product discovery experience not only improves customer satisfaction, but also drives engagement and repeat business, making your marketplace a go-to destination for buyers.

Streamlined cart and checkout flow

The checkout flow directly affects your platform’s conversion rates and customer satisfaction, and therefore is vital to the success of your marketplace.

There are two aspects to a streamlined checkout flow: the functionality and the user experience.

From the functionality perspective, you’ll want to make sure the payment gateways and shipping methods you offer are relevant to your target market. Features like cash on delivery, combined shipping, or cryptocurrency payments may be crucial for one industry, but completely useless for a different one. Remember - different regions, industries, and market segments may have different preferences when it comes to the payment and shipping process.

From the UX perspective, you’ll want to ensure a frictionless purchase experience no matter what target market you’re catering to. A user-friendly interface simplifies the checkout process, minimizes cart abandonment, and makes it easier for your customers to complete their transactions, boosting sales and cultivating cultivates customer loyalty.

Reliable order processing and tracking

Depending on your business model, it can be up to your platform or your vendors (or both) to process your customer’s order and get it dispatched and delivered to their doorstep. In any case, it’s in your best interest to make sure the customer gets their product as soon as possible, and that the experience is smooth no matter what happens in transit.

To make this possible, you want to ensure the products are dispatched swiftly and accurately, your customers are provided with tracking numbers and real-time updates, and there is a way for them to communicate with the seller in case any issues or delays arise. And because they will inevitably arise no matter how good your marketplace is, you want your platform to be capable of handling returns and refunds easily and effortlessly to ensure the best possible buyer experience and reduce disputes and complaints.

Mobile-friendly user interface

Mobile commerce will account for 43.4% of total retail ecommerce sales in 2023, up from 41.8% in 2022, according to some estimates. With more and more people shopping via their mobile devices, you need to ensure that your marketplace adapts to different screen sizes and resolutions. While you don’t necessarily need a separate mobile app for your marketplace, at the very least you need a platform that’s responsive, intuitive, and fast-loading on the most popular devices, especially when it comes to the checkout process.


Essential features for sellers

Quick and easy seller onboarding

You want new sellers to be able to join your marketplace with minimal hassle and start selling right away. This means offering a simple and clear signup process that asks only for the most relevant information and verifies the seller’s identity and credentials as quickly as possible (if KYC is needed).

Ideally, you want to guide your new sellers through the first steps of setting up their store, listing products, and managing orders. Additionally, you want to offer support and resources to help the sellers understand your platform’s policies, fees, and best practices. This will help attract more sellers to your platform, reduce dropout rates, and increase seller satisfaction.

Product catalog management

While it’s important for sellers to be able to easily create product listings with images, descriptions, prices, and inventory levels, there’s more to catalog management than that. It also means being able to apply discounts and promotions, optimize product listings for search engines and discoverability by customers using tags, keywords, and categories, and keep the product catalog up to date.

You’ll also want to provide your sellers with a way to synchronize their product catalog with external platforms they might be selling on, such as Amazon, Shopify, Etsy, or others, to avoid duplication and inconsistency. All of this will help your sellers showcase their products effectively and increase their visibility, driving new sales and ultimately new revenue for your marketplace.

Order management and logistics

If you want your platform to provide a satisfying customer experience, you want your sellers to be able to manage and fulfill orders quickly and handle any issues that may arise as efficiently as possible.

This means providing sellers with order tracking, inventory management, fulfillment integration, and returns management features, which allow them to monitor the status of their orders and identify errors in the fulfillment process, manage their stock levels across multiple channels, connect with third-party fulfillment providers, and handle customer returns and exchanges in a hassle-free manner.

Analytics and reporting for sellers

Successful sellers are key to a successful marketplace platform. And to make sure your sellers can optimize their performance and profitability, you want to provide them with analytics and reporting tools.

Some of the core analytics features may include sales and inventory analytics to allow sellers to track their revenue, orders, stock levels, and inventory costs, identify their best-selling products, avoid stockouts, and optimize their inventory turnover ratio.

More advanced analytics may include customer analytics to help sellers understand their customer behavior and preferences, competitor analytics to gain insights into their competitive strengths and weaknesses, and advertising analytics to allow sellers to measure the effectiveness of their advertising campaigns on your marketplace platform.


Marketplace-wide and administrative features

General marketplace management tools

These are the administrative features that allow the marketplace staff to manage various aspects of the platform, such as vendors, customers, orders, payments, fees, reports, and other areas.

Some of the essential ones here are things like the activity overview or dashboard that helps staff monitor the KPIs of the platform, notifications and alerts to make it easier to keep track of the key platform activities, and a catalog moderation system to review and approve or reject products submitted by vendors thus ensuring quality and consistency and preventing fraudulent or inappropriate listings.

Quality assurance and seller performance features

It’s in your best interest to attract, retain, motivate and reward sellers who provide high-quality products and services on your marketplace platform.

You can use internal seller ratings and conduct quality checks to monitor the quality and reliability of your sellers based on various criteria and ensure your sellers comply with the platform’s standards and policies regarding product quality, authenticity, safety, and other factors.

To incentivize your best sellers, you can use a tiered system of benefits and privileges based on seller performance metrics and provide top sellers with lower fees and higher visibility, as well as gamify the experience by rewarding sellers with points or badges for completing certain actions or reaching certain milestones.

Sales and marketing tools for growth

The more traffic, leads, and sales your sellers receive, the more successful your marketplace business gets, so it’s essential to have a set of tools at your disposal to create and execute effective campaigns, optimize conversions, and measure results.

A few broad categories of sales and marketing features are tools to create marketplace-wide or seller-specific promotional campaigns to attract new customers like discounts, coupons, bundles, flash sales, and others, advertising tools that allow sellers to increase their visibility on the platform, such as featured products, sponsored listings, or banner ads, and analytics and reporting tools to make it easier to track and measure the performance of your platform, sellers, and customers.

Tools for messaging and communication

Facilitating interactions and exchanges between the marketplace operator, the sellers, and the customers makes life easier for all parties by providing support, feedback, and guidance to both sellers and customers, as well as enabling sellers and customers to communicate with each other regarding specific orders, products, or services.

Depending on the size of your business, you may consider implementing some of these features internally (like basic private messaging) and creating integrations with third-party tools like CRMs and social media conversation platforms for advanced communication features.

Tax management tools

Tax regulations and obligations can be pretty complicated for a marketplace platform, especially if you operate across different jurisdictions and countries, so it’s essential to have tools that help you calculate, collect, report, and remit taxes on behalf of your platform, sellers, and customers.

Some of the most helpful tax management tools for a marketplace include tax calculators that help determine the correct amount of tax to charge based on various factors, tax collection tools that make it easier to collect taxes from customers at checkout, tax reporting tools to generate and file tax returns and comply with different tax regulations, and tax remittance tools to pay taxes to the appropriate authorities.


We hope this article has given you some insights into the features you might need to create a thriving online marketplace.

But keep in mind that running a successful marketplace isn’t just about the features. If you're looking for more information about creating your own marketplace platform, check out our Guide to Building an Online Marketplace Business.

Martin Boss

Martin Boss

I'm the founder of MultiMerch and a marketplace ecommerce enthusiast.