How to Build a Marketplace in 2026: Technical & Business Guide

Why Marketplaces Are the Hardest Product to Build

Most software products have one user type. A marketplace has at least two — buyers and sellers — and neither side gets value without the other. This creates a set of interlocking problems that make marketplaces uniquely difficult:

• The chicken-and-egg problem. Buyers will not come without sellers. Sellers will not come without buyers. You need to solve both sides simultaneously or find a creative workaround.
• Trust between strangers. Your platform is the intermediary between people who have never met. Reviews, verification, payment escrow, dispute resolution — these are not nice-to-haves. They are the foundation.
• Payment complexity. You are not just processing payments. You are splitting them — taking a commission, paying the seller, handling refunds, managing subscriptions, dealing with tax implications across jurisdictions.
• Moderation at scale. Every listing, message, and review is user-generated content that could be fraudulent, offensive, or illegal. You need systems to catch problems before they reach your users.
• Unit economics. Your revenue is a percentage of transactions that happen on your platform. If transaction volume is low, or your take rate is too small, the math does not work no matter how good the product is.

Despite all this, marketplaces remain one of the most valuable business models when they work. Airbnb, Uber, Etsy, Upwork — the platforms that solve these problems at scale become category-defining companies.

This guide breaks down the business and technical decisions you need to make to build a marketplace that works.

Key Takeaways

• Marketplaces fail because of the chicken-and-egg problem, not technology
• Budget 8,000–40,000 EUR for an MVP with payments, reviews, and messaging
• Solve the supply side first — manually recruit your first 50–100 sellers
• Payment splitting (Stripe Connect, Mangopay) is the hardest technical piece

Choosing Your Business Model

Your business model determines how you make money and how your incentives align with your users. Get this wrong and everything else falls apart.

Commission Per Transaction

You take a percentage of every transaction that happens on the platform.

• Pros: Aligns your incentive with your users' success. You only make money when they do. Low barrier to entry for sellers.
• Cons: Requires significant transaction volume to be viable. Sellers may try to take transactions off-platform to avoid the fee.
• Typical range: 5-20% depending on the category and value provided.
• Examples: Airbnb (3% host, ~14% guest), Etsy (6.5% transaction fee), Uber (~25%).

Subscription Tiers for Sellers

Sellers pay a monthly or annual fee to list on the platform. Tiers offer different levels of visibility, features, or listing limits.

• Pros: Predictable recurring revenue. No need for high transaction volume to be profitable. Sellers are invested because they are paying upfront.
• Cons: Higher barrier to entry — sellers need to believe they will make enough to justify the fee. Harder to attract sellers in the early stage.
• Typical range: Three tiers from free/cheap entry-level to premium (e.g., EUR 4.99/mo, EUR 49.99/mo, EUR 119.99/mo).
• Examples: LinkedIn Premium, Zillow Premier Agent, Xyste (wedding marketplace with vendor subscription tiers — see it in our portfolio).

Freemium With Premium Features

The basic marketplace is free. Premium features — promoted listings, analytics, lead management, priority placement — are paid.

• Pros: Low barrier to entry. Users experience value before paying. Upsell is natural.
• Cons: Conversion rates from free to paid are typically 2-5%. You need massive volume for the math to work.
• Examples: Indeed (free listings, paid sponsoring), Thumbtack.

Listing Fees

Sellers pay a flat fee per listing, regardless of whether it sells.

• Pros: Simple, predictable for both sides. Revenue starts with the first listing.
• Cons: Sellers resent paying for listings that do not convert. Creates incentive to list fewer, higher-value items.
• Examples: eBay (insertion fees), Craigslist (select categories).

Hybrid Models

Most successful marketplaces combine multiple revenue streams. A subscription base plus a transaction commission plus premium features is a common and healthy structure. The subscription ensures baseline revenue, the commission aligns incentives, and premium features provide upsell.

Our recommendation for new marketplaces: Start with a freemium model or low-cost subscription to reduce friction during the cold-start phase. Layer in transaction commissions once you have proven demand and built trust. Add premium features once you understand what your power users actually want.

The Cold-Start Problem: Getting Your First 100 Users on Each Side

The cold-start problem kills more marketplaces than bad technology. You can have the most polished product in the world, but if there is no one on it, it is useless.

Here are the strategies that actually work:

Single-Player Mode

Build your product so that one side — usually the supply side — gets value even without the other side present.

A restaurant review site is valuable to restaurant owners as a profile and menu page even before customers are searching. A freelancer marketplace that gives freelancers a portfolio website is valuable before any clients are browsing.

This lets you build one side of the marketplace before you have the other.

Geographic or Vertical Focus

Do not launch everywhere at once. Pick one city, one neighborhood, one industry niche. Concentrate all your effort on making the marketplace work in that narrow context.

Uber launched in San Francisco. Airbnb started in New York. Etsy started with handmade crafts. Density in a small market is infinitely more valuable than thin coverage across a large one.

Curated Supply

In the earliest phase, you handpick the supply side. You personally onboard every seller, vendor, or service provider. This serves two purposes: you ensure quality (which builds buyer trust), and you can tailor the experience to real feedback.

This does not scale, and it is not supposed to. It is a bootstrapping strategy for the first 50-200 suppliers.

Constraint-Led Launch

Artificially constrain access. Invite-only, waitlists, application-based — these create scarcity, signal quality, and give you control over growth while you work out operational kinks.

Seed Content and Profiles

If your marketplace depends on rich profiles or listings, seed them yourself. Create the initial listings, write the first reviews (transparently, from real usage), populate categories. An empty marketplace looks dead. A marketplace with 200 curated listings looks alive.

Incentivize the Hard Side

The "hard side" of a marketplace is the side that is harder to attract — usually supply. Offer them free listings for the first six months, waive commissions for early adopters, provide premium features for free, or even pay them directly to join.

The cost of subsidizing early supply is almost always worth it if it gets the flywheel started.

Tech Stack Decisions

Technology choices for a marketplace need to balance speed to market with the ability to scale. Here are the key decisions.

Mobile App vs. Web-First

Our recommendation: For most new marketplaces, start with React Native for the mobile app and a Next.js web app for SEO and desktop access. This gives you fast cross-platform development, a strong web presence for search engine traffic, and the ability to iterate rapidly.

Backend Architecture

Your backend needs to handle user authentication, listing management, search, messaging, payments, notifications, and admin tools. Here are the realistic options:

Supabase — A managed PostgreSQL backend with built-in authentication, real-time subscriptions, row-level security, and file storage. Excellent for marketplaces because it gives you relational data (critical for complex queries), real-time updates (for messaging and notifications), and a generous free tier.

• Best for: MVPs and early-stage marketplaces. Teams that want to move fast without managing infrastructure.
• Trade-off: You are building on a platform. If you outgrow it, migration is non-trivial (but possible).

Firebase — Google's managed backend with NoSQL database, authentication, and real-time capabilities.

• Best for: Simple marketplaces with straightforward data models.
• Trade-off: NoSQL makes complex queries (filtering, sorting, aggregations) painful. Data modeling for marketplace relationships (users, listings, orders, reviews) gets messy fast.

Custom Backend (Node.js/Python + PostgreSQL) — Full control, full responsibility.

• Best for: Marketplaces with complex business logic, custom payment flows, or enterprise requirements.
• Trade-off: Slower to build. Requires DevOps expertise. More expensive to maintain.

Our recommendation: Start with Supabase for the MVP. It handles auth, real-time, and relational data out of the box. If and when you outgrow it, you are still on PostgreSQL, which makes migration to a custom backend manageable.

Real-Time Features

Marketplaces need real-time capabilities for:

• Messaging between buyers and sellers
• Notifications (new orders, messages, reviews)
• Live updates (booking availability, price changes, inventory)
• Presence indicators ("online now," "typically responds within 1 hour")

Supabase Realtime, Firebase Realtime Database, or Pusher/Ably all handle this well. The key is choosing a solution that integrates cleanly with your backend, not bolting on a separate system.

Search and Discovery

Search is how buyers find what they want. Poor search means buyers leave. Good search means they convert.

For MVP:

• PostgreSQL full-text search (built into Supabase) handles basic keyword matching well.
• Category filters, location-based search (PostGIS), and sorting by price/date/rating.

For scale:

• Algolia or Meilisearch for fast, typo-tolerant, faceted search.
• Recommendation engine based on browsing history, favorites, and similar user behavior.
• Map-based search for location-dependent marketplaces (services, real estate, events).

Do not over-engineer search on day one. PostgreSQL full-text search is good enough for your first 10,000 listings. Switch to a dedicated search engine when you have the data volume and the user behavior insights to justify it.

Payment Integration

Payments are the technical core of a marketplace. You are not just charging customers — you are splitting money between multiple parties, handling refunds, managing payouts, and complying with financial regulations.

Stripe Connect

Stripe Connect is the industry standard for marketplace payments. It handles:

• Onboarding sellers with identity verification and bank account linking
• Split payments — automatically dividing each transaction between your platform fee and the seller's payout
• Payouts to sellers on configurable schedules (instant, daily, weekly)
• Escrow-like holds — capturing payment from the buyer but delaying transfer to the seller until service is delivered
• Refunds and disputes — managing chargebacks and refund flows
• Tax reporting — generating 1099s (US) and handling VAT where applicable

Stripe Connect offers three integration types:

Our recommendation: Start with Express accounts. You get Stripe-hosted seller onboarding (which handles identity verification and compliance) while maintaining control over the payout experience.

Subscription Billing

If your business model includes seller subscriptions, you need recurring billing. Stripe Billing or RevenueCat (for mobile) handle:

• Subscription creation and management
• Free trial periods
• Upgrades, downgrades, and cancellations
• Failed payment recovery (dunning)
• Invoice generation

Escrow and Delayed Payouts

For service marketplaces where delivery is not instant, you need to hold payment until the service is completed. Stripe Connect's manual payouts or separate charges and transfers let you:

1. Charge the buyer at booking
2. Hold the funds on your platform
3. Release to the seller after service delivery confirmation
4. Handle disputes if the buyer is unsatisfied

This is critical for building trust. Buyers need to know they will not be charged for undelivered services. Sellers need to know they will get paid.

Trust and Safety

Trust is the currency of a marketplace. Without it, neither side transacts.

Reviews and Ratings

Implement bilateral reviews — buyers review sellers AND sellers review buyers. This creates accountability on both sides.

Design considerations:

• Reviews should be revealed simultaneously (both parties submit before either can see the other's review) to prevent retaliation.
• Aggregate ratings should use a weighted system — more recent reviews weigh more, reviews from verified purchases weigh more.
• Allow but do not require text reviews. Star ratings alone provide useful signal with lower friction.

Verification

Verify identities on at least one side — typically the supply side. Options range from email verification (minimal) to government ID verification (Stripe Identity, Jumio) to portfolio/credential verification (manual review).

The level of verification should match the stakes. A marketplace for used books needs less verification than one for childcare providers.

Dispute Resolution

You will mediate disputes. Build the process before you need it:

1. Buyer files a dispute with evidence
2. Seller responds within a deadline
3. Platform reviews and decides (or escalates)
4. Resolution: refund, partial refund, or decision in seller's favor
5. Appeals process for edge cases

Automate what you can (auto-refund if seller does not respond within 48 hours) but plan for manual review of complex cases.

Content Moderation

Every listing, photo, message, and review is user-generated content. You need:

• Automated filtering for obvious violations (profanity, prohibited items, spam)
• Flagging and reporting by users
• Manual review queue for flagged content
• Clear policies that define what is and is not allowed

MVP Scope: What to Build First

The biggest mistake in marketplace development is building too much before validating demand. Here is a realistic MVP scope:

Include in MVP

• User registration and authentication (buyers and sellers)
• Seller profiles and listing creation (text, photos, categories, pricing)
• Search and browse (basic filters, categories, location if relevant)
• Listing detail pages
• Messaging between buyers and sellers
• Booking or purchase flow with Stripe Connect payment
• Basic review system (post-transaction)
• Email notifications (new messages, bookings, reviews)
• Simple admin dashboard (user management, content moderation queue)

Cut From MVP

• Recommendation engine (use manual curation instead)
• Advanced analytics for sellers (ship it as a premium feature later)
• Native mobile app (launch web-first, build the app once you have traction)
• Social features (following, sharing, wishlists)
• Multi-language support (start in one market)
• AI-powered anything (add it when you have the data to train on)
• Complex subscription tiers (start with one or two options)

MVP Timeline and Budget

A realistic timeline for a marketplace MVP with an experienced team:

Budget range for a competent team: EUR 8,000 to EUR 40,000 for MVP, depending on scope, platform (web vs. mobile vs. both), and design complexity.

Be skeptical of agencies quoting under EUR 5,000 for a marketplace MVP. Either the scope is too thin to validate your idea, or they are cutting corners you will pay for later. For a broader look at what mobile apps cost across different categories, read our mobile app pricing breakdown.

Scaling Challenges

If your MVP succeeds and you start growing, a new set of problems emerges.

Performance

• Database queries that worked at 1,000 listings break at 100,000. Invest in indexing, query optimization, and caching (Redis) early.
• Image-heavy listings need CDN delivery and responsive image optimization.
• Search latency matters. Users expect results in under 200ms. Move to Algolia or Meilisearch when PostgreSQL full-text search starts to lag.

Operations and Support

• Customer support volume scales linearly with transactions. Plan for it.
• Disputes become a significant operational burden at scale. Invest in self-service resolution tools.
• Seller onboarding needs to be automated. Manual onboarding does not scale past a few hundred sellers.

Fraud Prevention

• Fake listings, fake reviews, payment fraud, and account takeover all increase with scale.
• Implement velocity checks (flag accounts creating many listings quickly), cross-reference IP addresses, and use Stripe Radar for payment fraud detection.
• Budget for a dedicated trust and safety function once you exceed a few thousand active users.

Platform Leakage

As your marketplace grows, some users will try to transact off-platform to avoid fees. Mitigate this by:

• Making the platform genuinely more valuable than direct transactions (escrow, reviews, dispute resolution, visibility)
• Delaying the exchange of direct contact information until after booking
• Offering competitive commission rates that do not incentivize circumvention

Real-World Example: Xyste Wedding Marketplace

To ground this guide in reality, here is how we approached building Xyste, a wedding services marketplace connecting couples with vendors (photographers, florists, caterers, venues, DJs, and more).

Business model: Subscription tiers for vendors — three plans at EUR 4.99/mo (basic listing), EUR 49.99/mo (enhanced visibility, analytics, lead management), and EUR 119.99/mo (premium placement, priority support, unlimited photos). Free for couples.

Tech stack:

• Mobile app: React Native (Expo) — single codebase for iOS and Android
• Backend: Supabase (PostgreSQL, real-time, auth, storage)
• Payments: Stripe for subscription billing via RevenueCat
• Deployment: App Store (iOS), Google Play (Android)

Key features built:

• Vendor onboarding flow with portfolio upload, service categories, pricing, and availability calendar
• Search and discovery by location, category, budget, and availability date
• In-app messaging between couples and vendors with read receipts and push notifications
• Booking request flow with date confirmation
• Review system (bilateral — couples review vendors, vendors review couples)
• Vendor dashboard with booking management, message inbox, and performance analytics
• Subscription management with free trial and upgrade prompts

Cold-start approach: Curated supply. We manually onboarded the first 150 wedding vendors in the target region, verified their portfolios, and offered the first six months of the premium tier for free. This created a rich, trustworthy catalog before any couples signed up.

Timeline: 16 weeks from kickoff to App Store submission. 4 weeks of discovery and design, 10 weeks of development, 2 weeks of testing and launch preparation.

Result: A production-grade marketplace with real vendor subscriptions, real bookings, and real revenue — running on a tech stack that can scale without a rewrite.

What Comes After Launch

Launching your marketplace MVP is not the finish line. It is the starting gun.

Weeks 1-4 after launch: Monitor everything. Fix bugs fast. Talk to every user who signs up. Understand what is working and what is friction.

Months 2-3: Iterate based on real data. Which features do users actually use? Where do they drop off? What do they ask for in support tickets?

Months 4-6: Layer in your second revenue stream if you have not already. Build the features you cut from MVP — but only the ones your data tells you matter.

Months 6-12: Invest in growth. Expand to new geographies or verticals. Build the native mobile app if you launched web-first. Start automating operations that are still manual.

The marketplace model rewards patience and persistence. The network effects that make it hard to start are the same ones that make it hard to compete with once you have them.

If you are building a marketplace and want to talk through the technical and business decisions, we have been through this process and can help you avoid the expensive mistakes. Once your marketplace is running, you will also want to automate repetitive operational tasks to keep your team focused on growth. Reach out and let us scope it together.