You must have heard about local marketplace apps like OfferUp and LetGo. These apps are shooting up like mushrooms. At first, Amazon pampered us with the ease of online shopping, then eBay introduced its classified section and there’s no way back.
Being one of the leaders in local buy and sell market, OfferUp is one of the most esteemed privately owned businesses based in the Pacific Northwest, crossing the $1B valuation after raising an amount of $130M in late 2016. According to Crunchbase, It has raised a total of $261M in funding over 7 rounds.
Not just OfferUp, its other competitors are also raising the bar higher. LetGo and eBay – both are giving it a tough competition in the market while walking neck to neck with each other. The accomplishments of all these leading marketplaces are unquestionable. And, this is the reason numerous entrepreneurs are keen on repeating their success.
But, is it that easy? Yes, you just need to know the right strategy to tap into the market and a robust solution to support you in your journey of becoming the industry leader.
Here is all you need to know before you start building your own apps like OfferUp and LetGo:
Local marketplace apps like OfferUp and LetGo have facilitated the procedure of buying and selling locally for both – the sellers and buyers. Let’s begin by some statistics that will give you a clear idea of the scope of building such an app:
The stats mentioned above are the reason why your idea of investing in local marketplace apps like OfferUp and LetGo is a win-win. Now, before we proceed onward into the marketplace application development – how they work, the features your app like Offer up should have or the cost to develop sites like Walmart, OfferUp, letGo, let’s first put some spotlight on user’s behavior and sentiments towards shopping online:
Source: GoodFirms Survey
Now that we know enough about the e-commerce marketplace apps and how the online shopping market is booming, let’s move forward and see how these apps work and the business model they follow to bring money to the table.
How Does OfferUp Work?
The main functionality of applications like LetGo and OfferUp is that they give sellers an opportunity to advertise their products or services free of charge. Using these apps, people can easily advertise products, for which they are not able to find local buyers.
To put it simply, OfferUp and Letgo enable users to sell their stuff online in a specific area – effectively and profitably. These apps are so easy to use that users can come on-board in just a few taps and start buying and selling in minutes.
Once the sellers come on-board, they can simply create Ads for the product they want to sell and the platform lets them connect with potential buyers. Moreover, these apps also allow buyers and sellers to communicate and discuss the product specification privately using chat and call features built-in the app.
To put a cherry on the cake, the developers of apps like OfferUp have also integrated the feature in which sellers can upload the pictures of items they want to sell utilizing inbuilt camera functionality.
Aside from the basic functionality, the OfferUp application also ensures privacy and let buyers and sellers build a profile page on which they can rate each other. Now that you know the business model of these popular apps, let’s see what results these key online buy-sell platforms are achieving:
Isn’t that stunning? In such a short span of time these applications are causing a ripple effect as mobile hybrids between Craigslist and eBay and so far users are loving it. According to statistics, it is proven that the individuals are spending an equal amount of time in these applications as they spend on Instagram and snapchat. Here is the proof:
This once again proves that making applications in this arena is a sure shot way to success. But, how these apps make money? Let’s check out.
Most of the local marketplace apps like OfferUp, Letgo, Olx, Quicker have almost the same monetization model. However, if you would like to know how these brands bring money to the table and what are the monetization strategies they use, just read on.
The membership business model has proven very fruitful with marketplaces. With this model, essential functionality is free. However, to get more advanced features, people will have to pay for them.
For example, the business model of Letgo has Letgo Pro subscription. Premium members can avail special benefits like:
Most local marketplaces charge a commission from merchants for every deal made on the app. For instance, on Etsy, venders pay 5% of the price tag for each deal. eBay charges somewhere between 3.5% to 10% from the seller fee.
This model works well for several companies. However, you should remember that this strategy of monetization is beneficial just when your application provides huge value to both the parties involved and ease their conversation.
Want to Know How You Can Monetize an App as Per Your Business Model? Check Out Our Blog On Possible Avenues to Monetize Your App.
This is the most well-known revenue channel for a lot of marketplace apps like OfferUp. A lot of platforms charge a commission for transactions. When a user pays via your application, you can charge a fixed cost or a percentage. This is very easy to execute with the help of some third-party service like PayPal.
Sellers who need to incorporate some special offers can display it to the users in the tab of Featured products. And this is another way online marketplaces for local buy-sell makes money. This technique of promotions enables sellers to entice users by providing them with special offers and internal recommendations.
Also, showing ads on each page can bring in a good amount of revenue for you as well.
Now, when we know how local online buy and sell apps work, let’s see what functionality we need to include into our own sites like OfferUp or LetGo to create a successful business model for the same.
We will consider an MVP approach while explaining the features since it is the best one for startups, and also save time and money while development. So, let’s first see only must-have features of your app like LetGo and then we will proceed to some advanced features to make your app stand out in the market.
To copy the exact business model of apps like OfferUp and Letgo isn’t the most ideal approach to make your very own mobile application. To make your app effective, you should not overlook that uniqueness is an absolute necessity and your application should contain some extraordinary features that are not there in any app yet.
Firstly, you should research the drawbacks of your competitors and secondly, you can launch and scale it if needed. Below mentioned are some of the must-have features that you should integrate into your app to find a good user base:
Even though it sounds very simple to accomplish, not every marketplace application developer knows how to design their mobile app especially the registration page. And, this is one of the main reasons why the app uninstall count is rising.
Thanks to social media integration, you no more need to make your application users frustrated by filling pages after pages to get into your app. They can simply enter the application with a couple of clicks via Facebook or Gmail or some other social networking platform.
The idea is to make an application where the entire registration process becomes as easy as possible so that the app users don’t need to wait to get into your local marketplace application like OfferUp or Letgo.
Undoubtedly, the search engine is the main asset of an app like LetGo. As the number of customers and ads increase in-app, there exists a definite need for proper handling of the traffic for the smooth run of the app. This will further ease the customer in finding their desired product easily. Thus the role of a search engine is vital.
Integration of advanced filters is also crucial to make the search procedure simple and fast. You should divide all products into categories and groups to minimize the search time.
The feature provides users the ability to take photographs in the application and upload them to listings right away. A lovely addition that the merchants would love is the option to edit photographs, adjust lightening and cropping the images in-app.
Integration of rating and review feature is a must-have when you develop sites like offerup, even if you are just building an MVP. The feature doesn’t just build trust in the users but also enable them to make informed decisions while giving you a direct understanding of things that you need to work upon.
The power that accompanies with helping the users to remember what they are missing, when planned right by applying a great push notification strategy, can help define the success of your application. That’s why it is critical to put resources into an appropriate push notification framework that would keep users from abandoning your application.
With this feature, users can pay for their products online. To streamline the process of purchasing and selling items, you must incorporate a powerful framework in your application to empower simple payments.
Now that we have looked into the must-have features, let’s see what are the advanced features that you can integrate in your app.
With the assistance of this feature, your application can give users the recommendations about how to fill in descriptions and categorizations of the articles. Also, it will help you in tracking the quality of uploaded photos.
On a number of platforms, users complaint about the quality of photographs or that they are phony. A few services tackle such issues by the deactivation of the deal or by asking the seller to include at least one live photograph of a product.
If you want to gain the trust and loyalty of users when you are done with developing an app for purchasing and selling products, ensure you did your best to protect your users from fraud. OfferUp is already investing in user protection & support and is also using various fraud detection algorithms in its app.
Also, putting resources into fraud protection, focusing on the collaboration with vendors and mobile network providers is a well-considered action for long term market growth in the future.
Utilizing the idea of augmented reality in e-shopping, this feature is useful for purchasers who wish to try an article, glasses or accessories before they purchase it. This feature can help make your application the best purchase and sale application if designed appropriately. Also, we recommend native app development for the type of app development that requires the integration of advanced technologies in it.
It is one of the best features for users using which they can compare and purchase the item on the best prices. Also, it is great if you are providing merchants the ability to offer hot deals and discounts in-app for enticing the users.
Moreover, if you make this feature one that must be paid for, it can bring you another source of revenue.
Do categorization in your app for best deals and hot offers. This is an extraordinary way to persuade sellers to play well and improve their ratings.
You can also provide delivery services in-app to help users get their products at their doorsteps. Do partnership with outside delivery services to furnish your users with the best shopping experience.
Now that we know all about crucial and advanced features of a marketplace app, it is time to take a deep-dive and explore the main question that when you invest in such an app, how much it will cost you. So, let’s explore and find the answer.
To develop an app, there are three main segments we need to focus on – Wireframing of the app, Prototyping or App Designing and Development. To determine the cost to develop an app like OfferUp, let’s look at three of them first:
Wireframing of apps like OfferUp is a process in which rough templates of a mobile app is created to give a plan to the developers and the app owner on how the application would look like after development. And the cost of developing wireframes for an app like LetGo would come around $500-$1000.
When you make an application for local buying and selling, the versatility and flexibility that you exhibit in it eventually set the pace for its mass adoption in the market. Knowing how vital and beautiful the design component must be, it would cost somewhere around $5000 to $10,000 to make designs that are loved by users.
This is the step where the magic actually happens and your app idea gets converted into a fully functional mobile app. The expense of development is reliant on two components – the number of developers who will be working on your project and the features you would like to add in your app like OfferUp or Letgo.
Keeping this into consideration, the total expense to make a buy-sell application like OfferUp or Letgo would be around $40K to $50K. Now that you know everything about starting a business likeOfferUp, it’s time to hit the market with a bang!
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