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We’ve recently talked about pros and cons of Ruby on Rails framework in our blog and named a number of cool features RoR has to offer you.

DesignRush.com, a B2B marketplace connecting brands with agencies, also discovered the top 3 Ruby On Rails functionalities that make it so wide used on the market.

They also listed the top Ruby On Rails development companies of 2019 and Sloboda Studio is proud to be one of them.

The Ruby On Rails platform offers plenty of features that improve business productivity and user experience, which ultimately leads to meaningful business growth.

The top 3 Ruby On Rails features by DesignRush include:
  1. Easy Platform Access

Ruby On Rails is open-source software, which means it is ultimately free to use. Because of its public access, over 4500 developers have contributed custom lines of code the ROR that other brands can utilize. In addition, businesses can partner with a Ruby On Rails development company to further personalize their ROR website and ensure success.

  1. Intuitive Development Process

Ruby On Rails was created with the idea of “Convention Over Configuration” in mind. This means that conventional features, functionalities and lines of code are automatically included, and developers only need to specify their customized “unconventional” features within the code.

This idea speeds up the development process by eliminating the need to code each and every web feature and makes building a functional website even easier for brands.

  1. Simple API Integration

Ruby On Rails websites can be integrated with third-party programs through a seamless API. This allows businesses to personalize their website to meet the needs of their consumers, improve brand identity, better user experience, and increase their own efficiency, all of which lead to business growth.

“Ruby On Rails is one of the leading website frameworks,” says DesignRush Founder and Executive Director Gabriel Shaoolian. “Their dedication to building light, fast-loading websites that are customizable and simple to develop adds significant long-term value to the businesses that build their online presence on ROR.”

DesignRush’s Agency Listing section features the top local and global Ruby On Rails agencies. Some of the top Ruby On Rails development companies from around the world include:
  1. Rubyroid Labs

Rubyroid Labs was founded in 2013 in Minsk, Belarus. Since then, they have become a leading Ruby on Rails development company in Eastern Europe with a full cycle of software development services.

Visit Rubyroid Labs online at https://rubyroidlabs.com/

  1. Parrolabs Inc

From the city of eternal spring Medellin, Parrolabs focusses on Web Development, Mobile Development and Digital Marketing. Its team is ideally located in the same timezone as New York City and its Nearshoring model will give you very competitive rates in the Americas.

Visit Parrolabs Inc online at https://www.parrolabs.com/

  1. Active Bridge

Active Bridge is a full-stack development partner responsible for developing and maintaining websites, mobile applications and software systems. We provide dedicated programmers who have extensive experience in Ruby on Rails development across a variety of industries for in-house teams. In the five years, our company’s gone from the startup to the successful provider of web/software development services to North America and Eastern Europe markets. Now we have more than 20 multifunctional projects and 30+ high qualified specialists in the staff. Active Bridge’s core technologies are Ruby on Rails, Angular.js, React.js, Ionic and Android/iOS. We implement them successfully creating client-side products and company’s projects.

Visit Active Bridge online at https://activebridge.org/

  1. Andolasoft

Andolasoft is a dynamic web and mobile apps development company that designs and develops web applications, mobile applications and deploys clouds for start-ups and established businesses. They are supported by a solid team of over 200 experienced developers that specialize in Ruby on Rails, PHP, CakePHP iPhone/iPad apps, Android apps, and Cloud Management services. Andolasoft has given all of their efforts to their two main products. One is OrangeScrum – the project management software – and another is WakeUpSales, the CRM application. They help clients all over the world by delivering projects within their budget and time.

Visit Andolasoft online at https://www.andolasoft.com/

  1. Arkenea

Arkenea is a full-service software development consultancy that helps fast-growing companies, whether Fortune 500 or startups, accelerate product time to market with custom software development and UI/UX design. Technology companies prefer Arkenea because of the founders’ experience in building, scaling and successfully exiting from a software product company. Their unique delivery model combines North America-based analysis and project management with delivery from their team of talented developers in India. Results, service and care levels are those that brands would expect from the best front-office tech teams in the country. Rahul Varshneya and Karthik Krishnaraj started the company to solve one of the biggest challenges they faced while scaling their own tech startups prior to Arkenea – that of unaccountable offshore software development teams. Arkenea was thus born by disrupting the business model of a traditional software development firm.

Visit Arkenea online at https://arkenea.com/ruby-on-rails-development/

  1. BenoSoftware

BenoSoftware, an IT services unit of Beno Group of companies, was founded with the vision to assist global companies in niche and complex engineering needs. In a short span of time, BenoSoftware has gained a wonderful reputation and significant clientele in its space. With its highly matured delivery processes and Agile approach, BenoSoftware has developed quite a few award winning and very complex applications. Over the last few years, BenoSoftware has served many global customers in various technology needs. Their choice of technologies, development methodologies, code quality and matured delivery processes has made them a trusted offshore product development company.

Visit BenoSoftware online at https://benosoftware.com/

  1. Briisk

Briisk helps companies go through digital transformation by building their software for over 6 years. They understand their clients’ needs and know how to pursue their business goals to be seen as the leaders in their industry. Briisk has a strong, multi-skilled team of software developers, analysts and designers who get a buzz out of technologies such as Ruby on Rails which helps create clients’ MVPs quicker.

Visit Briisk online at https://www.briisk.co/

  1. Clustox

Clustox has extensive experience in undertaking mission-critical projects. They demonstrate measurable value in terms of time-to-market, greater productivity and higher profitability. Their satisfied customers will gladly testify to how they have profited from their transformational value. 88% of their business is repeat business and perhaps the one constant in Clustox’s relationships is longevity. Clients consider them to be their extended organization. Clustox is focused on creating value, which brands can profit from. To create solutions that matter to customers and partners, their software engineers and architects constantly ask themselves: Is there a better way? Invariably, they find there is. They call this “The Clustox Way”.

Visit Clustox online at https://www.clustox.com/

  1. Datarockets

datarockets prides themselves on being much more than an outsourced development resource – they are a team of product developers. datarockets’ philosophy embraces intensive communication, quick delivery, automated and iterative processes. They work with clients as a single team. For the last 4 years, they have built more than 20 products for EU and NA startups and established businesses.

Visit Datarockets online at https://datarockets.com/

  1. Digiryte

Digiryte is one of UK’s leading Web and Mobile application development companies, known for its technical expertise in the Software development arena and business knowledge. Having started as a tech startup, Digiryte assembled a dream team of highly skilled and experienced innovation consultants, growth hackers, designers, developers and data scientists to build complex web and mobile-based systems.

Visit Digiryte online at https://digiryte.com/

  1. DNA Team

DNA Team’s talented Russia-based developers are ready to build software and mobile applications tailored to clients’ specific business needs, at a fair price and with very fast turnaround. At the same time, their consultants will work with brands wherever they are, to ensure the highest level of service and guarantee that their developers create exactly what each brand needs. They provide turn-key services or work on a limited scope, depending on client needs.

Visit DNA Team online at https://www.dnateam.ru/

  1. Emveep

Emveep is a team of professional Indonesian programmers doing web and mobile app development since 2006. They work with international startups. Emveep developers apps from scratch, and help clients launch, maintain and iterate in a lean manner. They can help brands localize and launch if they have an appetite for the huge Indonesian market.

Visit Emveep online at https://www.emveep.com/

  1. eproductions interactive web team

eproductions was founded in 1997 in New York. In 2002, they moved their activities, experience, expertise and knowledge to Athens, Greece. eproductions provides integrated, highly specialized web and new media services combined with prompt and excellent customer service that covers the needs of each project and of every client. Their main objective is to achieve the ideal outcome for each client, through strategic support of every technological requirement. At eproductions, every project presents a new challenge and also an opportunity to be creative in order to achieve the desired result.

Visit eproductions interactive web team online at https://eproductions.gr/

  1. JetRuby Agency

JetRuby Agency is a Full Cycle Web and Mobile outsourcing software development company with over 8 years of expertise in the development and maintenance of SaaS, CRM, ERP, E-Commerce, Social Media applications, RealEstate solutions of different complexity based on top-notch technology stack. The story of their success has already been spread over half of the Globe. Their portfolio is rich enough to include clients from the USA, Canada, Australia, China, the Middle East and the Gulf. They are proud to have The Financial Times of New York and GoPro among the dedicated clients that they have been working with for the last 4 years. Their mission is to help well-established businesses and startups develop high-quality IT solutions and integrate them into their daily operations in order to grow business success.

Visit JetRuby agency online at https://jetruby.com/

  1. Jyaasa Technologies

Jyassa Technologies is a Ruby on Rails Software Development Company. They transform ideas into real-time products, giving clientele the ultimate online experience. Jyassa Technologies has a professional team whose expertise lies in web and mobile applications and who are proficient in the 3Rs (Ruby on Rails, React and React Native). Jyassa Technologies specializes in building digital products for startups and early-stage businesses. Whether it’s a mobile app or custom web application, they are passionate to design, develop and deliver products that do well in the digital world. Their mission to inspire and enable entrepreneurs and startups to build great products that solve real-world business problems.

Visit Jyassa Technologies online at http://jyaasa.com/

  1. Navtech

Navtech is well known to be one of the Best Mobile App development companies in this world since 2013. They always keep running with a bundle of youthful and energetic software designers. Their Cloud Computing Services with a vision to deliver secure and cost-effective solutions for public, private and hybrid cloud services. Navtech’s solutions enable customers to harbor the benefits of a cloud platform without compromising its agility and efficiency. They transform creative ideas into innovative panaceas which enable their clients to witness a remarkable experience.

Visit Navtech online at https://www.navtech.io/

  1. RailsCarma

One of the fastest growing technology enterprises, RailsCarma specializes in crafting solutions for entrepreneurs, large organizations, agencies and start-ups. With a blend of ingenious expertise, system prowess, and cloud compatibility, RailsCarma endeavors to maximize the profit that clients deduce from their IT investment. They are industry veterans using and implementing Ruby on Rails from its nascent stages for development, training, deploying and contributing back to the Rails Community. Through trusted technical expertise and consummate customer service combined to deliver a delightful experience for clients, RailsCarma provides end to end Ruby on Rails consulting, architecture, building, management and extension to companies around the globe. They support clients with tools, techniques and pioneering approaches to solving mission critical business problems.

RailsCarma provides an extensive range of RoR Consulting services from process review, cloud deployment to consulting. An eclectic mix of group, their RoR experts are united by the love for Rails framework and a desire to produce digital masterpieces. Using a collaborative and delivery-oriented approach to all projects, RailsCarma’s experts bring exquisite visuals, intuitive designs and outstanding content and convert ideas into successful products. Be it for large enterprises or start-ups, RailsCarma believes that RoR has the power to turn challenging ideas into outstanding projects.

RailsCarma promotes RoR without reservation as they believe fast iteration contributes to a lot when it comes to success in this hyper-paced business world. Technologies and the Internet are enabling them to create and consume information at an alarming alacrity and RoR is only contributing to make it faster. In short, the world is fast and a business needs to be faster to survive. RailsCarma’s adept team builds faster and powerful scalable products that work with ease and effectiveness.

Visit RailsCarma online at https://www.railscarma.com/

  1. Redwerk

Redwerkis an outsourcing company that provides quality software development services to large enterprises and startups around the world. They have two offices in the Ukrainian cities of Kyiv and Zaporizhzhia and an almost 60-head team of real professionals. Redwerk provides top quality web, mobile and software development services and guarantees the flawless of all projects outsourced to developers. Whether a client needs professional designers, skilled developers or attentive QA engineers under the proper guidance of the project manager, Redwerk is the right place to turn to.

Visit Redwerk online at https://redwerk.com/

  1. Sloboda Studio

Sloboda Studio is a company that provides custom web development services. Founded in 2010, they completed 92 projects for the clients from Western European countries. Their clients include Marketplaces, Fintech, and Adtechproducts, and they apply Agile methodologies to ensure the timely delivery and the high quality of the product. Sloboda Studio’s core specialty is marketplace development. They also work with mature companies located in Western Europe on an out-staffing basis with dedicated models. Since 2018, Sloboda Studio provides machine learning services. For clients, they can create Deep Learning Neural networks that are capable of processing the human language, photographs, audio and video files. With scoring and clusterization algorithms, they can develop the recommendation systems that will offer the most relevant solutions to clients.

Visit Sloboda Studio online at https://sloboda-studio.com/

  1. Syndicode

Syndicode is a software development company, whose quality, performance and flexibility resulted in a trusting partnership with companies in Ukraine, Europe, and the USA. They help to create digital products for various businesses be it one-page promo website, e-commerce mobile app, critical enterprise app, two-sided marketplace, SaaS, or backend for high-load video streaming social network. Syndicode loves building simple and unique solutions for the best customer experience. Their web and mobile developers know how to build products and services with the agile iterative approach. From proof-of-concept prototype, through Minimum Viable Product to Release 1 – they cover all phases from idea to managed launch and maintenance. Clients enjoy high intelligence, discipline and best engineering talent of Syndicoders.

Visit Syndicode online at https://syndicode.com/

  1. ThinkSys Inc

Thinksys is an award-winning software development and testing company with a rich heritage of building innovative and creative software products that fit any industry and budget. They have a group of over 250 experienced developers and testers, who work together to unlock value using their creativity, trending technology, and business-minded thinking. With its headquarters in the USA and the R&D operations based in India, Thinksys has experience of building over 300 innovative and custom B2B and B2C applications for a variety of industries, like Healthcare, Agriculture, E-Commerce, Finance, Logistics, Real Estate, etc. From providing dynamic web and mobile app designs to using effective testing methods, Thinksys offers solutions that transcend the trends of tomorrow.

Visit ThinkSys Inc online at https://www.thinksys.com/

  1. Webisoft

Webisoft knows the pain that entrepreneurs face while hiring developers for their dream product. They would like to invite brands to vet them rigorously prior to hiring. In fact, Webisoft frequently releases blog posts on the company blog for the novice Internet entrepreneur.

Visit Webisoft online at https://webisoft.com/

Brands can view the best ROR agencies by rates, expertise, experience, case studies, reviews and more on DesignRush. Users can easily filter to compare Ruby On Rails development firms and find the top Ruby On Rails developers who can build a successful website.

   

About DesignRush: DesignRush.com is a B2B marketplace connecting brands with agencies.

DesignRush features the top agencies around the world, including the best Ruby On Rails Development Companies, Data Entry Firms, Digital Agencies, Logo Design, Digital Marketing, Website Design, eCommerce Web Design Companies, and more.

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Sloboda studio Blog by Alex Morgunov - 11h ago

As the requests of developers and users change, so do technologies. As the main tools for the creation of applications, frameworks are no different. What was convenient and popular yesterday, may lose necessity and demand today.

The Ruby on Rails, a framework written in the Ruby language and released in 2004, is often called an example of such change. A framework that was once one of the most popular, is now considered to be stale and dead by some.

But is it true, though?

Ruby on Rails criticism

We all have prejudice about something. RoR has suffered enough at the hands of prejudice.

Why do some people assume that Rails is dying? Well, there are a number of reasons for this.

RoR’s popularity decline is not so much because of its obsolescence, but competition. At the time of its release, this framework was one of a kind, which made it widely used in development until new products with similar or superior features began to appear.

At the time Ruby on Rails appeared it made a huge impact on the developer community. After its grand entrance, Rails continued to be at the forefront of chosen frameworks, reaching Ruby on Rails high usage in 2006. Although popularity has since declined, demand remains stable today.

Is Ruby on Rails dead?

Ruby on Rails is alive and breathing, and may even outlive its competitors. Of course, the application development process becomes increasingly complex and requires new capabilities from the frameworks at a rapidly increasing rate. In addition, new frameworks appear with novel capabilities and get quick (albeit temporary) acclaim, supporting the assumption that RoR is dying.

How popular is Ruby on Rails?

Although the popularity of RoR has declined in recent years, this is a reasonable expectation for technologies that have been on the market for an extended period of time.

Evidence of RoR’s popularity and prosperity:

Convenience: today Rails is still convenient, functional and useful, which is relevant to developers. RoR is convenient due to quick development, convenient and readable syntax, and innumerable built-in solutions (libraries). Competitors, though on the rise are likely to fall out of popularity in part due to novelty over practicality.

Community: Rails always evolves, which is evident by the size of its active Ruby on Rails community. Developers use Q&A platforms like Stack, Overflow, and Dev regularly to discuss problems, as well as share new articles and tricks.

Companies using Ruby on Rails: many large companies (Imgur, Github, Twitch.tv, and others) still use RoR for their apps. The foundation for a future for the Ruby on Rails framework has been set. As long as RoR’s features and functionality are among the best, well-known companies will continue using it in the development.

Bright future of Ruby on Rails

New versions of Ruby keep getting released with increasing convenience. It is expected that the update of Ruby planned for release in 2020 will be groundbreaking.

The creators set three goals for Ruby 3:

  1. Static analysis
  2. JIT / Ruby 3×3 / Performance
  3. Concurrency

Ultimately, the Ruby founder wants ruby to be at least 3x faster than the current version, to have better handling of concurrency and “duck inference” with the introduction of static types in the best way.

So, above we’ve listed the bullet points that prove that RoR is very popular. If you want to get a whole overview of this framework, we have a list of Pros and cons of Ruby on Rails for you!

To sum up, even though there are lots of rumours concerning RoR’s fading out, the facts indicate otherwise:

  • Strong community
  • Continuous evolution
  • Enormous number of tools and libraries

Sometimes people believe that if nobody is talking about a technology that was highly popular not a long time ago, then it means that this technology is dying. Well, this is not the case here. It only means that the peak of Ruby on Rails’s popularity has passed and the period of stability has come.

Ruby on Rails: Perfect for a startup business, convenient for a development team.

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Got an idea for a marketplace and can’t wait to implement it?

Well, fasten your seat belts because we are about to break down each of the options available to you for creating an online marketplace.

Basically, there are two main ways to build your own marketplace:

  • Custom development
  • Off-the-shelf solutions
Custom development

Custom development means building software for a client from scratch. In our case marketplace softwares. You can either hire an in-house team of developers or outsource your marketplace development.

Custom development is suitable when you want…

  • to raise investment
  • to build a long-term project
  • better quality and flexibility
  • more features
  • to be independent and in control of your project
  • a custom solution
  • integration with external APIs and services
  • a scalable solution
  • a custom UI/UX
  • Opportunities for future growth

Pros

  • Personalization: you can build a marketplace according to your business needs and requirements
  • Compatibility: your marketplace can be made compatible with different devices, external services and tools
  • Security: while packed solutions offer mediocre security, custom development brings a variety of choices for securing your marketplace against fraudulence and malicious activity.
  • Scalability: a custom marketplace will be able to handle numerous listings and an increasing amount of customers, which is vital to the business’s growth.

Cons:

  • Cost: developing a marketplace from scratch requires bigger investments. Of course, no one says that you have to spend the whole sum right away; you will have time to find investors while building a marketplace MVP. After first getting traction on an MVP, you can pitch your marketplace to investors in order to raise money for further product development.
  • Time: No successful marketplace was ever built fast. Art takes time, and like any art, you need to have a team that is in it for the long haul. So building a super team can be a serious setback if not done conscientiously.

The process of custom development goes through several phases:

Off-the-shelf solutions

Off-the-shelf software is a ready-made solution. It can be a good start for quick validation of your idea. However, off-the-shelf solutions offer a limited number of features. So, if you want additional features that the platform doesn’t provide you will not be able to install them since the marketplace platform software wouldn’t allow it.  

Off-the-shelf solutions are suitable when you…

  • want to test your idea
  • want a quick and easy solution
  • don’t mind low functionality
  • have a small budget
  • have no technical background

There are four types of marketplace software builders:

  1. SaaS – Software as a Service
  2. CMS – Content Management System
    1. Vendor-hosted
    2. Self-hosted (open- or closed-source)
  3. API – Application Programming Interface
    1. plain
    2. with SDK
    3. with a basic front-end template
  4. PaaS – Platform as a Service
#1 Software as a Service (SaaS)

SaaS is a software model where software is accessed online via a subscription, rather than bought and installed on individual computers and is centrally hosted.  

The Saas marketplace platform could be the most suitable for marketplaces with a relatively simple business idea, or a niche & non-technical team. The service will create an account, connect a domain and allow for a personalized payment method – all in a few clicks.

One of the most common pricing models for such services is a monthly and yearly subscription fee. The exact price may depend on the number of transactions made through your marketplace, the number of listings (published goods or services), or the total number of users that have been registered on your platform.

Pros

  • Little or no technical effort to start from the founder’s perspective
  • Experienced technical support from SaaS provider

Cons

  • Low flexibility in terms of both functionality and UI
  • High price after reaching some number of users, listings etc.

Good examples: Sharetribe Go, Arcadier, MarketplaceKit, Cocorico, JaJuMa-Market.

Let’s take a closer look at the most popular marketplace builders.

Sharetribe Go, Arcadier and MarketplaceKit are the most popular examples of SaaS builders for marketplaces. The hosted versions of these platforms are pretty much the same except for a few differing features. For example, MarketplaceKit gives you a more powerful search across geolocation and custom multiple fields.

All three platforms offer you hosted versions, but only two of these SaaS builders offer self-hosted versions, namely Sharetribe and MarketplaceKit. Let’s look at the advantages and disadvantages of Hosted and Open-source versions of these builders.

Hosted version:  

  • They take full responsibility for the technical part: installation, maintenance, updates, security, backups
  • It is automatically updated to the latest version
  • They offer full support
  • It includes all the latest features
  • Stripe and PayPal payments are available
  • Almost no technical knowledge required
  • You can easily move from the hosted to the self-hosted version
  • Your software is hosted on the vendor server
  • You are unable to customize the backend
  • There is limited customization of CSS, HTML, and JavaScript

Self-hosted version/ Open source version (only Sharetribe and MarketplaceKit):

  • Ability to rewrite the code
  • You need to install the software on your own server
  • You need to take care of each of the technical elements
  • The level of support depends on the voluntary help of the user’s community
  • The platform almost does not develop
  • Some code and used methods are deprecated
  • It’s price-free, but a customer needs to pay for their initial setup, customization, hosting and maintenance, which means more features and therefore more money
  • Strong technical knowledge is required

Below you’ll find a comparison table with three main SaaS providers.

#2 Content Management System (CMS)

СMS is a software app or a number of related programmes that are used to create and manage digital content.

Marketplace CMS gives much more flexibility than custom SaaS in terms of logic and UI customization. That is because the developers in the marketplace team have full control over the code base and can create pages, animations, and transaction flows within almost any level of complexity. But this comes with a price: as a marketplace builder, you must locate and hire a team of developers who are:

1) familiar with this specific CMS or at least the tech stack on which it is built

2) professional enough to grab your vision of the marketplace features and main idea, and implement them precisely.

There are two types of CMS:

  1. Vendor-hosted: it is not just a customizable code base because the vendor also offers additional hosting and deployment services, as well as backups and updates for your marketplace. Sometimes it is even possible to access a small team of dedicated developers through the vendor themselves who will work on the initial CMS code to customize it according to your needs.
  2. Self-hosted: it can be an open-source marketplace CMS or it can be a commercial lifetime license which provides you with an instance of a closed-source CMS to deploy, scale and customize to any extent you need, but without support.

Pros

  • Good opportunities for UI and business logic customization
  • While having this flexibility, a marketplace builder can still rely on the vendor in terms of hosting, deployment, backups etc. in most cases

Cons

  • Possible tech stack lock-in: a marketplace builder has to look for developers familiar with a particular CMS tech in order to customize it (if a vendor doesn’t offer any customization support)
  • A CMS may become an additional development cost or even impossible, if it doesn’t feature public API or integration with external APIs (if a marketplace builder decides to provide an API for sellers).

Good examples: Sharetribe Go (hosted and open-source versions), Tamaranga (open-source (except for core components), self-hosted), OMS (closed-source), MarketplaceKit (open-source), Cocorico (open-source, self-hosted).

#3 Application Programming Interface (API)

Marketplace API (or so-called API as a service) seems to be the natural evolution of SaaS marketplace technology. API is a set of requests and methods between a server and a client.

All the API service providers want to offer both zero-cost management and maximum customization flexibility to their customers – people who want to build a marketplace. A great solution can be building an API on top of their own backend, deployment, and monitoring systems and offer it as a service. However, the UI and specific marketplace builders logic development is a burden for the marketplace development team.

Creating an SDK can make the life of a marketplace developer easier: a library (or set of libraries for different programming languages) wraps low-level calls to your API from marketplace front-end over HTTP or GraphQL and speeds up the development.

Moreover, some marketplace API providers offer a frontend boilerplate that uses their marketplace API (+ SDK). A particular marketplace developer may use it as a starting point to test the hypothesis and customize or even rewrite it from scratch later if needed.

Pros

The maximum level of the UI and business logic flexibility (within the API functionality)

  • Ability to integrate the API into existing e-commerce or marketplace websites (sometimes, API vendors even offer connector scripts for some target e-commerce platforms)
  • No headache for a marketplace builder in terms of API support, QA and DevOps

Cons

  • UI and UX for a new marketplace need to be created from scratch
  • Hosting, deployment, and backups of the front-end part is still the responsibility of the marketplace builder
  • Flexible functionality is still limited.

Good examples: Stelace (actually, they had a front end as well, but it’s abandoned now), Sharetribe Flex (API, SDK, and front end boilerplate), Arcadier, Izberg (API with SDK).

#4 Platform as a Service (PaaS)

One solution to rule them all. “Platform as a Service” or “Marketplace Platform” appears to be the most enterprise-flavour type of a marketplace tech approach. PaaS is a digital platform that allows people to build marketplaces and services by using the Internet.

While a marketplace builder is free to build, the UI and logic is provided by the platform (similar to CMS) and around its APIs (like in the “API case”), the deployment and administration are done through the platform portal interface. Simply put, it’s a blend of open-source CMS, API as a Service and vendor hosting. Of course, such an approach has its benefits and drawbacks.

The advantage here is that it gives a great deal of much flexibility within the realm of customization. Another perk is that you don’t have to choose between front end and back end – the platform has got you covered on both sides. The downside is that you’re tied to the platform’s grid of deployment and scaling servers. For some, this means no hassle with DevOps and support. For others, it can lead to lock-in and scaling problems.

Pros

  • All pros of the API
  • Vendor support and consulting for both front-end and back-end parts of a marketplace

Cons

  • Vendor dependency in terms of deployment and scaling

Good examples: PlatformOS (PaaS brand of NearMe marketplace) and Mirakl.

These platforms are practically the same, though there are some distinctions. For instance, Mirakl has Loyalty Program, Promotions Management and Returns Management whereas NearMe offers Account Management.

To sum it all up, in building a marketplace you have two options: custom development or an off-the-shelf solution. Off-the-shelf software for marketplaces comes in four different shapes: SaaS, CMS, API and PaaS.

While deciding which approach is most convenient for you, try answering the following questions:

  • What is your budget?
  • When are your deadlines?
  • Do you plan to fundraise?
  • What is the desired size of your marketplace?
  • Do you have a technical background?

Budget

Is your capital under $20,000? An off-the-shelf solution could be an option of low-budget start with limited functionality. Another option available to you is starting with a discovery phase and tech pitch deck, if you plan to pitch your idea to investors.

Do you have $20,000+? We recommend that you consider custom outsourcing.

Deadlines

Want to launch a marketplace MVP in less than one month? Your choice should be SaaS or PaaS.

Investments

Are you willing to fundraise further? Custom development would probably serve you better, so that you can introduce unique killer features to the market.

Size of your marketplace

Do you plan to have over 100,000 users in your marketplace? Then, SaaS or PaaS is off the table. Custom development is the best choice here.

Technical background

You don’t have it? Choose between custom outsourcing and SaaS, PaaS

The most important benefit of custom development is personalization. By building a marketplace from scratch, you will be able to design it exactly the way you want it to be. The biggest drawback is money.

Word of advice: raise money from investors before building an MVP (assuming you have a tech pitch, of course) or after your marketplace first gets traction.

Off-the-shelf software has some disadvantages too. The biggest are limited customization and functionality. The advantage here is quite simple: no tech knowledge is required if we’re talking about SaaS or PaaS.

Looking for an easy and cheap fix for the short term?

Then an off-the-shelf solution is your friend. All you have to do is decide which builder will best suit your needs.

Want to build a marketplace that is adaptable, scalable, secure and personalized?

Then custom development is your pal. Here at Sloboda Studio, we build custom service marketplaces for a reasonable price and with a trusted team of developers, QAs and PMs.

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What if I said that your payment solution stopped working? Terrifying, right? ‘Cause we all know that the payment solution is an inherent part of any online marketplace. Without it, your marketplace will struggle to survive.

Payment method affects your business model, payback, trust and popularity among users. The right payment method helps to increase sales, reduces the fraud risk, improves chargeback management, and even expands your business internationally.

As you can see, this is not a thing to go over lightly. There are a lot of factors to be considered. Let’s take a closer look.

Available online marketplace payment solutions

Basically, there are three main online monetization models: wire transfer, payment gateways, and personal payment solutions.

#1 Wire transfer

This method allows you to accept money via direct bank transfer. Some startup marketplaces use direct bank transfers, but such online payment gateway has its disadvantages:

  • Fees for users: There are large fees for bank transfers: American banks may charge 15-35% per transfer (TD Bank, US Bank, Citibank, etc.). European banks are cheaper, for instance, ING Bank (Holland) charges €6 per transfer.
  • Security: Lack features such as fraud protection or the ability to pre-authorize payments, it is impossible to get reversals or chargebacks.
  • Time: The bank transfer takes around one week to be processed. It is not convenient, especially when you have an Airbnb-like marketplace: if the online payment option is inappropriate, then the payment delays and the client won’t be able to use the rent.
  • Price. This payment method may be a good idea in case you are looking for a cheap solution. All you need is to send an invoice and get your bank transaction.
  • Implementation. There is no need to spend additional costs on the implementation process, that may be crucial for brand-new startups.
#2 Marketplace payment gateway

This could be any software that helps to facilitate the transaction between the marketplace and its customers. There are a lot of different online payment options, but you need to choose wisely because of such factors:

  • Types of payments. Online payment gateway options allow connecting different types of payments. For instance, Stripe and Adyen allow you to pay with international credit card payment gateway and payment methods (VISA, MasterCard, American Express, Alipay, etc.).
  • Fees for users. The average fee for one transaction is 2,9% + $0,30 (PayPal for marketplaces in the US, Google Checkout, Amazon Payments, Braintree, Stripe marketplace payments).
  • Ease of integration. A lot of payment gateways are targeted on startups, so their documentation is clear (Adyen) and integration is quick (Stripe). But, in some cases, the payment gateways have small API (MANGOPAY) or are difficult to implement (PayPal).
  • Security. The best payment gateways for marketplace offer you various security tools, such as SSL, PCI, 3D Secure, escrow payments. You can use tokenization and anti-fraud tools.
  • Technical support. As usual, is 24/7 (Stripe), some companies offer feedback forms, support via phone in English, German and French (MANGOPAY), or offers you live chat (Dwolla).
  • Geolocation. Before learning about how to implement a payment gateway, check the geography of your provider. This is where you should be careful, as long as some online payment solutions are restricted in different countries: PayPal is partially restricted in some countries, Adyen doesn’t work in Ukraine and Stripe is unavailable in the United Arab Emirates. As a vendor, you can only change a payment provider or choose another country to register your marketplace.

Note: there are two main ways to implement payment gateway to your marketplace: via widget or via API:

  • Widget. You only need to integrate a provide’s widget to your marketplace, and storage and security will be up to your provider. As a disadvantage, such a widget may have an inappropriate or hard-to-adapt design.
  • API. You can integrate payment gateway via API, creating front-end part and page making. But, you have to be responsible for the money of customers, as far as you should store it before sending to the vendor. In addition, you will need to pass PCI DSS certification and spend up to one year of development of secure architecture and data storage.
#3 Creating a custom payment gateway

You can also create your own payment solution, but such a method may be hard to implement:

  • Security and costs. To use your own payment integration, you will need to have a PCI DSS Certificate, which is expensive. Such a certificate will be required in every country when you are working.
  • Time. Such development will cost you about 5 years.
  • Team. You will need to hire a team to develop and integrate such online business payment solutions. As a result, the whole thing will cost you too much time and money.

Now you know how to connect website with payment gateway, so it is your turn to choose the right solution. Specify your requirements and choose the right payment solutions that will fit both you and your customers.

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In the age of disinformation, fake news and growing concerns about personal data usage, how do you convince online shoppers and vendors that your platform is safe to use? Safe enough to buy into the convenience of the ecosystem you’re building in order to monetize your online marketplace?

Luckily, as digital trust has become a greater challenge, more research has been dedicated to figuring out how to build trust in the online space.

Here are 4 areas where research has uncovered that it makes sense to focus if you want to build trust in your marketplace.

Build and design your product with trust in mind

It’s common sense really but building a user experience that feels trustworthy starts with building a product that’s designed to feel trustworthy.

A study by Stanford University found that 46% of people say that design is the number one criteria for determining a website’s credibility.

This result is backed by The Nielson Norman Group who states that design quality, up-front disclosure, comprehensive and current content, and connection to the rest of the web are the 4 ways which websites can communicate trustworthiness. Here they highlight the need for a well-organized site and a pleasing visual design that matches the purpose of your site.

The Nielson Normann Group has also created a pyramid of trust, based on Maslow’s famous hierarchy of needs. It outlines the 5 levels of commitment in site-user relationships and advice that you do not try to move the user to the next level of commitment before having met the trust needs of the previous level.

This is really important to consider when you design the user journey both for your buyers and sellers to ensure that trust is established.
It’s particularly important considering that in a survey by KPMG, 30 per cent of shoppers’ state that the most important attribute when deciding where to buy is having a preferred website and a website preference is closely tied to the level of trust they have in your site.

Verify your sellers and your content

For traditional ecommerce, it’s quite easy to ensure that design and content go hand in hand. For online marketplaces, this is a lot more challenging since in our industry we rely heavily on user-generated content. This creates multiple challenges. First of all, you need to assure that the content uploaded is genuine and not intended to scam potential buyers. Scam account for 2 per cent of the total volumes of content we review at Besedo every month. With that number in mind, it’s easy to understand why scams can have a significant impact on the user experience of your site if not removed early and continuously.

Make sure you have a process in place for pre-moderating the content that’s submitted so buyers know that the content, and sellers, have been through a verification process before they’re allowed live on the site.

Secondly, you need to assure that the content meets the quality standards required to keep the design of your site trustworthy. In a study on user behaviour on online marketplaces, we found that people who saw irrelevant content were not only less likely to buy the item advertised in the listing with irrelevant information. They were less likely to buy from any other seller on the site. In fact, only 23% of them would buy from other sellers, while 58% of those who saw a quality listing would buy from other sellers on the site.

This means that one piece of bad content can easily ruin the trust of your site. This is especially true for first-time visitors where you have built no other trust capital and as studies show, you have about 50 milliseconds to make a good first impression. As such bad content can severely impact your acquisition rates.

But it isn’t just acquisition that’s hurt by bad content. In a qualitative study we performed, 33% of users found misleading headlines which make them not want to buy the item being advertised at all. They simply didn’t believe they would get the product seemingly advertised.

This is why some of the biggest online marketplaces in the world work with Besedo to ensure high accuracy content moderation.

Finally, your entire brand image can be hurt if you do not have a process in place to curate the content submitted by sellers. Depending on your online marketplace and the target audience, it could be crucial to guarantee a certain level of image and description quality. Keep in mind that the first page of your app or site is the virtual storefront, where users decide if it’s worth it to explore the rest of your inventory. We’ve helped customers tag content with high, medium or low quality so they could guarantee that only high-quality images and texts were displayed at the top of searches and on the front page and other important landing pages.

This is the same tactic Airbnb used when they were scaling and would literally go out to people’s properties to take high-quality images that would convert and attract better.

Social proof through reviews

Reviews are a great way to add another layer of trust to your online marketplace. It gives users a sense of safety to know that others have had positive interactions with the sellers you feature. However, as with all other user-generated content, there’s a risk that bad actors will abuse them. For reviews, this usually happens by them adding fake reviews to boost their own standing or bad ones to discredit competitors.

Amazon, in particular, has struggled with fake reviews and in 2018 a study revealed that 61% of all electronics reviews on Amazon are fake.

The avalanche of fake reviews has not deterred people from using reviews as a guide for purchase and trust though. In fact, a study by Spiegel shows that the likelihood of purchase is 270% greater when a product has 5 reviews compared to when it has none. At the same time, 30% of consumers assume online reviews are fake if there are no negative reviews and 68% of consumers trust reviews more when they see both good and bad scores.

This means that you should add the functionality of reviews to your site, but you need to make sure that the reviews are genuine and that you get a good mix of both positive and negative reviews.

Provide great customer support and quickly respond when people reach out to you

Since online marketplaces rely on strangers feeling comfortable interacting with each other, often with no other proof of identity than what’s offered by their profile, it’s imperative that the platform lends the security to make the leap of faith necessary easier.

An active and high-quality customer support service helps facilitate trust by assuring users that there’s always somewhere they can turn for help if an interaction goes wrong.

A study by KPMG shows that 51% of consumers trust companies who make it easy for visitors to contact the people behind the company.

With this in mind, make sure it’s clear not just how to contact your support department, but also to put a face to the people that are behind your company. If they know there are real and genuine people behind your product, users will have an easier time trusting that, and the same is true for the profiles populating your site.

Great customer support doesn’t just build trust, it also creates loyalty. According to the study by KPMG excellent customer support is the attribute that drives the highest customer loyalty with 66% of respondents.

Consequently, you should invest in high-quality customer support, regardless of whether you decide to use an in-house team or outsource your customer support services.

A functioning and trustworthy Payment solution

The interaction on online marketplaces that require the biggest leap of faith is, without doubt, the step where you transfer funds to a stranger without having physically seen the product you are buying.

In the book “Trust in the network economy”, Petrovic et al. defined a trust pyramid where each level needs to be fulfilled before people feel comfortable transacting online. He also highlighted six elements that, when combined, forms the trust period. The first of them reads as follows:

“Using secure and reliable technology on your website serves as a recipe for promoting trust. Potential customers can feel secure whenever they engage in online transactions.”

That’s why it’s incredibly important to offer payment solutions that both protect the data of your users and acts as a security net if the received item doesn’t live up to the expectations created by the listing and the seller.

It is, however, also important that the payment system protects the seller as scammers increasingly abuse payments systems that favour buyer claims.

Whether you go with an escrow type of payment system where money is held until both buyer and seller are satisfied with the transaction, or a payment system with a lenient and well-functioning refund system, it’s important that you make payment security a priority.

Trust is built by continuously meeting or exceeding expectations

For people to trust your platform you need to always deliver the experience they expect. One negative experience could damage your brand and user trust in your online marketplace for good. According to psychologist Sara Ingvarsson “Even though a company hasn’t promised anything, we project expectations onto them, so when someone’s the victim of fraud they often feel that the platform has failed them and broken its brand promise as a result.”

As such it’s important that you make sure that your users (both sellers and buyers) are always met with the experience they expect from your site. Both when it comes to design and UX, content quality, customer support and payment options.

If you nail those areas, you have a very good foundation for a trustworthy user experience that will help you grow and convert.

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In the recent years, Big Data technologies left the business area of IT and were introduced into the different fields of our everyday life: state structures, business, science, healthcare, etc. On the example of healthcare area, you can see that Big Data technologies can not only optimize the production and increase the revenues of the companies, but also solve the global problems and save the lives of millions people.

Each year the population of our planet increases – that is why, predicting and preventing the epidemies, fighting the diseases are the main tasks of modern society. This can be done more efficiently with the help of Data Science.

In this article, we will tell you about using of Big Data in healthcare industry. You will learn about electronic health record systems, how portable electronic devices can be helpful and treatment, how Big Data algorithms can save people’s life in reanimation. Also, we will talk about telemedicine – remote medical consultations between the doctor and the client.

Also, we will tell you about the Data Science project created by our team. It is about analyzing the statistics of World health organization and defining the most frequent mortality causes among the European population. Stay with us, it is going to be interesting!

Data Science and Healthcare

In the future, the history of all medical procedures from the very birth of the human will be stored in the electronic database.

The machine learning algorithms are capable of finding the statistical correlations in world-wide volumes of medical data. This will help to quickly give the recommendations for the patients and their doctors.

Analysis of all known clinical records will help to introduce the support system for the doctors. They will receive access to the experience of tens of thousands colleagues all over the world. Let’s see the benefits of introducing Big Data technologies for in healthcare area.

Electronic health records

Electronic health record is a system for collecting the information from the different sources. Here you can find the information about the patient’s diagnosis, medicine, current health issues, passed procedures, medical screenings, etc. The smart heallth record cards are capable of sending the patients the emails about the necessity of completing the recommendation of the doctor.

By using the data from the electronic health record system, the doctor may find the correlations between the completely different (as it may seem) diseases. For example, the risk management system developed by the members of Kaiser Permanente Consortium, can calculate the risk of mental diseases among the diabetes patients. By using this model, the American army tries to minimize the suicide rate among the veterans.

Portable electronic devices

The number of the portable electronic devices, such as fitness watches, increases every year. Now, in the USA, the practice of passing the data to the attending medical doctor is introduced.

Even if the patient’s health is normal, petabytes of the collected information form flexible and constantly growing database. The neural networks will be able to find the correlations between the tracker data and person’s liability to diseases. This is the example of data analytics in healthcare that can spots the weak points in people’s health, predict the probable diseases and give recommendations on how to prevent them. For the doctors, it is a way to predict the result of particular way of treatment basing on its results among the patients with similar genetics and lifestyle.

Reanimation & Aggressive treatmeent

When it comes to reanimation, predictive analysis comes to the first place in terms of care for the patients. The most vulnerable ones are liable to sudden deterioration of health due to infections. These cases cannot always be predicted by busy reanimation and aggressive therapy doctors. But it can be done by healthcare data science algorithms.

They will help the doctors to ensure that they do not miss the important information about the patients, like their liability to sepsis. Since it does not have strong symptoms on the early stages of the disease, the doctors mostly detect it when it is too late – that is why about 40% of sepsis cases are lethal. By analyzing the patient’s state and millions of similar cases, the system will detect the risk of sepsis that will help the doctors to detect the disease as early as possible.

Telemedicine

Another example of using Big Data in healthcare is the development of telemedicine. This term includes both primary diagnostics and complex monitoring of the patient’s state. Due to telemedicine development, it is possible to communicate with a doctor remotely.

The doctors use telemedicine in order to create the individual treatment plan for the patient and to prevent hospitalisation. By decreasing the number of patients in the hospital, it is possible to reduce the financial expenses for medical services without losing the quality of the service. The consultation can be handled at any time from any place that is convenient both for the patient and for the doctor.

Challenges of introducing Big Data in healthcare

Despite the progressiveness of Big Data technology, it would be wrong to consider it the key to all knowledge in the world. While processing the huge amounts of the information, one may face three major challenges.

Unstructured data

The algorithms for dealing with the text information were created long ago and are widely used in Big Data processing. Yet,it is unclear, what to do with audio and video information. If we use the standard algorithms of transforming speech into the text, the volumes of information will become too big.

It will imply additional difficulties in finding the useful information. About 78% of medical data is unstructured and it is too expensive to filter and analyze such amounts of information.

Lots of junk information

Big data experts are sure that the majority of projects in this area fail due to abundance of irrelevant information in the information subject to analysis.

Collecting of the information does not cause any difficulties and storing the data is cheaper than destroying. Yet, lots of low-quality information can lead the analytical systems to the false conclusions, for example finding the false correlation between the disease and the external factors.

Lack of standards

The Big Data companies need to create the universal protocol for exchanging the medical information. The more standardized medical information is available, the more precise the analytical description of diseases and the predictions systems will be.

How we made a healthcare project using big data

We have created a report that shows a negative mortality trend since 2012. No wonder because since in 2012 the World Health Organization (WHO) revised the budget that responds to both the new reality of financial austerity and a series of reforms being undertaken to improve the overall performance of WHO. These reforms include an improved results-based management and accountability framework and a more realistic and flexible funding model.

It can be concluded that the innovations of the WHO work because sharp decrease in the number of dead and dead per 100 000 is observed.

For collecting the raw for the analysis, we used API from the official website of World Health Organization in order to obtain the statistics regarding the death causes. To get the information about the financial state in the European countries, we used the data from the website of the Central Bank of Europe.

Our goal was to define the most frequent death causes in the different European countries and to find the correlation between the economic conditions in the country and the mortality rate.

Practical application of the project

Many factors influence health status and a country’s ability to provide quality health services for its people. Ministries of health are important actors, but so are other government departments, donor organizations, civil society groups and communities themselves. For example: investments in roads can improve access to health services; inflation targets can constrain health spending; and civil service reform can create opportunities – or limits – to hiring more health workers. The visualization shows the mortality per 100 000 people in Europe. This visualization shows which countries need reforms and measures to reduce this indicator.

As can be seen from visualization, such measures are urgently needed by many countries, in particular the CIS countries, Moldova, Malta, Romania, Latvia, Montenegro, Bulgaria, Poland and Hungary.

Measuring how many people die each year and why they died, is one of the most important means – along with gauging how diseases and injuries are affecting people – for assessing the effectiveness of a country’s health system.

Cause-of-death statistics help health authorities determine the focus of their public health actions. A country in which deaths from heart disease and diabetes rise rapidly over a period of a few years, for example, has a strong interest in starting a vigorous programme to encourage lifestyles to help prevent these illnesses. Improvements in producing high quality cause-of-death data are crucial for improving health and reducing preventable deaths in these countries.

Development process

We decided to choose Power BI for business analysis platform. This tool offers the wide range of local and cloud-based BI  and analytical opportunities. Power VI offers preparation and detection of data, interactive information panels with project tools allowing to integrate different data sources and third-party application. The interface is very clear and convenient, the pricing is moderate as well.

Project stages

The process of data mining for this project was divided into the following stages:

  • Collecting of the information

On this stage, we filtered several sources of data from WHO official site and the sources from European central bank with the information about powerty in the different countries.

  • Preparing of the information

We have filtered out the data from invalid figures, such as skipped values, typos, impossible figures. Some data was transformed by creating the auxiliary values for analysis, for example, the mortality сoefficient for 100000 people. Then, the data from health organization were compiled with the information of European central bank.

  • Data research

This stage was necessary for the deep understanding of the data. We created the algorithms that managed to find the correlations and differences basing on describing and visual methods. While making the project, we found out that the level of mortality for 100 thousand people correlates with the living standards of society – i.e., the higher is the poverty rate, the higher is mortality. We also tried to check the correlation between the level of alcohol consumption and mortality, yet did not find obvious correlation.

  • Data modeling

On this stage, we used some ML methods for modeling. We have analyzed the methods of regression and decided that the most suitable one is the decision tree. We chose to use decision trees since the linear regression is not effective when it comes to big volumes of complicated data. The tree perfectly suits for studying complicated unlinear decisions and have better productivity, like neural networks. The tree helped us to model the value of mortality coefficient depending on the country, body mass ratio and number of years spent for studying – we came to the conclusions that when these values are high, the mortality rate is low.

  • Modeling and visualization

When we finished processing the data, we decided to visualize the results by presenting our conclusions and predictions. This approach is universal since notwithstanding the area, it is necessary to deeply understand and analyze the information. Modeling is the main factor for building a working system or business model.

Technologies

Using the decision tree of this report, you can simulate the mortality rate per 100,000 people by selecting a country. The coefficient is calculated based on BMI, the number of years of study (Schooling). The decision tree showed that the higher the BMI — the higher the coefficient, the higher the Schooling — the lower the coefficient.

The following analysis tools were used in the work: maps for displaying countries and numerical characteristics, time series for analyzing mortality by year, decision tree for modeling mortality rate, hexbin scatterplot for analyzing data with several numerical characteristics, heatmap for visualization of the dependence of various characteristics and classification of diabetes (high, medium, low incidence).

Results

The number of people with diabetes in Europe is estimated to be 58 million representing 8.8% of the population aged 20-79 years, including 22 million undiagnosed cases. While Europe has the second-lowest age-adjusted comparative diabetes prevalence of any IDF region (after IDF Africa Region), there are still many countries with relatively high diabetes prevalence rates. Turkey has the highest age-adjusted comparative prevalence (12.1%) and the third highest number of people with diabetes in Europe (6.7 million), after Germany (7.5 million) and the Russian Federation.

More than 477,000 deaths among people aged 20 – 79 are attributed from diabetes in Europe (9% of all mortality).

These problems show that the issue of diabetes is an important and relevant topic of health care.

You are welcome to check the full statistics here.

Conclusion

Upon reading this article, you are aware of how to use how to use big data in healthcare. We have studied applying data science in healthcare:

  • Electronic health records that will allow to have the fool picture of health state of a particular person
  • Portable electronic devices can be used for tracking everyday state of the organism
  • The efficiency of reanimation and aggressive therapy will be increased since the algorithms will be able to predict the possible complications.

We have also told you about our recent healthcare project based on Big Data analysis. It demonstrates the possibility of using the algorithms for obtaining the picture of the global situation. Such statistics highlights the weak points of human society demonstrates the areas of improvement.

Generally, Big Data opens huge possibilities for development of preventive measures in the medicine. Since it is easier to prevent the disease than to cure it, we can expect that Data Science improves the quality of medical services of all over the world greatly.

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React.js is a Javascript framework popular for its simplicity. While other frameworks realize full Model View Controller approach, React realizes only Views.

React applications are based on two major principles: Components and States. The Components may consist of smaller built-in, or custom ones. The States principle stands for a one-sided data stream that will make the interface responsive to each state.

What React is loved for, is that it doesn’t need any additional dependencies in order to allow it to integrate with any Javascript library. We will use it to integrate React with the Rails Stack for creating the external interface.

In this article, we will consider the three ways of integrating React with Ruby on Rails: react-rails, react_on_rails, and Ruby gems along with Webpacker, and describe how you can build two separate applications for frontend on React and backend on Rails.

Why use React with Ruby on Rails backend?

Ruby on Rails with React is a popular stack for a modern web application since both technologies are widely recognized in the development community. Let’s look at the benefits of incorporating React in a Rails stack for building a fast and scalable web application.

Reliability

Both React and RoR are proven technologies that are widely used by well-known sites and have the support of an active development community. This makes React with Rails a highly reliable framework that is supported by the highest development standards.

Speed & Convenience

Ruby on Rails provides good number of gems that offer ready-made solutions for different tasks. It also provides the tools for building backend APIs that can communicate with the client-side, for example, with React frontend. The developers no longer need to write everything from scratch, so development speeds up, and the cost is reduced.

Lightweight

React is lighter than any other Javascript framework. When building the frontend, the developers use the structured components and add only those modules that are necessary. This helps to make the code precise and clear and reduce unnecessary lines.

Easy testing and maintenance

Comparing it with other technologies, Rails is a more convenient solution in terms of development, testing, and maintenance. The abundance of testing frameworks and libraries (Rspec, Capybara for Rails) and the distinct division between the two frameworks (backend on Rails and frontend on React) help to make the development and maintenance smooth.

Efficiency of teamwork

Since the application is clearly divided into the backend and frontend parts that are based on different technologies, communication within the team is improved by dividing the project into the areas of responsibility. React does not need to know that your frontend team knows the details of Rails, and vice versa – the work of the teams is handled separately.

Three ways to integrate React.js with Rails React-rails gem and webpacker gem

Using the react-rails gem is the simplest and quickest way to integrate React into your Rails app. This gem uses the default Rails asset management and transforms JSX into the asset pipeline using the Babel transformer.

Webpacker is a gem offering smooth and standard integration of Rails with Webpack collector and the package manager Yarn. The optional integrations with popular frameworks and libraries like React, Angular, and Vue also come out-of-box.

For each Rails launching environment, there is a corresponding file in the config/webpack directory that is a part of the shared.js configuration that is common to all environments. There is also the configuration.js file that is responsible for processing the settings from config/webpacker.yml.

There are two installation scripts for launching the Webpacker installation process:

  • bin/webpack for one-time launching  

  • bin/webpack-dev-server for launching the installation with tracking of file changing and re-build after modification. While developing your application, we recommend you use this variant.

Provided that you have already installed the latest version of Ruby and Rails, you are now ready to read our guide.

First, you need to add the gem to your gemfile by running the command gem 'react-rails' and install the gem by running bundle install and react-rails installation script: rails g react:install.

These actions will create a directory for the components and manifest file, and add them to the application.js file.

Once you have done this, create the .jsx React component file and save it in the directory app/assets/javascripts/components and run the code:

var HelloMessage = React.createClass({
render: function() {
return (
<h1>Hello {this.props.name}!</h1>
)
}
});

Later, use this component in the view with the help of the react_component helper method:

<%= react_component('HelloMessage', name: 'John') %>

It will add a div with the relevant classes and props that are later used by the react_ujs driver for mounting and rendering the component.

This method will allow you to start working with React gradually and test everything by converting the individual views into React components. Once you have achieved your goals, you can go to a more poverful setup.

react_on_rails gem

Another popular way to integrate React and Rails is with the react-on-rails gem. The key difference between this and react-rails is that it uses ECMAScript 6 (ES6) and state-of-the art tooling including Webpack by default, instead of relying on the Rails asset pipeline. This gem also does’t depend on jQuery.

To install Javascript libraries, instead of manually downloading gems, you can use NPM. Having integrated them, you will get more opportunities just for installing and managing several components.

In order to get started, install the node that will enable you to use NPM for launching Javascript dependencies. You can download the node directly from the website or install it by using NVM.

Having installed the node, we can add the gem to our Rails app and install it by running the bundle.


gem "react_on_rails", "~> 6"

In order to make the installation script work, we need to commit to this Git branch:


git init
git add -A
git commit -m "Initial commit"

Once you’ve done this, run the gem’s generator and create package.json and Procfile.dev files:


rails generate react_on_rails:install

Upon completing the above steps, run the bundle again in order to install exec.

Then launch the bundle once again (bundle && npm install) for installing execjs, and npm install for installing JS dependencies, and start the Rails server: foreman start -f Procfile.dev

The gem also creates a custom directory where all the client-side code is stored. Having set up everything we need, we can create and use the necessary React components.

Ruby on Rails API with ReactJS Front-End

Another way to integrate React with Ruby, is to make two separate applications for backend and frontend parts: the API part written on Rails and an application on React connected to the Rails API. This approach has the following advantages:

  • The frontend developers are allowed to use the Javascript libraries without needing to adjust their code to Rails constraints.

  • Since Rails API is communicating with the React interface via JSON files and there is no concept of sharing state to numerous servers, it will be easier to scale the application.

So, let’s see how we can connect the Rails API with the React frontend.

First, you need to create your Rails app structure and start the Postgres server by launching the corresponding app on your machine. Once this is done, you see the welcome page and the application is ready for the next step.

Inside the application folder, you need to create the client folder and React interface by using the create-react-app client. Inside this folder, you can use Yarn for performing the following actions as:

  • Yarn start for starting the development server (the React page can be accessed on http://localhost:3000/).
  • Yarn build for bundling the app into the static files for production.
  • Yarn test for starting the test runner.

Now, we will start the proxy for API calls via the necessary port without having to swap between development and production and restart the NPM server.

Later, you need to create the main active record relationships:

  • Scaffold the list resource by running rails g scaffold List title:string excerpt:text description:text upvotes:integer. In API mode, it will help to create migration, model, route, and controller.

  • The item resource can be created by running rails g scaffold Item type:integer name:string excerpt:text description:text url:string upvotes:integer.

  • For list item, we can create the join relationship by running the command rails g model ListItem list:references item:references description:text position:integer.

Having done this, it’s time to create and migrate the database by running the commands rake db:create and rake db:migrate.

Customize the namespaces by creating a folder app/controllers/api/v1 and copy the lists_controller.rb and items_controller.rb files to it. We have set up the proxy asking all calls beginning with /api to reach localhost:3001 where the Rails API is active instead of localhost:3000 where the NPM React client is working.

Once the API part is set up, it’s time to work with the React interface. Import  to App.js one and create a client/src/components folder where the components will be stored.

The next step is installing axios for making API calls: npm install axios. Now, import it to the ListsContainer by adding the line import axios from 'axios'. Also, you will have to redo an npm install, and quit and restart the npm server with npm start.

Then, let’s refactor the List part of the application by grouping the code into a component that does not handle the state, but receives data by props. To do this, create the list.js component:

import React from 'react';
const List = ({list}) =>

{list.title}

{list.excerpt}

export default List;

Then, import it from the main List component by running import List from './List'.

These are the three main ways to add React.js to the Ruby on Rails app. You are welcome to choose the one that fits the needs of your project best.

Read also: How to Get React and Django Work Together

Conclusion

Upon reading this article, you now know how to integrate React with the Rails app. Let’s briefly recall the content of our material:

  1. First, we considered the characteristics of React and the benefits of using it with your Rails backend: Owing to its reliability, speed, lightness of weight, and extensive documentation, the efficiency of the development team’s work will be increased.
  2. We also considered the three main ways of integrating React with Ruby on Rails: use react-rails and react-on-rails gems along with Webpack, and create two separate applications for the backend and frontend parts written on Rails and React accordingly. The last way is obviously the most complicated, yet it would be the best choice for the most complex projects with large development teams.
  3. Hopefully, the article was helpful. Happy developing! Just contact us in case you need expert help for your project.

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Application speed and performance are crucial when it comes to project success. Users expect the app to load as quickly as possible, and our main task is to meet their expectations.

Both experienced IT professionals and junior developers have tried to address the problem of Ruby on Rails optimization. Fortunately, we know what this is about. With our tips on how to improve Ruby on Rails’ app performance, your project will surely achieve success.

3 Things to Keep in Mind Before You Start to Optimize Your App

To achieve the desired results, you need to learn more about the topic. So before we proceed with the detailed description of steps to take, take a look at the following factors:

Performance Measurement

Back in 2011, almost half of all Internet users expected an app page to load in 3 seconds or faster. As the years have passed, Internet connection has improved and page load speeds have increased. These days, users expect an app to load in the blink of an eye. This is what you need to be ready for.

There are various tools that may be used to monitor website performance. We have been working with Ruby apps for many years, and here are some recommendations:

WebPage Test

WebPage Test provides general information about app performance based on numerous indicators. The results of the performance measurement session are clear, precise and accessible. The tool is quite easy to use.

PageSpeed Insights

Have you ever used a Speed Score performance indicator? This is a Google tool used by PageSpeed Insights. The solution provides information about both web and desktop performance. Thus, you have a complete picture of how the application will work in different environments. The most important thing is that Google takes into account the PageSpeed performance measurement results when ranking the web page. The better performance your web app shows. the higher the rank on the search results page.

New Relic APM

New Relic APM will fit all of your needs. It is a great choice not only for Ruby applications but also for Java, Node.js, Python, and many other solutions. It is a cloud-based system with a clear intuitive interface and it provides you with all the significant details concerning any application’s environment. Here you can find the key metrics and ensure your app runs well. Additionally, New Relic APM may help you to solve other issues. It analyzes them in real-time and shows ways to fix them.

Optimization of the Elements that Actually Need Optimization

Recently, one of our partners came to us with a particularly interesting case. He could not optimize a Ruby app, and every improvement he tried to make led to worse performance than the initial version demonstrated.

We analyzed the situation, measured important indicators, and compared the results. The conclusion was interesting: when working on Ruby app performance, you need to apply essential changes only to those elements that actually need them. So, spend more time identifying the weaknesses and focus your effort on them. There is no need to rewrite the app from scratch or try to optimize the whole solution.

Get Acquainted with Useful Gems and Plugins

Ruby performance optimization demands code cleaning and tedious manual refactoring. But numerous third-party tools can help you to get this routine job done quickly.

Specific Ruby gems and plugins provide great assistance with code optimization. For example:

  • Bullet gem helps to seamlessly address the N+1 problem which will be discussed a little later. This gem is highly popular in the Ruby community and works out of the box;
  • Yslow gem uses Yahoo! Rules for performance measurement and helps you identify problems.
How to Improve Ruby on Rails App Performance

After the introduction, it is time to take real steps towards your app’s success. Rails app optimization is a multicomponent task. Here are our tips on each component’s improvement.

Server Optimization

Everything from the memory capacity and the web hosting service to the quality of code you deliver impacts your web app performance. In this section, we will discuss the methods of server optimization:

Increase RAM capacity

If the number of your app users increases and you notice either slight or considerable performance degradation, the very first thing you need to do is check your server capabilities. It is very likely that you need to increase RAM capacity to get your app back to top performance. Another similar tip is to opt for a more powerful CPU than you already have.

Replace HDD with SSD

The upgrade to SSD is exactly what you need to amaze the users with the solution’s performance. Solid-state drives are much faster than hard drives of the older generation.

Use a load balancing method

Modern high-traffic applications process hundreds of thousands of requests per second. And the more requests that are processed, the harder it gets to respond immediately. Load balancing is a way to route requests to the server appropriately. It allows you to attain maximum speed and skyrocket app performance.

Backend Optimization

After you have checked the basic things that may decrease the app’s speed, it’s time to proceed with your Ruby code.

Keep your code clean

We do not want to reinvent the wheel by saying that clean code is your must-have. It is the axiom that every software engineer should always keep in mind. To succeed with clean code techniques, here are some rules to remember:

  • Create the app logic beforehand;
  • Stick to well-defined clear code structure;
  • Explain your actions with comments;
  • Keep the functions short;
  • Follow standard naming principles.

Spend some time studying the clean code principles and implement them to make the app fast and seamless.

Work on query problems

So, you plan to have a cup of coffee with your friends. You get a cup and put it on a table. Then you go back to take a spoon. Then you remember that your friends would like to have some coffee too, so you repeat the same action over and over. Ridiculous, isn’t it? Well, your code sometimes acts in exactly the same way. Each query brings one result, so you send new ones again and again until you get all the results you need. Optimization is about making one single query bring hundreds of needed results.

The query-based issue is rather complex. You need to be attentive and thoughtful about your code to make sure the queries are short, clear, and efficient.

Add indexes

One of the reasons for delayed server response is missing indexes. The more the tables expand, the slower the app gets. Each time a request appears, the database engine has to check every single cell until it finds the required information. All you need to do is add indexes and accelerate this process.

Keep in mind that indexes speed up the search but slow down the updates. Besides, don’t underestimate the necessity of adding indexes to joint tables and foreign keys, and to the models that represent polymorphic relations.

Use background job processors

Background processes are something that may impact your performance, too. Statistics calculations, reports generation, video processing and similar tasks may belong here. Their automation is another step you need to take to get better performance. There are many tools developed for RoR specifically that may be useful here. We prefer the following solutions:

Sidekiq

We can confidently say Sidekiq is one of the most popular open source gems used for this purpose. It is featured with a convenient dashboard where you can find the information about all the queues and response details.

Rescue

Rescue is the alternative to Sidekiq. It is used to handle Ruby exceptions.

Active Job

The Active Job framework helps to deal with jobs in queues, too. It enables the parallel processing of small, well-organized units of background tasks.

Cache everything you can

Better speed means fewer meaningless actions. And this is what caching can help you with. It allows storing of the content each time the server responds to a new request. There are several types of caching, each with its own specifics and purpose. You can take a look at them in official Ruby documentation.

To use this solution to best advantage, you need to measure which part of the web app is damaging the performance and apply caching techniques to it.

Use Ruby GC Tuning

GC, or garbage collection, is one more concept you need to get acquainted with to optimize the Ruby on Rails app. This is a method of managing the app’s memory. By changing your Ruby GC settings you can speed up both unit tests and indeed, the whole application. Its algorithms are fascinating and require some extra research to be understood.

Frontend Optimization

Your app is not just made of brilliant Ruby code you have written yourself. To make it run fast and seamlessly, you also need to take care of its frontend.

Get familiar with CDN

Another thing that may hinder your endeavor to improve performance of a Ruby on Rails app is distance. The server may be a thousand miles away from the end user. The query-response time may take up to a minute. How do you deal with this?

A content delivery network (CDN) is your tool for content delivery optimization and improvement. A CDN is vital not only for Ruby apps but for any type of web applications. It helps website content to load fast no matter where the end user is located.

Share static files

Normally, you don’t need to generate files on the go. In the case of CSS files and images you never have to do this at all. Using static files you save your time for something more important and boost the app’s response speed.

Compress the files

With attractive images you can get more and more users to visit your website or web app. These images are breathtaking, lovely and authentic but… they increase the web pages’ loading time. Compress the files you design to appeal to your users with both great images and lightning-fast page load.

Make friends with AJAX

Influenced by the most popular programming language, the AJAX technique was created to find application in a variety of fields. Actually, it is a whole set of techniques for asynchronous solutions development. It makes the web page content change dynamically. There is no need to reload a page every time you want to check the update; it is all automated. AJAX minimizes the number of queries and thus, helps to improve the performance.

In Conclusion

Being a RoR developer is not a piece of cake. Launching excellent solutions is not like riding a bike. Creating a legendary app requires your full dedication and maximum effort, and you have no choice but to do your best to speed up your project. We have discussed how to improve Ruby on Rails’ app performance, and your road to success includes:

  • Server optimization:
    • Increasing RAM capacity
    • Replacing HDD with SSD
    • Using a load balancing method
  • Backend optimization:
    • Keeping your code clean
    • Working on query problems
    • Adding indexes
    • Using background job processors
    • Caching
    • Using Ruby GC Tuning
  • Frontend optimization:
    • Using a CDN
    • Sharing static files
    • Compressing the files
    • Using AJAX

We hope our tips will help take your application speed and performance to the next level. If you need help with your project, do not hesitate to contact our team to get a professional consultation.

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Business Model Canvas is a great tool that will allow you to create a precise, straightforward business model that will be comprehensive for you, your team, your investors, and your partners. Sounds amazing? Yes! Sounds difficult? Not at all!

This template is great in its simplicity. You no longer need to present huge business plans to your investors (we are sure they will be grateful). By filling the Canvas, you will give the precise and simple answers to such fundamental questions as “What is your value proposition?”, “Who are your audience?”, “What are your revenue sources?”, and many others. If you are able to answer them for yourself, you will have no difficulty presenting your project to partners and investors and establishing business relationships.

In this article, we will consider the use of this template, its structure, and it benefits in respect to an ordinary business plan. We will study its structure in detail and give you extensive comments on each of its points. We will also apply this template practically by considering the business model of one of the biggest marketplaces of our time – Airbnb. Hopefully, it will help you to understand the essence of the template and successfully use Business Model Canvas for your marketplace business.

What is Business Model Canvas?

Business Model Canvas is a graphical representation of the main points that show the basis of your business. It was developed by Swiss business strategist, Alexander Osterwalder, and information systems management professor, Yves Pigneur. They defined the main blocks that serve as a basis for any organization: business structure, value proposition, clients, relationships with clients, and finance.

Generally, the template is used when creating a new business. All the main points of the business can be presented in a simple and logical way on the spreadsheet, and later these materials can be used for meetings with potential investors and partners. They will definitely appreciate the precise and logical presentation of your idea.

However, Business Model Canvas can be used not only by startups, but also by mature businesses. If the organization for some reason does not have Business Model Canvas, it’s high time they got it and filled it out! It will help to find out the strong and weak points of the business and highlight possible gaps in the processes.

How is it different from a business plan?

Business models and business plans have completely different formats, purposes, and ways of developing and presenting them to potential partners.

To make a long story short, a model is a brief presentation of your business structure. It does not contain any information about the strategy of the business idea realization. It also does not contain any figures and calculations reflecting the plan of business development.

However, a business plan is an extensive strategic document that describes the way of developing the future business. It contains a deep analysis of the market, the steps of attracting investments, detailed calculations of expenses and revenue, and much more information.

Both of these documents are important and are not interchangeable in any way. However, the main point you should remember is that the business plan is based on the business model, and its development is started only when the business model is validated and approved.

The structure of the Business Model Canvas Infrastructure

The first thing to consider when starting to establish a new company is its internal structure – the processes of conducting the business and the resources for its establishment. Additionally, no business can exist without partnerships with external organizations, and this aspect should also be considered when creating the business model.

  • Processes – the ways of managing the company’s workflow.
  • Resources – here you describe the most important active assets necessary for the functioning of your business model. The key assets are:
    • Material resources – physical objects such as production assets, buildings, equipment, transport, etc.
    • Intellectual resources – intellectual property such as trademarks, information protected by property rights, patents, databases of partners and clients, etc.
    • Human resources – this is a crucial factor for every business, yet some types of startups, like science-based or creative ones, require particular attention to this resource.
    • Finance – a lot of business models require different financial resources or financial assurance such as money assets, credit money or reserves.
  • Partners – the organizations establish partnerships in order to optimize their business models, minimize risks or get resources. These relationships become the basis for lots of business models. There are several types of partnership:
    • Strategic collaboration between non-competition organizations.
    • Co-competition (a strategic partnership between competitors).
    • Joint venture companies for launching new business projects.
    • Relationship of the producer with the supplier in order to ensure getting components of the necessary quality.
  • Activities – this block describes the way the company is going to achieve the business purpose. This can be done in several ways:
    • Research & development – if it is a completely new product, the company should conduct market research as to whether it is necessary to the clients and develop it according to their suggestions.
    • Quality check – in order to provide the best user experience, the company should constantly control and ensure the perfect quality of the product.
    • Marketing & advertising – even the best product needs to be promoted and advertised for the audience to know about it.
Value proposition

The value proposition is the complex of advantages that the company can offer its clients. Let’s look at some of the advantages of value proposition:

  • Novelty – some value propositions are oriented on satisfying completely new needs that have never existed on the market before.
  • Productivity – increasing the efficiency of the client’s business or performance of the product is traditionally used for creating the value proposition.
  • Custom manufacture – the merchandise and services satisfying the individual requirements of the clients are of high value.
  • Do one’s work – the value proposition may offer the clients help in doing their job.
  • Price – offering the existing advantages for a lower price is one of the most popular strategies for fulfilling price-sensitive requirements.
  • Cost reduction – offering the clients help in reducing their own expenses.
  • Risk mitigation – the clients will appreciate lowering the risks when buying the products or services.
  • Availability – making the goods or services available for those clients who did not previously have access to them.
  • Convenience – simplicity and user-friendliness of the merchandise can be a value proposition as well.
Clients

This block defines which customer groups the company is going to attract and satisfy their needs. In order to do this more efficiently, you need to classify them according to their needs, behavior and other features – in other words, to define the target audience. Why is this necessary?

  • The target audience:
    • The difference in their demand determines the difference in your offer to each group.
    • The interaction is handled via the different channels.
    • The way of establishing the relationships will also be different.
    • Different groups of clients can bring different profits.
    • They are attracted by different aspects of your offer.
  • Sales channels – how will you sell your product?
  • Interaction with the clients – this is about the company’s way of communicating with the different target audiences and bringing the value proposition to them. The channels of communication, distribution, and selling compose the system of the company’s interaction with the clients.
Relationship with customers

This block defines the way of company-client interaction and client support by the company.

  • Personal support – the client communicates directly with the company representative before and after the purchase.
  • Special personal support – a particular client has a personal manager that is assigned to them.
  • Self-service – the company does not communicate directly with the client but provides all the necessary tools for them to deal with everything on their own.
  • Automated service – this is a combination of the more advanced form of self-service with the automation of the processes.
  • Communities – many companies create and support online communities that allow users to exchange their knowledge. They help to understand the needs of the customers better.
  • Collaborative creation – some companies do not build traditional buyer-seller relationships and instead create a product in collaboration with the client (allowing them to participate in creating the design or content).
Finance

This block describes the two major money flows of the company: the expenses for maintaining the business and he revenue from selling the value proposition.

  • Expenses – when creating the business model, here you should include all the possible expense items for establishing and maintaining of your business. For example:
    • Organizational costs (establishing the company as a legal entity).
    • Human resources (salaries for the employees of the company).
    • Office (cost of the rental, maintenance, buying the equipment, etc.).
    • Online platform (if your company handles business via the Internet, it is a must to have a website or an application; here you include the work of developers, PMs, administrators, maintenance of hardware, etc.).
    • Marketing & advertising.
  • Revenue – the earnings of the company that cover the expenses and bring profit to the owners.
    • Earnings from selling a value proposition (revenue from selling physical goods, commission, earnings from selling subscriptions or premium services, etc.).
    • Advertising (earnings from posting the advertisements on the online platform).
    • Brand usage (if your company is already a widely recognizable brand with a registered trademark, you can charge other organizations to use the brand).
Business Model Canvas for online marketplaces with the example of Airbnb

In order to understand how to apply the Canvas for developing the marketplace business model, let’s analyze one of the top marketplaces in the world – Airbnb. Taking into account the success and worldwide recognition of the platform, we believe it is a good example to follow.

Infrastructure

The infrastructure of Airbnb’s business will be represented by the partners and resources of the company. In order to get the support of the business, they should establish a partner relationship with different businesses, and travel and legal authorities. To provide the best user experience for the hosts, they use the services of different companies and apply the digital instruments of third-party providers. Let’s look at the partnership network and the resources of Airbnb more closely:

Partners

Key partners – partnership is essential for the development of the business.

  • Hosts – the suppliers of the marketplace whose property brings Airbnb part of the revenue.
  • Investors – the people whose money helps Airbnb to support and develop the business.
  • Lobbyists – the laws of the different countries may impose legal and financial restrictions on renting one’s property on a commercial basis. That is why Airbnb needs support at a governmental level.
  • Business travel partners – in order to expand their potential audience, Airbnb collaborates with platforms engaged in the organization of business trips, such as Concur, Triplink, and others. Thanks to the partnership, the Airbnb apartments appear among the variants of accommodation for business travelers. You can learn more here.

Other partners – partnership is used in order to improve the quality of the service and to provide a better user experience.

  • Photographers – the research demonstrated that places with attractive professionally made photos get more bookings than the ones with amateur pictures. That is why Airbnb hires photographers in order to take the pictures of the properties. This service is free for hosts, so the company has to cover the expenses.
  • Integrations – in order to improve the functionality of the platform, Airbnb uses third-party tools such as integration with Google maps, cloud storages, identification services, etc.
  • Insurance – the marketplace provides the insurance for the hosts’ property for the deals confirmed via the marketplace.
Resources
  • Listings – the major resource of Airbnb that brings the actual revenue.
  • Technical resources – used for maintenance of the online platform (the platform architecture, machine learning algorithms, analytic tools, hardware, etc.).
  • Brand – since Airbnb is a famous and reputable company, its brand has financial value and acts as a trust factor for the clients and partners.
Activities

Airbnb has developed a stunning idea for short-term rental; however, they would never have become so successful without their activities for attracting users:

  • Providing a positive user experience by making the transactions smooth and easy.
  • Growing the community (adding new participants, extending to new cities, etc.).
  • Keeping the travelers returning by providing an exciting experience and lots of events.
  • Extending the value proposition (event hosting, Airbnb-plus apartments, etc.).
Value proposition

Airbnb’s clients trust them with their property and their money since the marketplace can offer value for them. Let’s consider the value proposition of Airbnb in more detail:

For hosts
  • Additional income from their property
  • Fast and simple transactions
  • Meeting people from different countries
  • The host may choose to accept only verified guests
  • Extensive options for calendar and booking management
  • Transparent ratings of guests
For guests
  • Lower cost than hotels
  • More variety of apartments
  • Fast and simple transactions
  • Local experiences during the trip, meeting new people
  • Transparent ratings of hosts
Target audience

No business can exist without defining a target audience. In order to develop a better offer for each group of customers, the business owners and marketers usually split the audience into segments. Let’s see what types of customers use Airbnb’s service.

  • Hosts
    • By type of accommodation: entire apartment, private room, shared room
    • By location: countryside, city
  • Travelers
    • By travel type: business and leisure travelers
    • By demographic: families with children, couples, retired people
    • By income: looking for low-cost or premium accommodation
  • Sales channels
    • Digital advertisement campaigns
    • Content marketing (newsroom, guidebooks)
    • Social media
    • Free advertisement in travel blogs
Customer relationship

Before developing each business, it is necessary to decide how the company will maintain relationships with their customers. Airbnb appears to be using a combined type of customer support: self-service for routine issues and personal support for extraordinary ones. Let’s take a closer look at Airbnb’s interactions with customers.

Hosts
  • Additional opportunities for getting new income (short periods between guests, premium listings on top)
  • Support in case of any issues (accidents, damage, and other complaints)
  • Support during all guest stays
  • Orientation on host success
  • Additional benefits for super hosts
Both parties
  • Deal with all issues in a timely manner
  • Manage risks of both parties
  • Secure and transparent storage of personal data
Financial

We cannot even imagine the monetary turnover of a company that is worth about $31 billion dollars. So we can give only a minor part of the possible expenses of Airbnb. Their revenue streams seem to be simpler, since we know approximately what monetization model they use. However, a worldwide recognizable brand is also likely to bring huge revenues to the company – and for this we cannot calculate even approximate figures.

Expenses
  • Development and maintenance of the platform (work of developers, office, hardware)
  • Staff salaries (developers, non-technical staff, support specialists, photographers)
  • Maintenance of offices
  • Cost for transactions (using the services of payment providers)
  • Legal issues (lobbying, legal proceedings if any)
  • Customer support (office and salaries of support specialists)
  • Cooperation with partners (travel platforms, insurance companies)
  • Marketing & Advertising
Revenues
  • Transaction fees from both parties:
    • Hosts – 3-5% from rental hosts, 20% from event hosts
    • Guests – 5-15% from rental guests, no fee from event guests
  • Premium services – the owners of VIP apartments pay a $149 fee for company representatives to check the apartment and to award the category of an Airbnb-plus apartment.
  • Brand value – the revenues from using the brand, advertising, partnerships, etc.
Tips on creating a marketplace business model

We have provided you with lots of useful information regarding creating a business model canvas for an online marketplace, however we understand that it can be difficult to take it all in at once. We also understand that the most difficult part of any project is deciding what to start with. So we will now give you some organizational tips on creating a business model for your own business.

1. Before you start

Hopefully, before deciding to start your own business, you have conducted thorough market research, figured out your major competitors, and studied their business. We suggest that you start with analyzing the business models of your competitors. You can even create a model describing their business like we made Airbnb’s. This will help you not only to understand their business but will give you experience in working with the business model canvas. So, we recommend you study the models of competitors and pick the most successful ideas that can be implemented in your business.

2. Preparation

The best way to work on developing a business model is to brainstorm in a small team. So, to start to design your canvas, you will need:

  • A team of 3-5 people
  • Printed or drawn canvas template on a big sheet of paper
  • Lots of sticky notes and markers
  • About 45-60 minutes
3. Brainstorming

While discussing the business model, don’t forget that it should contain only the basic and most general points of your business. Leave details and strategic planning for later steps. We also recommend you make the process as logical as you can:

  • Connect the blocks: each point of the value proposition with the corresponding customer segment
  • If some ideas refer to the current aspects of the business and some of them to the future, keep them separate to avoid mixing them up
  • If different ideas refer to different departments, keep them separate as well

These simple actions will help you to make the business model more logical and structured and will save your time in the future.

4. Review

We recommend doing this step a few days after the brainstorming in order to have a more fresh and unprejudiced view of the results of your work. Evaluate the model according to the following criteria:

  • Is it easy for the customers to use your product or will they find a cheaper/more convenient alternative?
  • Is your model scalable?
  • Will it produce repetitive revenue?
  • Will you earn some money before you spend it?
  • Is your business model protected from the competition?

We recommend that each team member evaluates the business model on a 1-10 scale, justifying their point of view. Your initial model will most likely be changed a lot of times before it becomes polished and viable.

Conclusion

In this article, we have considered the template of the business model canvas and its use in developing your own business. After reading our material, you now know everything about its structure and usefulness for business. Let’s go over the structure once again:

  • Infrastructure is about setting the structure of your future business. This block consists of describing the working processes, the existing resources, and partnerships with external organizations.
  • Value proposition is the set of advantages your product can offer to customers.
  • Target audience should also be described in the business models. It is better to split it into the different segments and to describe the value proposition to each of them.
  • Relationship with clients describes the way your company will curate and support your customers before and after they have purchased the product.
  • Finance is of particular importance since it describes the expenses necessary for business management and the revenues the company will have from selling the product.

In order to make everything more clear for you, we have laid out Airbnb’s marketplace business model canvas. Now you can see that the template is absolutely applicable to a real business. We have also given you some tips on how to organize the development of your business model. Hopefully, they will be useful for you.

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Did you know that 52% of users are likely to change services if they do not get a personal approach? That is why modern business owners must add as much personalization to their services as possible. Luckily, modern web solutions such as machine learning provide many personalization options.

Machine learning has come a long way from being just an idea for a sci-fi novel: it is the reality of our world today. There is no industry (IT or non-IT) where artificial intelligence cannot optimize the efficiency of business processes.

It’s the same story with a marketplace business. Having appeared recently, it quickly became popular due to its convenience and universality: almost any offline business can be digitized via marketplace platforms. The idea of uniting the marketplace platform with machine learning algorithms has been widely adopted, including by big players such as Amazon, Airbnb, and Etsy.

In this article, we will examine the use of machine learning in marketplace development, and find out where it is used. You will also learn about the benefits of applying AI technologies to marketplace businesses, and see how it was implemented by large companies.

Read also: Cost to Build a Website Like AirBnB

How to use machine learning in marketplace development Predicting what your users will like

Personalization of search results, resulting in recommendations for users, is one of the most common ways to apply machine learning to a marketplace business. Through analyzing different aspects of the user’s behavior, the artificial intelligence algorithms can recommend goods and services that the user is likely to buy.

The machine learning algorithms can improve the user’s experience by analyzing the following data:

  • Personal profile (such as location and interests).

  • Search history (such as previous search results, and any applied filters).

  • Clicks (such as which items were viewed, and which ones were added to the cart).

  • Purchase history.

  • The behavior of similar users (such as those from the same location, or with similar interests).

  • The most popular items from this category.

The more actively the user uses the platform (ie, looks for items or services, adds items to the shopping cart, buys items), the more precise information the system will have, and the more relevant options it will offer to the user.

Predicting the best prices

When setting prices for goods or services, the seller faces two challenges:

  • How to set the correct price.

  • How to adjust this price to market changes.

The first issue is particularly important for those selling unique items such as hand-made products or precious goods. If you are engaged in retail commerce or provide popular services (cleaning, taxi etc), it might be enough to just study the competitor’s offers and establish appropriate pricing. With handmade items, it is great that they are one-of-a-kind, however, they can be hard to sell, and it can be difficult for buyers to find exactly what they need.

With regard to the second issue, there are many factors that influence final pricing, including the cost of the material, and the length and complexity of the artist’s work. The final price should not be so high that it discourages potential workers, but it should also not be too low for the artist to benefit. The suppliers should provide as much information as possible, and the marketplace should offer an advanced search system with a wide variety of filtering options.

It’s the same story with apartment rental businesses such as Airbnb. All flats are different, and the rental price depends on location, season, flat conditions, whether you will live alone or share with the owner or other guests, etc. It can be challenging for the human mind to account for all factors and calculate an appropriate rental price. However, artificial intelligence can do this calculation in minutes. Later, we will discuss how AI can define a recommended price.

Predicting and preventing fraud

Shared economy marketplaces are about trusting your valuable property (car, house, money, etc.) to a complete stranger. Acting as a mediator, the marketplace takes on the responsibility of ensuring the security of business relations between buyer and customer.

There are many ways to secure your platform. One common method is a system of reviews and references. Everyone can read the references written by previous business partners and decide if it is worth dealing with this person. However, one disadvantage of this system is that even though it prevents recurrence of fraudulent incidents, it does not prevent fraud itself.

This is where machine learning can help. The marketplaces build custom systems that predict and prevent fraudulent activities, and do not allow fraudsters to operate on the platform. They use transaction history, and information from social networks and other external sources. This allows the machine learning algorithms to detect anomalies in user behavior, and either restrict their operating on the platform or require additional verification. Machine learning can predict and prevent many types of online fraud, including payment fraud, fake listings, spam messages, account hacking, and duplicated accounts.

Improving customer support

According to recent research, within two years 85% of customer support will be handled without the participation of a live person. The intelligent chatbots powered by machine learning algorithms will be able to answer the most common user questions, and also track user behavior, etc. Human workers will only deal with unusual cases.

The benefits of customer support powered by artificial intelligence are clear: business owners will no longer need to hire lots of human support specialists, pay their salaries, and pay for renting and maintenance of an office. The chatbot can communicate with hundreds of users simultaneously without impacting efficiency. Artificial intelligence will both increase the speed of work and eliminate human mistakes.

Machine learning in marketplace use cases Airbnb

For Airbnb hosts, it can be particularly difficult to set a price for their apartments due to multiple factors which can impact prices: date, accessibility of the city center, public transport, the condition of the apartment, etc. They must also analyze existing demand and supply and set competitive prices in order to attract guests.

Airbnb’s machine learning engineers have launched a feature which can predict the likelihood of a particular listing being booked at specific prices on specific dates. It is a mathematical model that analyzes the demand and supply for those dates, and suggests a price in order to increase the chance of booking the apartment at the best price for the host.

Let’s look at the procedure for listing a house on Airbnb and the factors that affect the rental price of the house. For testing purposes, we have chosen to rent a private room in Paris.

The host is ready to rent a private room with a queen-size bed and private bathroom.

Then, the host is asked to choose the amenities that will simplify the guest’s life during the trip and help the property owner to justify the higher price.


After entering the primary characteristics of the apartment, the system calculates the approximate earnings of the host. Thus, a private flat with a queen-size bed, private bathroom and basic amenities not far from the city center will earn about $1280 per month.

Then, we have uploaded the photos of the bedroom, bathroom, and kitchen, and added short titles and descriptions.


Having fulfilled all the necessary points, we are offered a base price by the system. There are also variants of pricing for low and high seasons, which allow correcting the offer depending on the demand.

You can choose the suggested price or set your own. According to Airbnb’s data, the hosts who adopt the suggested price get 5% more bookings.

Uber

Although Uber does not offer a unique price or services, they also face challenges with setting the price for their services. Their major challenges are low profit from some trips and low driver efficiency in peak times of demand when the requests become spread out and drivers make fewer trips per hour.

In order to adjust the prices to both of these factors, Uber has developed a machine learning system. They have implemented a feature that predicts where the user is likely to go depending on the current location, time of day, and previous ride history. For a new user without a ride history, the system will offer the most popular destinations from this place at this time.

Also, they have designed a solution that allows adapting the prices for different categories of users. Their route-based pricing system offers a customized price depending on the location – if the client orders the car from an affluent location, the price will be higher than for the same mileage from a poorer neighborhood. This helps the companies to regulate the demand and compensate the low-cost services.

Read also: Online Marketplace Revenue Models

Conclusion

The job of a marketplace owner is to establish the best way of matching the buyers with the appropriate seller and to provide a smooth way of handling the transactions.

However, if you want to gain more popularity for your product, these are not your only tasks. You also need to provide enough security for the users’ money and property, and prevent fraudulent incidents. But the main things that will bring your marketplace lots of users is the optimization of their business and helping them to earn more money. All these tasks can be solved by applying machine learning algorithms to your marketplace business.

In our article, we have considered the ways of applying artificial intelligence to your marketplace. Let’s go over them once again:

1. Personalizing suggestions

The algorithms will be able to match the sellers with the buyers, providing exactly the item or service they need. By analyzing the user account and previous behavior, the system will offer the relevant listings and help the user to save time when browsing through the listings, and bring the seller more clients and money.

Using machine learning in a peer-to-peer marketplace can help you do this job in the most efficient manner.

2. Setting the best prices

The machine learning algorithms are able to analyze all the characteristics of your offer and the ones of your competitors, and calculate the best price that will suit the buyer and bring more profit to the seller. It will also monitor the changes in the market conditions and offer corrections of your price in different periods (before the holidays, in the high season, etc).

3. Preventing fraud

The participants of the p2p marketplaces trust their money and property to complete strangers, and they want to be sure about the level of protection. Artificial intelligence can analyze the behavior of each user and, if it seems suspicious, the account can be restricted and further verification can be required. Machine learning algorithms successfully prevent types of fraud such as fake listings, fake/duplicate accounts, spam activity, and suspicious transactions as well.

4. Improving the user experience

Machine learning algorithms can be a base for intelligent chatbots that can provide immediate help to numerous users simultaneously and reduce the expenses of hiring human support specialists.

We have also considered the way that the machine learning algorithms of Airbnb and Uber work. Hopefully, this will help you to use machine learning in your marketplace business. Do not hesitate to contact us to get further professional consultation.

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