How to Create an Online Marketplace like Etsy

When building your marketplace, there are many things to think through and evaluate. Sometimes it is easier to see a real world example of how a marketplace platform could be built using no-code. Etsy is one of the most successful marketplaces in the last decade and connects independent makers and artists with buyers who want custom, hand-crafted goods. If you were building an Etsy MVP using no code, or if you’re thinking of something similar, here’s a playbook for getting to your MVP.

Overview

Etsy has two audiences it must cater to: makers and buyers. For makers, Etsy gives them a platform to display and sell their handmade goods to a broad audience. For buyers, Etsy provides a place to find and purchase homemade or custom goods. The platform handles the discovery and purchase of goods, and each individual seller handles their own fulfillment. For the marketplace to work, it needs a few basic things:

A flow to onboard sellers and capture their information
A way for sellers to add their products
A place for buyers to discover products
A way for buyers to purchase products
Tools to aid in communication and fulfillment for both sides

Etsy’s primary business model is taking a small (3.5%) transaction fee at the point of purchase. Etsy also has additional business models, such as taking a listing fee from sellers and offering additional advertising, but this guide will only focus on the transaction fee. Below is a quick guide on how to create an online marketplace like Etsy.

Seller onboarding

With a marketplace like Etsy, getting the sellers onboard is likely the place you want to start with as you’ll want to have some products to browse through when you start looking for buyers. You’ll want to capture basic profile information and create their account. Below are the onboarding components to focus on.

Account sign up	Start by having the sellers create an account so that you can save their information. For an MVP, a simple email and password signup is likely enough, or you can consider adding social logins as well.	Sample sign up
Additional information	Next, you’ll want to capture some additional account information such as their location, what they want to call their shop, a bio, or anything else you’d want to display. To make it easier on the seller, you can break this into sections and walk them through with a step-by-step flow.	Sample info gathering flow
Admin approval	Early on, you’ll want to ensure only high quality sellers make it on your platform. One way to do this is to have an admin approval step where you manually approve sellers after they complete their profile. To do this, you can set up an admin dashboard and add a place to approve new sellers and email notifications for sellers alerting them of their approval.	Sample admin dashboard

Adding items

Once sellers have created their account, they will need to add their products. You’ll also want to have a place for sellers to view and manage their items once they are added. Below are some ways to have sellers add and manage products.

Adding a product	You can create a simple form page where sellers can add a product name, description, item price, shipping price, photos, and any relevant tags. You can use different field types such as free-form text, checkboxes, selection fields, and image uploads.	Sample form input page
Managing products	You should create a seller dashboard where they can see all of their products, and click in to edit or modify them. This can be done with a table giving them a quick overview of all their products that they can drill down into.	Sample dashboard table

Buyer discovery

The next thing to think about is how buyers will search for and view the products on your platform. Because sellers are listing physical products, images and visuals will go a long way as buyers scroll through what they are looking for. Having ways to filter and search for exactly what they want will also be critical to their experience.

Searching through products	Buyers will likely want to search and filter through products by things such as keywords, tags, and price. Making it easy to narrow things down while presenting visual cues is a great way to help buyers find what they need.	Sample product search page
Viewing individual product	Buyers will click into the specific product they are interested in to learn more and decide to buy. The individual page should include all the relevant details they need to make a purchase decision and have a clear buy button so they can move forward.	Sample product page

Messaging

Sellers may be listing custom products that require some back and forth before or after purchase. Buyers may want to ask a seller if the customization they want is possible or try to negotiate a bulk discount. Including a messaging system on the platform helps encourage a discussion and reduces the risk of the transaction happening offline.

Messaging

You can add a simple chat widget to the bottom of the product page. New messages can trigger emails to notify either party that a message is in their inbox, and they can log in to view it.

Sample messaging widget

Purchasing a product

When a buyer has found a product they like, the next step is to purchase it. Having a streamlined and trusted checkout flow will increase the likelihood of getting to a completed transaction. This is one of the most critical parts of your platform, so you’ll want to focus on setting this part up correctly.

Checkout page	This should include a summary of items in the cart, a place to enter shipping information, a calculation of final price including shipping and taxes, and a way to collect payment.	Sample checkout page
Payment processor	A third-party payment platform such as Stripe will handle the actual payment itself. You will set up the payments to send a portion of the money to the sellers and a portion (such as 3.5%) of the money to your own Stripe account as a platform fee.	Stripe Connect
Sales tax	Sales tax can be complicated, so it’s best to integrate with a tool that can calculate taxes on a state by state basis and automatically add that in upon checkout. Stripe has a tax tool that can be easily added.	Stripe Tax

Fulfillment

Once an order gets placed, the seller will have to fulfill and ship the item to the buyer. You’ll want to make this as easy as possible for the seller, and keep the buyer updated along the way. For an MVP, having the sellers manually ship the products and enter the tracking numbers into the platform will be sufficient, and you can set up email triggers to the buyers to receive tracking info once the seller marks the item as fulfilled.

Checkout page

This should include a summary of items in the cart, a place to enter shipping information, a calculation of final price including shipping and taxes, and a way to collect payment.

Sample checkout page

Reviews

For custom or homemade products like Etsy, it can be helpful to include reviews on the platform so that future buyers can be more confident when deciding to purchase an item. This also encourages sellers to always produce their best and to focus on a speedy transaction so that they will get positive reviews and more business in the future.

Reviews

A few days after the item is shipped, you can trigger an email to the buyer prompting them to log back in and fill out a review using both stars (1-5) and free text. You can even set up a reminder email a few days later if the review has not been filled out.

Review popup

Administration & analytics

After setting up the seller and buyer sides of the platform, you’ll want to add a few administrative things to manage your platform overall. Being able to see all the users on your site, the transactions that have happened, and general metrics will allow you to get insights into how your marketplace is performing and give you a place to handle any problems.

Dashboard	To manage users and view transactions, you’ll want to set up a dashboard page that displays the happenings on the site.	Sample admin dashboard
Basic Analytics	You can view simple metrics such as number of visitors, time on site, where people are coming from, etc. using a tool like Google Analytics.	Google Analytics
Event Analytics	If you want to include more advanced analytics, you can integrate with a more advanced site that looks at specific event triggers and aggregates the data for you. A tool like Amplitude can track specific user purchase behavior over time and has a basic free plan.	Amplitude

Launching your MVP

Now that you’ve finished your basic Etsy MVP, you can launch your marketplace and start getting feedback! Early on, it’s helpful to be hands-on and talk to your users directly. Find out what they like or don’t like and where you can add or modify things on your platform. Check in with sellers that may have lapsed and with those who are active to fix the things that aren’t working and double down on the things that are. And remember to take time to enjoy all the progress you’ve made - you’ve gotten past the hardest part which is starting!

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