Open source marketplace –
The complete guide
Four popular peer-to-peer open-source marketplace software reviewed. Benefits, drawbacks, and alternatives to open source. How to choose the right solution for you. Here’s everything you need to know about building a marketplace on top of open-source code.
Table of Contents
- Introduction: The opportunities in online marketplaces
- Open-source marketplace software – the benefits
- The drawbacks of open-source marketplace software (and scripts)
- Four popular (open-source) marketplace solutions
- How to choose the best open-source marketplace solution
- Alternatives to the open-source marketplace approach
Introduction: The opportunities in online marketplaces
Online marketplaces offer tremendous opportunities for entrepreneurs.
With numbers like this, it's not surprising that many markets are being revolutionized by websites like Airbnb and its business model. Still, many investors believe we're only at the beginning of the marketplace revolution.
Platform technology used to present a big barrier for entering the marketplace space. Even for teams with several skilled developers, the workload of building and maintaining a site like Airbnb is colossal. For non-technical founders, the barrier was even higher, as developers tend to be expensive folks to outsource.
Luckily, no-code marketplace tools and other marketplace development alternatives have emerged. Open-source marketplace software offers one approach.
This guide will help you estimate the cost (in terms of both time and money) of building a marketplace on top of open-source code. A lot of it will also apply to software and marketplace scripts that are offered as downloads for a one-off fee.
Skip ahead to the sections most relevant to you, or continue to the next chapter to read about the biggest benefits and drawbacks of this approach.
Open-source marketplace software – the benefits
Building your marketplace on top of open-source software can save you some time while ensuring you can customize your platform to your liking.
If a piece of software is open source, its source code is freely available for modification, redistribution, and commercial use. Open-source marketplace software lets you cut down the cost and time-to-market of your online marketplace project.
Here are all the benefits of the open-source marketplace approach.
It lets you download years worth of work
Every marketplace needs a set of essential marketplace features. Sellers want to create pages for their offering. Buyers want an effective way to search and browse the offering. Messages, reviews, and online payments need to happen. Powerful admin functionality is a must.
Creating all this two-sided functionality from scratch is an expensive, time-consuming project.
A high-quality open-source marketplace solution will have all this functionality pre-built. Open-source software providers like Sharetribe and Cocorico let you access their entire source code on Github, download it, and host it on your own servers without ever paying a dime for the software. Setting up the foundation of your online business becomes a matter of a few weeks instead of several months.
Even if there’s a technical co-founder involved, the founding team’s time and focus is a resource that has a monetary value. Open-source software offers one way to ensure that that resource is spent wisely and not wasted on the fundamentals.
Open-source code can be freely customized. If you’re familiar with the technology stack of the marketplace software in question (often based on Ruby on Rails or PHP), you can adjust the existing features and develop new ones on top.
These are strong perks. Depending on the foundation of your team, using open-source marketplace software may mean saving hundreds of working hours or tens of thousands of dollars.
Even so, there are considerable drawbacks you should be aware of beforehand.
The drawbacks of open-source marketplace software (and scripts)
Open-source marketplace software might not be the fastest or cheapest way to market. It may also not offer the best developer experience.
Open-source software can be a solid foundation for your marketplace business. No drawback presented here has to be a dealbreaker in itself.
Still, unexpected development bottlenecks or surprise costs may bust schedules and shrink runways. So before committing to the open-source approach, consider the drawbacks we've listed below. The points largely also apply to comparable solutions like marketplace scripts, downloadable proprietary software and Airbnb/Amazon/Etsy clone software.
It’s not the fastest way to market
Compared to months of crunching code, getting a complete marketplace platform in a matter of weeks is extremely fast. But it’s not the fastest.
Any open-source software will require development work. Lots of it, even, depending on the solution you choose.
At the very least, you need to install your development environment with the correct tools, configure your domain, and set up and deploy your marketplace to production in your chosen environment. Integrations to third-party tools – image processing, emails, server logging and monitoring, map provider, and so on – need to be set up. An online payment provider needs to be selected and the integration configured.
This isn't anything a skilled developer wouldn't be able to do, but the setup can take up to a few weeks. That time could instead be spent on strategic initiatives like crafting a quality UX, building custom features, or seeding a user community. Hosted no-code tools and API-based headless tools can offer a lot faster path to launching.
Its maintenance cost might come as a surprise
Open-source software, by definition, is free to use. Marketplace scripts can be downloaded for a one-off fee and used indefinitely.
The first step where costs incur is hosting. The cost at a base level is likely to land somewhere between $75–$200 monthly. Any Saas tools you need add to the recurring costs, but a careful comparison between providers can bring down the total price tag.
More importantly, having a marketplace platform run safely and reliably is regular, ongoing work. Server uptime needs regular monitoring to make sure traffic spikes won’t crash your site. Data has to be backed up and stored according to the latest data processing regulations. The backend software, databases and SaaS tools need updating to the newest versions, as do payment processes when online payment regulation changes.
As your business scales, this work will quite soon begin require several hours each day and quickly grow into a full-time job. This time is away from reaping the benefits of open source and developing your unique, custom marketplace features.
It can be a pain to develop and scale
One full-stack developer can likely manage building a marketplace on top of most open-source marketplace software alone, at least in the beginning. Whether this work will be fast or enjoyable is a different question.
Many OS marketplace tools and scripts weren’t specifically built with heavy customizations in mind. Sometimes, they’re the source code of a piece of software designed to be offered as a SaaS tool.
Even if the tool was built to be customized, open-source marketplace solutions can be complex beasts to master. They typically contain lots of code that is unnecessary for your marketplace idea and gets in your way. The sheer amount of code easily leads to situations where a simple code change causes something to break elsewhere.
In addition, using an open-source solution commits you to several specific technology choices: if it's built with PHP and MySQL, you need to use these technologies, too, instead of choosing the right tools for your specific idea.
You're also committing to a specific type of architecture. A typical issue is a lack of a proper API. If you don't have one, it's very difficult to build a mobile app for your marketplace later on. Managing third-party integrations can also become painful without an API. Another issue might be that the architecture is designed to only support marketplaces up to a certain size, and once you reach this level, it's difficult to scale up.
A poor developer experience is frustrating at best. At worst, the increase in manual work may double your development expenses, especially when you scale. If you're looking to create a unique, heavily customized marketplace and build a big business around it, an API-based headless marketplace solution is an alternative worth considering. We'll discuss this approach more later in this article. First, we're going to take a look at some popular open-source marketplace software solutions.
Four popular (open-source) marketplace solutions
Marketplace solutions that offer their source code as open-source or in comparable formats.
Cocorico by Cocolabs specializes in service-based marketplaces and has some features to support especially this use case. It can also be used for rental marketplaces.
Cocorico is available as a hosted Saas tool called Hatch. For the open-source version, Cocolabs also offers development and customization services.
Cocorico’s technology stack is based on PHP.
Shuup is available as a hosted Saas solution with a monthly subscription. It’s also offered for a one-off fee with customization work included. The software is open-source and can be downloaded on GitHub to use according to the open-source license.
Shuup’s technology is based on Django and Python.
Sellacious may suit as a starting point for marketplaces that focus on retail and need features like inventory management and shopping cart.
Sellacious is a downloadable marketplace software. It offers a free version and a set of premium plans with additional features and services. There is no Saas offering, though some plans include free configuration. You can also hire the Sellacious team to customize the site.
Sellacious’ technology stack is Joomla and PHP compatible.
How to choose the best open-source marketplace solution
The steps to evaluate the open-source offering and find the best alternative for your requirements.
Here’s how to find the right open-source software or marketplace script for you.
List your key marketplace requirements
No marketplace script will offer everything you need. All of them will offer something you don’t. Listing your key requirements will help you cut through the noise and compare functionality relevant to you.
For example, retail marketplaces (like Amazon) allow multiple vendors to sell relatively low-value items. They generate revenue because shoppers use them like online malls and buy from multiple sellers in one go. So, a shopping cart is a core requirement, as is inventory management. This will tip the scale in favor of solutions like CS-Cart or Sellacious.
A marketplace that offers rentals (like Airbnb) or services (like Fiverr) has no use for a shopping cart. Ditto a product-selling marketplace for unique and/or high-value items like apartments or artwork. What these businesses likely require is a booking calendar, location search, and user profiles.
If you need to custom develop even a single key feature at the beginning, your costs and time to market skyrocket. If there are lots of features you have no use for, they’ll be on your way in the code and complicate customization. It pays off to take time to find a solution with the right balance.
Listing your key requirements, it’s good to also spare a thought for the future. As your business evolves, you’ll likely want to adjust your transaction flow and pricing logic. So in addition to core features, make sure customizing your marketplace is easy. More on this topic, check out this chapter about developer experience and this one about API-based marketplace solutions.
Read through the open-source license
First, check that there is an open-source license. It's possible a service provider may only have outsourced a portion of their offering, and the rest is proprietary.
There are also differences in open source licenses in terms of the use they allow.
For instance, the MIT license allows for commercial use and modification, and the modified works can be distributed under a different license. The only requirement is that the license text and copyright are included.
The GNU General Public License v3.0 also allows for commercial use and modification, but has more conditions. For instance, the modified material needs to be distributed under the same license.
Visit the community forums and documentation
An active community around your chosen OS tool tells you a few things.
First, that there are real-life use cases and success stories powered by the script or software. Second, that help and peer support are available when you need them. Third, the biggest pain points in developer experience quickly surface on these forums.
Before choosing, browse through the community forum to see what kinds of questions are asked and how they’re answered. A community forum is a quick way to identify the most significant drawbacks and understand if you’re willing to negotiate them.
If no community forum exists, evaluating the depth and user-friendliness of the documentation is a good idea. Try doing a couple of searches in the documentation to see if you can find out the answers to your most common questions about development.
Evaluate the developer experience
Make sure you’ll be happy working with your chosen marketplace software. Try installing the software on your local machine and making customizations. If there's a developer tutorial, go through it.
Examine developer tooling: is there an API? If there is, are there SDKs for different programming languages? Is there a command-line developer tool available? What kind of tooling is available for monitoring errors? Does it have automated tests in place, and how long does it take to run the test set?
Typically such an evaluation only takes 2-3 hours per tool, but it can really give you an idea of whether the tool is a pleasure to work with or not.
Alternatives to the open-source marketplace approach
Some alternatives can help you optimize time to market, customizability, and developer experience.
There are many approaches to marketplace website development. The linked article discusses them in great detail and helps you compare the benefits and drawbacks.
But let’s briefly look at a few alternatives specifically compared to the open-source approach.
Developing a marketplace from scratch
The key benefit of coding a completely custom platform is, naturally, that it’s completely custom. You’re free to design your ideal feature set and look and feel. More importantly, from a developer’s perspective, you get to choose your tech stack.
The cons are pretty obvious as well. Building a platform requires full-stack development skills and a UX designer from the get-go. Considering the workload, you’ll likely want more hands on deck even if you have all these skills yourself. An open-source solution typically lets you get started with front-end customizations, though you’ll likely need a full-stack team soon enough.
Another concern is time to market. Managing the project will be a balancing act between hiring more people to your development team and increasing your time to launch. In any case, this alternative will cost you more than using an open-source solution, either in terms of time, money, or both.
To sum up the pros and cons:
+ Choose your tech stack
- Full-stack development team needed
- Much more expensive (in terms of time-to-market, budget, or both)
Using a hosted no-code marketplace SaaS tool
A hosted no-code Saas tool is unrivaled in speed to market. Some Sharetribe Go customers have launched in a single evening. By the time a competitor is ready to start running beta tests on their open-source-powered platform, a Saas-based business is already live and listed on Product Hunt.
Ease of use is another clear benefit. Configuring a no-code marketplace is as easy as ticking boxes and writing copy. Maintenance work is even easier, as there is none. Everything from server maintenance to feature updates are included in the subscription.
The trade-off is customizability. When you don’t have access to the code, there’s much less you can do to make the platform yours. Many entrepreneurs accept the compromise because they want to launch their MVP fast and validate their idea. In the case of Sharetribe Go, there's a migration path to Sharetribe Flex, so it's possible to scale that way after validating the initial concept. But for some, low customizability is a deal-breaker.
The subscription fee might pose another barrier. As a developer, you’ll need to consider which resource you’re more willing to part with: your money or your time. If it’s the latter, go with an open-source solution.
Summary of pros and cons:
+ Extremely fast time to market
+ Ease of use
+ No maintenance required
- Much less customizability
- More expensive in the beginning
Using a generic website CMS with multi-vendor plugins
Many generic websites or eCommerce builders offer extensions for adding multi-vendor functionality. This is the case with common CMSs like WordPress and Magento.
The benefit is that these tools typically allow for a lot of customization without touching the back-end. Magento and WordPress are open source, so there are lots of possibilities for both custom development and for adding proprietary or community-built plugins or extensions.
The biggest drawback is that unlike dedicated open-source marketplace tools, generic CMSs won’t offer you the key marketplace functionality out of the box. You’ll need to design your user journeys and transaction flows from scratch and figure out how to best implement those with an interplay of plugins. As a result, there’s a risk of vulnerabilities in your setup. The failure of one plugin may render your entire site unusable.
Depending on the exact CMS and plugins you choose, this approach may also incur bigger initial costs than using open-source marketplace software.
Summary of pros and cons:
+ Typically more no-code customization options
+ Lots of community-built and proprietary plugins and extensions
- No marketplace features out of the box
- Customization can be challenging if you need to make lots of changes
- Possibly bigger initial costs
Using an API-based headless marketplace SaaS tool
An API-based marketplace solution (also called “headless”) is a great alternative for an open-source software solution. A headless solution typically offers a set of open source templates that connect to a backend hosted by the software vendor via an API. This approach is designed to offer infinite flexibility, fast time to market, and an enjoyable developer experience.
Both API-based and open-source solutions have the benefit of offering you the key marketplace features outside of the box. The biggest difference is in developer experience.
Unlike most open-source tools on the market, headless marketplace solutions are built to be customized. More often than not, helpful developer tools like SDKs, CLIs, and developer documentation are offered to make work smoother. You can also choose freely the tech stack you want to work with. APIs simply return data that you can process with your favorite tools, whether that means PHP, Ruby, Node.js or something else.
More importantly, API-based tools will most likely require much less development work than open-source tools in the long run. There are three key reasons for this.
First, customization tends to be a lot simpler. Let’s take a concrete example: creating a unique transaction flow for your marketplace. Using the source-available version of Sharetribe Go, this task would require both back-end and front-end development. With the headless Sharetribe Flex, the same can be achieved in a couple of minutes, without even touching the back-end code. While the backend of a headless solution like Flex is not open source, it offers open-source web templates that make building fully functional marketplaces with them a breeze.
Second, an API-based Saas tool will require much less maintenance work. Traffic spikes, system updates, and bug fixes are included, which will save you countless developer hours in the long run.
An obvious drawback of API-based solutions is that you need to pay a subscription fee to run your marketplace with them. However, we believe that Flex ends up being a more cost-efficient solution for most businesses than open-source marketplace solutions, because of the economies of scale created by its shared hosting infrastructure.
Another drawback is that you can't make direct changes to the backend of an API-based solution. This doesn't prevent you from extending your platform, as you can always plug in a backend of your own. But if you're only looking to do a very slight backend adjustment, that might be easier to accomplish with an open-source solution.
Summary of pros and cons:
+ Great developer experience
+ Less custom development work needed to add new features, as you don't necessarily need to do any backend development
+ Reduced operating and maintenance costs
+ Work with the tech stack of your choice
+ Ensure you can scale to any size without facing performance issues
+ Technical support available for no extra cost
- Higher monthly cost in the beginning (if you don’t account for the development and sysadmin costs)
- You can't make adjustments to the API yourself