There is a company N, which sells sporting goods and is in the top 10 on the market with good turnover. As the competition grows, the company realizes it’s time to expand with new categories and brands.
How exactly? This is where the idea comes in – to create your own marketplace. And at this point, most companies make the same mistake, believing that it will be easy. Let’s figure out why this is a wild delusion, and what it takes to launch your own marketplace.
Don’t use an ERP system for development
A few words why most people want to create their own marketplace. It’s simple: it has a lucrative legal framework. The company actually enters into a commission agreement and creates an opportunity to bring the buyer and seller together, expanding the range and not investing in creating its own inventory. And for the seller this is a kind of game, because he has an additional sales channel, the opportunity to increase his brand awareness. But the main role, of course, is given to the platform through which its sales go.
And the key problem faced by companies that already have an established business is the confidence that a full-fledged marketplace can be built on the basis of their ERP system. No, you can’t do that.
When a company, for example a distributor, begins to develop the architecture of its system, the result is to create only a more or less large online store. But this cannot be called a marketplace, since there is no autonomy and scalability. And the main point is that a marketplace is a complex IT platform that must work with a large number of goods in the storefront and process the flow of orders without user intervention in operational processes.
That is, roughly speaking, the order management system (OMS) itself routes the flows (selection of goods, identification of items of goods for specific suppliers, etc.). All processes of the system should be automated: catalog management, loyalty programs, showcase, etc.
These are all architectural tasks that, in principle, cannot be packaged into a distributor’s system. If the company decides to start this process, it may simply break the distribution.
The problem is that such companies cannot work with piece orders and, in general, with goods that do not belong to them. All these are non-standard tasks for them. They try to solve them by hiring third-party “specialists” who, in an incomprehensible way, load goods into the system and try to work with them. But more often than not, everything comes out crooked.
Yes, and in general, there are no complex solutions on the IT market that could cover the functionality associated with the operational activities of the marketplace.
What happens? Instead of a marketplace, a platform appears with a personal account and several managers from the commercial department who try to manually process incoming orders and contact suppliers so that they can deliver everything on time.
And in the end, the company complains about the result, because the expectations do not coincide with reality. We expected a sharp rise in sales, but received no more than 10% of the total turnover. This is all pretty sad. But there is a way out.
Opt for a microservices approach
It is used by large trading platforms.
The essence of the microservice architecture is that each separate function (set of functions) is separated into an independent system. That is, OMS (order management), PIM (product catalog management), billing system, transport system, personal account, loyalty program, warehouse, etc. – all these are separate systems in a single architecture.
The marketplace also includes accounting systems (accounting, treasury, budgeting, etc.), integrating them into a back office, but the entire operational part is completely microservice.
Why? It’s easier to develop and adapt this way. When a company chooses an architectural solution “competition for a card”, then it is then that it becomes a real marketplace.
Even if one seller is indicated on the card, but at the same time architecturally, for example, 10 competing among themselves for leadership is already a marketplace. But the best option would be to provide buyers with the opportunity to immediately select a product according to different parameters: by rating, price, delivery terms, discounts, etc.
And such a core is not embedded in the distributor’s operating system. The maximum depth of their analytics is the actual nomenclature with partial product characteristics. In the case of a marketplace, you need to go deeper below, to the level of a specific delivery of goods from an individual supplier.
If earlier we worked only with the product catalog in the core (for example, we just took several apple 10 models and sold), now we need to take into account specific apple 10 units of the first, second, third supplier, as well as warehouses, barcode numbers, accounting for boxes and their movement, that is, a large number of features and parameters of only one product.
Thus, if a company wants to enter the market with a real marketplace, then it must be created on a microservice platform and become one of its sellers. This will be the correct architectural decision. There is no need to break the current ERP, WMS systems, which are customary to work with in your specific business.
And the most important thing at the beginning of the journey is to get around the rake with incorrect expectations in time and adequately approach the process of creating a platform.
How to get started with a project to launch a marketplace
We start by defining a development strategy, describing processes and building a target architecture. This is necessary to describe the targets, local competitors, system architecture, as well as predict the cost of developing IT solutions.
We understand how to build internal marketplace processes, and have good experience in developing individual systems from scratch. At the exit, when working with a project, close the following tasks:
formation of key automation systems for the marketplace in the “To be” format;
building a general architecture of the marketplace components with the definition of data flow and system load;
a description of the key requirements for the platform and functionality that is needed to automate the marketplace;
formation of key requirements for the infrastructure.
Let’s talk. We will discuss the details of your project, advise on issues of concern and decide on further steps.