Big numbers are dazzling.


The success of online marketplaces is dizzying.


Having an online marketplace is clearly an extremely lucrative business. But it is in no way easy to build a successful one. Make enough mistakes and even a business like a marketplace (which we believe is quite easy to succeed at) can become a bad idea.


One of the reasons for online marketplaces failing comes from entrepreneurs who take things too lightly and dive right in without researching and planning for potential risks and obstacles.


10 Worst Mistakes Online Marketplaces Make 


So, to make sure that you don’t make the mistakes that many online marketplace owners make, we have compiled a list of the 10 worst mistakes online marketplaces make. 


1. Confusing an online marketplace with an e-commerce store

No. No. And no.


An online marketplace is a digital sales channel for a group of businesses that sell a similar product. While an e-commerce store is an online storefront for a single business.


For example, Uber sells food from different restaurants as an online marketplace. While Domino’s produces the food it takes orders for on its website – it’s an e-commerce store.


Each model has its pros and cons.


Online Marketplace


  • Makes it easy for businesses to acquire new customers.
  • Helps your brand get recognition in highly competitive markets.
  • More consumers trust established marketplaces over a new website.



  • Lack of specialized features and marketing.
  • Weak brand impression due to packaging and branding protocols.


E-commerce Store


  • Faster response to consumer trends.
  • Strong Brand impression.
  • Freedom to showcase as many products as you like.



  • Lesser credibility, especially with newer websites.
  • Heavy reliance on just one website.
  • Internet security concerns.


Interestingly, it is estimated that 95% of all purchases in the US would come from the US by 2040. In fact, 59% of millennials go to Amazon first when they want to purchase something.


2. Not assessing business risks

Yes, you can’t completely avoid risks, but you can surely plan for them. Assessing business risks gives you a head start that nothing else can. It helps you prepare for the worst-case scenarios as well as get the most out of worst-case scenarios.


There used to be a popular streaming site called Blockbuster in 2004 which was a market leader in the industry at the time. But as it failed to assess the risk of competition from smaller market players like Netflix it went bankrupt in 2010.


Hence, it is essential to assess risks to survive and thrive in any market.


3. Lack of transparency in business

No business wants to be seen in a bad light by their customers. But in many situations, you need to be honest, and upfront with your stakeholders to help you get out of tight spots without your credibility being questioned.


For example, as an online marketplace, you need to be upfront about the tracking of customer orders, waitlists, and possible delays.


4. Creating problems instead of finding an existing one

There are several startups and online businesses that are struggling or going bankrupt. Not because there’s something wrong with the industry, but because these businesses are solving problems that no one has.


Recently, a messaging app was launched that allowed you to send only “yo” to people. Although it might have sounded like an interesting idea to some people as the startup received $1 million in funding, it failed eventually because no one actually really needed it.


5. Bad category management

If you want to eat Mexican you wouldn’t want to sort through 1000s of restaurants offering gazillions of different food options. And that’s where categories help a customer. From sorting options by cuisines, prices, and eateries, categories make your marketplace so much more manageable.


But if your category management isn’t up to the mark and is difficult to navigate through it defeats the entire purpose of having categories, and makes the customer reluctant to return to your site.


Zeew has features that help you manage and add categories to your site in an effective way, so you don’t have to worry about problems that arise out of bad category management.


6. Improper customer management

The customers are bombarded with options in today’s digital age, and bad service or lack of attention to their reviews and feedback would eventually make them move on to different options.


You have to give your customer a good reason to stay with your business. And that can be easily done by making your online marketplace more interactive where a customer’s challenges are heard and acted upon. 


In fact, according to Forbes 96% of customers leave businesses due to bad services.


You don’t need to worry too much about bad customer management, as Zeew can help you with it. Zeew’s customer management feature helps you manage the name, email, and status of your customers. It also helps you track active and inactive customers to make communication with them easier.


7. Launching without a prototype

Before you venture out into a new market it is essential to gain at least some bit of footing before that. A prototype of your online marketplace helps you with just that. It also helps you get a general reaction to your actual product, and if people would be interested in investing in it or not.


It also helps you analyze the design and feasibility of your website. Hence, it is always a smart choice to launch a prototype to understand your consumers as well as your own site’s design better.


8. Not figuring out if you should start with buyers or sellers

As a new online marketplace that is yet to attract both sellers and buyers and work on the acquisition and retention of both, it can be quite difficult to figure out where to start. And starting from the wrong end is one mistake that several online marketplaces make.


For example, if you are a food delivery chain, it would be ideal to attract good eateries and restaurants to your marketplace before you attract customers. This way the eateries would bring their loyal customers to your marketplace as well as give you products through which you can attract new customers.


9. The user interface isn’t user friendly

When it comes to an online marketplace, easy site navigation and interactive site design are two key features that you must consider while designing your online marketplace. Because no user wants to waste their time on a site that takes forever to load, has extremely complex navigation, and is very difficult to interact with. Can be for browsing, payments, leaving feedback, and so on.


Now, you don’t even need to put in a lot of effort to design a user-friendly and interactive marketplace. You can easily do so by using Zeew, which helps you manage everything from categories, tracking, customer management, payment integration, and so on.


10. Not Setting Milestones for Your Business

Not setting milestones is one of the major aspects that leads to the failure of an online marketplace or any business in general. Let’s take the example of the Polaroid. Founded in 1937, Polaroid was a well-known brand in instant films and cameras. But it failed to set new milestones for its business and was heavily dependent on its present products and current market.


But eventually, the product and technology went obsolete and Polaroid went bankrupt in 2001. There are several examples of business giants like Polaroid which were brought to their knees because they failed to set milestones and work towards business growth. Hence, you should surely not commit such a mistake with your online marketplace.


How to Avoid Common Mistakes

Surprisingly, the worst mistakes committed by online marketplaces are the easiest to avoid with proper planning and foresight.


Here are ways you can avoid the above mistakes:

  • Know what an online marketplace or eCommerce store would work better for your business. If you are an established offline brand trying to go online then an eCommerce store might work for you, but if you are a new business it’s better to go for an online marketplace.


  • Study all the external and internal risks related to the market. You can do so by researching your competitors, getting in touch with industry leaders, groundwork, hiring mentors, and so on.


  • Be honest with your customers. The digital world works on the fiber of reliability, hence transparency in your work is foundational.


  • Don’t skip the stage of idea validation. Find out what your family, friends, and most importantly your target audience thinks about your marketplace.


  • Put a good amount of thought into your website, its design, features, etc. Efficient website design goes a long way for an online marketplace.


  • Get a considerable number of sellers onboard. These people will be your first team and bring in your first customers. Hence it is essential to get sellers before you try getting buyers for your marketplace.


  • Have foresight for business expansion or exit to keep up with innovation and changing technology.



So, these were the 10 worst mistakes that online marketplaces commit that are a huge hindrance to their success. And all you need to do is put the right thought and effort into your business to avoid them.


Speak to Zeew’s experts. We have built marketplaces in USA, LATAM, Europe, Middle East, and Asia. Book a call.


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