How to create a marketplace like Etsy

8 min readMay 13, 2022


48% of online buyers prefer to shop on eCommerce marketplaces rather than in small online shops. Customers choose marketplaces because they save time by helping them to find everything in one place.

As demand for online buying increases, more shopping platforms pop up on the Internet space. The distinctive feature of newly established marketplaces is their narrow focus specialization. Instead of selling everything to everyone, marketplaces occupy a specific niche, where they have an advantage over other competitors.

Etsy is one such marketplace. Bringing together artisans from all over the world, Etsy offers craft products for demanding customers.

This post will shed light on Etsy’s success story, its business model, and distinctive features. It will also touch upon its technical part and suggest how to develop a marketplace like Etsy.

What makes Etsy unique?

It would seem that Etsy is one of many online stores that sell and buy all sorts of things. However, this selling platform is among the top ten marketplaces based on the number of monthly visits. Why is Etsy in such high demand, and why do customers love it?

The formula for success is simple: a fresh idea multiplied by high-quality implementation.

Etsy has clearly defined its mission, target audience, and features, differentiating it from other sellers. Instead of becoming another Amazon, it chose a niche targeting a narrow circle customer group.

So, what does Etsy’s marketplace model consist of? Here are the core components:

Transaction participants. On Etsy, a sale takes place between ordinary people who are not entrepreneurs. That is, the marketplace uses the C2C model.

Product type. Etsy sells tangible goods only. There are no services, virtual products, or intellectual property.

Marketplace subject. The Etsy marketplace focuses on unique products, not mass-market goods.

Offline-online relationship. All processes take place online, except for the shipping and delivery.

Service type. The marketplace focuses on product uniqueness rather than service speed. The ordered product is often made on demand and shipped a few days after the order is placed.

How to create a marketplace like Etsy: the technical part

It is vital to develop and deploy the software in a robust IT environment no matter what marketplace format you choose. The technical capabilities of your e-commerce platform should allow you to adapt quickly to growing business demands and make any software changes on the go.

From a technical point of view, it should be straightforward to add products from new sellers, test new categories, track orders in real-time, or access new markets. Your marketplace must be ready for peak loads on holidays and weekends and effortlessly support a growing number of newly registered users.

Of course, all these requirements make heavy demands on your IT infrastructure. However, you can easily cover them by renting server space from a cloud provider. The cloud infrastructure will help you access advanced tools and save on an on-prem IT environment. Additionally, it will promote fast development, deployment, and results.

We suggest that you choose AWS as your cloud provider when building a marketplace like Etsy. At Erbis, we have deployed many projects on this platform and believe it has the best price-quality ratio in terms of provided features.

Also for your Etsy-like marketplace, you will need to take care of a technology stack responsible for

  • backend development
  • frontend development
  • database setup
  • security management
  • third party integrations

Here is what current Etsy technologies look like:

Etsy’s tech stack

Essential features of an Etsy-like marketplace

Any marketplace has three user types: sellers, buyers, and admins. They interact differently with the platform and need different functionality to cover specific needs. Etsy is no exception, so read on to find what you will need to implement when building an Etsy alternative.

Marketplace features for admins

These tools focus on operations related to site productivity and the convenience of marketplace participants. They are gathered in a MMS (Marketplace Management System) to help users adjust various marketplace parameters and set individual work models for different users. For example, you can differentiate access rights for employees, create diverse commissions for sellers, or apply various bonuses for buyers.

Note that Etsy follows an unmanaged management approach. It means that buyers choose sellers based on previous customers’ reviews, and merchants are not subjected to preliminary moderation. This approach saves company resources and simplifies the functionality of the administrative system. However, you will still need to develop a content moderation system, built-in analytics, and automatic reporting. Also, you will have to implement a communication mechanism to provide support to your customers and a task management system to organize effective workflow.

Marketplace features for sellers

These features are implemented for users who want to publish their crafted goods on your selling platform. E-commerce developers should design them with users in mind providing intuitive functionality and effortless user flow. Here is what should be implemented:

Creating a seller’s account. Clear text and video instructions will help users quickly create an account in your marketplace. It is advisable to avoid having a complicated registration process with multiple data entry fields if you don’t want to lose a client halfway through the signup.

Etsy page for vendors

Adding listings. After creating an account, users will want to fill it with goods. Again, this process should be as simple as possible. Creating product descriptions, choosing categories, or adding photos — none of these actions should cause problems for users.

Customizing stores. While it’s nice to have a list of predefined marketplace design templates, users should also have an opportunity to customize their stores to suit their personal taste. To enable this, allow switching between standard and custom descriptions. Also, provide an opportunity to insert HTML/CSS code into the store/product description field.

Accepting online payments. You should add a payment gateway to your e-commerce app to enable merchants to accept payments. It’s better that developers integrate with multiple providers such as PayPal, Stripe, or Apple Pay for to give more extensive options for buyers and sellers.

Setting payment options at Etsy

Managing orders. This is an important part of e-commerce marketplace software that allows merchants to automatically process orders, change their status, update product stock, and provide timely customer service. With the help of an orders management system, sellers can identify the most wanted products and arrange business flow accordingly.

Providing shipping options. One of the decisive factors for online shoppers is a convenient shipping service. Some buyers want fast delivery, others — free shipping, still others — door-to-door service. To meet customers’ needs, the seller should provide various shipping options. For that, your marketplace should integrate with various shipping providers through the shipping API.

Running analytics. Merchants need to be up to date about their stores’ activities to make timely business decisions. Vendor dashboards provide sellers with visual analytical tools to show the dynamic of sales, returns, followers, feedback, cart abandonments, and more.

Marketplace features for buyers

These features should provide an excellent shopping experience and make customers buy more from your selling platform. Here’s what you need to implement if you want to create an Etsy-like marketplace:

Search. It is necessary to create a powerful search tool that will produce accurate results according to a customer’s request. For better UX, you can also implement voice search and search by photo. The latter means the users can search for a product without knowing its name or brand. They only need to download the photo of the product they like, and the system will provide the relevant results.

Searching goods at Etsy

Wishlist. On a platform like Etsy, sellers usually manufacture products after a buyer places an order. However, some sellers have a kind of mass production. Seeing that the item is added to the wish list, they can then arrange faster production and provide better services to customers. In turn, customers will receive a notification as soon as the product is in stock.

Checkout. When you make a marketplace you should remember that 70% of shoppers choose to leave a website without completing a purchase. A user-friendly checkout can reduce this amount by providing

  • detailed product information
  • plain cart contents
  • actual shipping costs
  • current checkout progress
  • up-to-date information about products in stock

Reviews. For marketplace apps similar to Etsy user reviews play a crucial role. Usually, the sellers don’t go under moderation on C2C platforms, so the feedback and ratings of previous buyers may be extremely useful for new customers.

Ratings and reviews at Etsy

Social media integration. Many people use social networks to share their daily events such as visiting a restaurant or buying a new thing. In view of this, social media integration may be a decisive factor to buy from your marketplace for some customers. Also, it can simplify the signup process allowing users to log in under their existing social media account.

How much does it cost to create a marketplace app like Etsy?

Most customers who want to start an online marketplace enquire about the development cost up front. Well, there is no single answer to this question.

A marketplace like Etsy is a large-scale and ongoing project. It can be endlessly improved with new features, however, we do not recommend creating a full-fledged product right away.

The wise move is to launch a minimum viable product (MVP) with just a few essential features. After releasing it into production you can evaluate user demand and decide what to do next.

If your product is successful, you can add advanced functionality. If it is not in demand, you can change the development strategy with minimal losses.

If you want more information about how to create an Etsy-like business, please contact our managers. They will study your idea and provide a detailed estimate of project implementation.




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