Why online marketplaces are great for your software engineering career

First, the bad news: mature startups (series A – C) in Europe have cut recruitment by 30 – 50% in 2023, followed by another 15% drop in 2024.  Things are not much better in the US with Indeed showing a huge drop in software developer job postings since 2022.

Even more unsettling, career progression at many companies has also slowed down significantly. It’s therefore no surprise that the same reports show that software engineers are prioritising job security and stability among their criteria for employers.

Now for the good news. Despite the general decline in hiring there are still areas of immense growth: fintech, AI & ML, data science, VR & AR, cyber security, blockchain, and cloud architecture. And the online marketplace model is smack bang at the nexus of all those technologies!

In our 2024 company review, we’ve already touched on the reasons why CobbleWeb decided to specialise in online marketplace development. To recap:

• The marketplace model presents the height of complexity in ecommerce. This presents a strong competitive advantage if you have the right skill sets, processes, and experience in place.

• Issues with DIY and SaaS solutions drive clients to custom marketplace experts for two big reasons: 
  • Lack of flexibility, extensibility, or scalability. 
  • No discovery or iterative process to validate assumptions about the client’s target market or business model.

But there is also a broader perspective. Which market, technology, and consumer trends are shaping ecommerce in general and marketplaces in particular? What opportunities do they create for CobbleWeb, and more importantly, for you as a software engineer?

Market trends

How big is this ocean that we are fishing in? Short answer: VERY BIG and getting larger by the day. Let’s break it down into different schools of fishes and a tsunami or two.

Ecommerce

The total ecommerce market (B2C, P2P, B2B, G2B) is now worth $26 trillion. That’s the equivalent of the entire US economy!

And it is going to get much larger. Ecommerce is expected to more than triple by 2030, growing at a blistering 19%  per year. That’s almost three times faster than the world’s fastest growing economy, India.

One in five retail transactions now take place online

B2C ecommerce as a share of global retail broke through the momentous 20% barrier in 2023 and is estimated to grow at 9.5% for the next five years.

There’s a B2B tsunami on the way

Sharp-eyed readers may have spotted that there is a big gap between the retail (B2C) growth rate of 9.5% and total ecommerce growth at 19%. Where is all that extra velocity coming from?

The answer is business-to-business transactions. B2B’s share of global ecommerce topped 70% in 2023.

Phenomenal growth in ecommerce startups

According to the Dealroom database, the number of active ecommerce startups founded since 1990 have grown to almost 200,000, with a combined enterprise value of $13 trillion.

Marketplaces dominate ecommerce

If those ecommerce stats impressed you, you will be even more gobsmacked by what’s happening with marketplaces:

• 67% – marketplaces’ share of global ecommerce.
• 310 million – active users on Amazon. If they were citizens, it would be the world’s 4th largest country! 

Marketplaces are challenging traditional business models

• 🚙 Transport – Uber is almost three times more valuable than Volkswagen, despite being 72 years younger.

• 🛏️ Accommodation – 16-year old Airbnb is more valuable than 97-year old Marriott, the world’s largest hotel chain.

• 🛒 Retail – Amazon’s market cap is three times larger than Walmart.
• 👗 Fashion – Shein became the world’s second largest fashion retailer in 2023 when it overtook H&M and Gap.

The marketplace model has built-in advantages for startups

Network effects (when the value of a product increases as more people use it) are exponentially more powerful in multisided platforms like marketplaces. Airbnb is a classic example – the more home owners signed up to their platform, the more useful it became to people looking for short-stay accommodation.

Marketplaces offer gigantic Economies of Scale. That’s because the cost of adding additional users and transactions is much lower than a physical business. Network effects that drive organic growth amplify economies of scale by lowering lower customer acquisition costs even further. Amazon exploited this characteristic brilliantly, first as a viral online bookseller and then as The Everything Store. 

Marketplaces are data goldmines. Their digital nature and granular touchpoints enable better insights into customer behavior, preferences, and trends. This data can also be used to improve operations, personalise user experiences, and optimise supply and demand matching. Our client MobyPark, a car parking app, analysed user data, such as in-app search queries and GPS tracking, to identify new cities as part of a very successful expansion strategy. 

Marketplaces make fragmented markets more efficient and transparent. By centralising transactions and information (e.g. product details, reviews, prices) buyers and sellers can connect with greater ease. Deliveroo and MealMap (restaurants), MobyPark (underutilised parking spaces) and Etsy (handicraft) all successfully aggregated highly-fragmented markets with lots of small and medium-sized players.

Niche verticals and hyper-localisation are creating new opportunities

Smaller specialised marketplaces are successfully competing with giants like Amazon and eBay by offering tailored services that cater to specific customer needs. Growing familiarity with the marketplace model has driven an explosion in location-, product- and service-specific marketplaces.

Recent examples of this trend include Cocoli.com, a German marketplace for pre-owned vintage and designer furniture, Cocoli has raised €3 million and stocks 350,000 items a mere three years after being founded. 

Then there is our client, MealMap, a food ordering app that focuses on UK-based Chinese restaurants. It already has hundreds of paying customers (restaurants paying subscriptions) just a few months after launching an MVP platform.

B2B marketplaces are a sleeping giant

Despite being five times larger than the B2C ecommerce market, only a fraction of B2B ecommerce is currently served by marketplace platforms. This creates a massive opportunity for startups that have the advanced skills to build the complex procurement pipelines that B2B platforms require.

VC firms have noticed this huge opportunity. According to Dealroom, B2B marketplaces are attracting record investment, since they are less vulnerable to economic downturns and benefit from increased digitisation of supply chains. Investors also like the fact that they are often SaaS or fintech-enabled. 

The rise of highly-managed and supercharged marketplaces

The first proto-marketplaces like Craigslist were glorified classified indexes, with transactions usually taking place off-site. Most of the revenue was thus lost to the platform. 

During the 2010s, lightly-managed marketplaces like Airbnb and on-demand apps like Uber managed to capture more value by taking over the matching (between buyers and sellers) and payment processes. Sophisticated search algorithms, review mechanisms, and secure payment features enticed users to complete their transactions on-platform.

Now some marketplaces are taking things even further, investing in advanced features that offer a much more automated experience to users in exchange for higher take rates.

Opendoor, a real estate platform, has taken over most of the procurement and matching process. Using its proprietary technology and market data, Opendoor analyses the property and generates a cash offer within days. If the homeowner accepts, Opendoor purchases the home as-is, handling all the paperwork and logistics. It also handles any repairs before listing and reselling the property. 

One of the reasons for above-mentioned Cocoli’s triple digit growth is the full-service logistics solution – packing, collection, shipping, warehousing – that’s built into their platform. Items are collected from the seller’s home and delivered to the buyer’s location as a seamless part of the transaction. 

For our client, Remoovaz, a home removal platform, we developed an inventory calculator that recommends the right size moving van based on the volume and type of household items.

Other marketplaces are using third-party integrations such as fintech, SaaS, and procurement tools to supercharge their platforms. 

In fintech, Buy Now Pay Later service providers like Klarna and Afterpay are boosting ecommerce by more than 20% per year. B2B marketplaces, especially, can benefit from fintech solutions that cater to the specific financing needs of their stakeholders. For example, Aria provides instant invoice payouts for sellers and flexible payment options for buyers.

AI tools are being used to optimise workflows and user experience. Boost AI provides AI-powered customer service and sales chatbots that offer personalised recommendations and support which is tailored to each platform. Like this one for a Swedish auto-repair marketplace.

In MealMap‘s case, IoT integration between kitchen printers and front-of-house POS allows real-time order updates, which has been a big driver of the platform’s early adoption. 

Some of the world’s largest companies are investing in marketplaces

Bricks and mortar giants like Target, Home Depot (US) and John Lewis (UK) are adding online marketplaces at a rapid pace as they try to catch up with the Amazons of the ecommerce world. Walmart alone has invested more than $7.2 billion in supply chain and omnichannel fulfillment solutions. It seems to be paying off, with Walmart Marketplace now growing at thirty percent per year.

Technology trends

Marketplaces have always been early adopters of new technology, using it to drive innovation and growth. Amazon led the way with many early innovations such as the AWS cloud infrastructure, their trailblazing one-click ordering system, which revolutionised the checkout process, and product recommendation algorithms built with machine learning.

Moore’s Law is dead

Nvidia founder, Jensen Huang, recently made the controversial statement that computing performance is going to increase at a rate even faster than Moore’s Law. 

Challenging Moore’s Law, the observation that computational power – based on the number of transistors that can be placed in an integrated circuit – doubles every two years, Huang predicts a doubling or tripling every year. 

This increased rate of growth in computing power is already having an enormous ripple effect on different technologies such as AI, ML, VR and AR. And of course – anything that happens in technology usually affects ecommerce and especially marketplaces.

Augmented Reality

A branch of spatial computing, augmented reality blends virtual and physical worlds via computer vision (data from cameras, sensors, LiDAR), sensor fusion, and spatial mapping (3D model of the environment). 

Facebook alone has pumped $46bn into the metaverse – a virtual, digital universe that combines elements of augmented reality, virtual reality, and the internet to create interactive, immersive experiences. This is causing a retail revolution with big implications for marketplace verticals like fashion, eyewear, and interior decoration.

Zalando’s virtual fitting room allows shoppers to upload an avatar of themselves so that they can try on clothes before buying, which has already reduced product return rates. Houzz, a marketplace for house renovations, allows shoppers to position online products within photos of their house 

Artificial intelligence and Machine Learning

We’ve already mentioned AI-powered chatbots used as customer service and sales agents. That’s just scratching the surface though. Custom chatbots like Amazon’s new Rufus shopping assistant can be trained on customer data to act as personal shoppers. 

AI tools are also increasing seller productivity by automating product descriptions and images, optimising revenue (pricing suggestions), and increasing high-value conversions (digital guides on B2B marketplaces).

Internet of Things

IoT integration possibilities with marketplaces are endless. Whole ecosystems, such as the Bosch Mobility Marketplace, are being built to support interoperability between software and hardware within various industries. 

CobbleWeb has integrated a number of IoT devices into our client’s marketplace platforms: parking bay access for MobyPark’s car drivers, property access for Nestify’s property cleaners, and kitchen printers for MealMap’s restaurants.

We used Axible, an IoT-focused connectivity integrator, to create an access system for MobyPark’s parking lot owners. When a customer books a parking slot a code is generated and shared with them on the app. They then use that code to enter car parks via access points such as entry booms.

Blockchain

Although its commercial use is still in its infancy, blockchain technology is being tested in multiple use cases:

• Smart contracts, which automate tasks like order fulfillment, payment processing, and dispute resolution, can speed up processing times.
• Product verification – blockchain can track the origin and journey of products, ensuring transparency and authenticity.
• Enhanced security – blockchain’s decentralised and immutable ledger ensures that every transaction is recorded permanently and cannot be altered, reducing the risk of fraud and data breaches.

Drones

According to PwC drone deliveries will grow from $251 million in 2024 to $65 billion over the next ten years. 

“by embracing the technological and revenue-generating potential of drone deliveries, retailers and logistics companies can improve the client experience, reach new client segments, and increase the efficiency of their operations.”

PwC

Consumer trends

Human behaviour affects technological innovation. And where technology goes, ecommerce follows. Take a wild guess which industry drove the boom in ecommerce innovation during the 1990s? 

For the innocent among us: pornography websites were the first to offer real-time credit card verification (after Richard Gordon founded Electronic Card Systems), which was later adopted by Amazon and eBay. The porn industry also pioneered online subscriptions, internet billing, streaming video that works without a plugin in the browser, as well as video chat.

The rise of Total Experience

Nothing has really changed since the 1990s. Human behaviour is still driving ecommerce trends with consumers now expecting a total experience (TX) when they engage with brands, products and services.

Total experience (TX) = customer experience (CX) + user experience (UX) + employee experience + multi-experience. 

This holistic focus aims to create a seamless, interconnected experience for everyone involved — customers, employees, and end-users — across all platforms and touchpoints. The goal with TX is not entirely altruistic; according to Gartner, the tech research platform, companies that invest in TX can increase customer satisfaction by up to 25%.

Okay, so that’s nice and all, but what is the TX relevance for marketplaces? The clue is in that last bit: multi-experience. Marketplaces are ideally suited to an omnichannel multi-experience with features such as CRM integration, self-service options and AI-powered chatbots.

Business-to-Everyone (B2E)

Businesses are losing control of the sales process as B2B buyers start copying the behaviour of retail customers. The result is that third-party review sites like Clutch or G2.com and social media feedback have become more influential than sales teams. 

Traditionally price and quality were the deciding criteria. Now customer experience is rising in importance with many B2B buyers willing to pay up to 30% more for a good CX. This creates a gap for product developers to create features (e.g. automated sales and self-service options) that improve the customer experience.

Consumers prefer to do their shopping on marketplaces

Challenges for marketplace developers

It’s not all plain sailing though. Stricter international and local regulations are making the development and management of marketplaces much more complex and challenging. As always though, this creates an opportunity for experienced marketplace specialists to build a competitive advantage.

Regulations tend to focus on three main areas:

1. Illicit flows such as money laundering and tax evasion
2. Consumer protection against fraud and fake or dangerous products
3. Data privacy under regulations such as GDPR in the European Union 

To combat numbers one and two, online marketplaces are investing in robust anti-fraud and compliance mechanisms that verify the identity and legitimacy of users, detect and prevent fraudulent transactions, and report suspicious activities to authorities. Technology such as optical character recognition (OCR), AI facial recognition, and biometrics are being integrated into platforms to automate the KYC and AML processes.

Our client SoShop – a digital bank –  implemented Onfido, a dedicated KYC and AML tool for financial services, which uses AI-powered identity verification and custom workflows to scale customer onboarding without increasing risk.

When it comes to data management, marketplaces are confronted with third-party cookies being phased out. First-party data collection has therefore become a priority. That means building feedback mechanisms (surveys, widgets, prompts), on-platform analytics (search terms, heatmaps), user-generated content features (reviews, low-friction curation tools), and communities (product forums, Q&A repositories, project showcases). 

The competitive landscape

Competitors to specialist custom marketplace developers like CobbleWeb fall into three categories: 

• General software development agencies
• Low-code or no-code app builders like Bubble.io or Bolt.new
• Dedicated SaaS marketplace builders like Shateribe or CS-Cart.

Our value proposition is built on three pillars that amount to a very strong competitive advantage compared to all of those competitors.

ONE: 

We offer a proven product development process as opposed to a inflexible, unscalable DIY templates. Our clients are assisted with the mapping of user flows, the prioritisation of features, the selection of technology, and the identification of optimal revenue streams.

TWO:

Our highly-specialised expertise and iterative, evidenced-based, user-focused process contribute to significantly higher success rates. How do we know this? Check out the case studies promoted by generalist agencies and SaaS builders and you will mostly find vanity metrics (traffic, investment rounds), instead of concrete business results such as liquidity, profit, turnover, and traction.

THREE:

Arguably the most important component of our competitive advantage is our culture:

Collaboration is part of our DNA

We are Masters of Complexity

Purpose-Driven Teams and Meaningful Work

Our innovation engine keeps us at the cutting-edge of ecommerce software development

Phew! That’s a lot of reasons to come work with the marketplace experts. If you are a skilled and purpose-driven software engineer who wants to future-proof your career, hit that orange button and let’s see if we are a good fit.