App marketplaces are a proven way for digital platforms to extend the functionality of their offerings, create new revenue streams, and build an ecosystem of developers and partners around their product. On this page, we'll discuss:
What Is an App Marketplace?
Make-up of a Marketplace
An app marketplace, also known as an app store, app directory, add-on or extension marketplace (or even a few other variations!) is a structure that enables third parties to build and distribute add-ons for a platform's products. These add-ons, or apps, can be anything from free integrations with another organization's products, to premium platform-specific functionality.
Successful app marketplaces include the Salesforce AppExchange, Atlassian Marketplace, and Shopify App Store, achieving respective annual revenues of $1.5 billion (2016), $200 million (2018), and at least $100 million (2018). They can also see huge growth and adoption, like the HubSpot Ecosystem, which is expected to generate $12.5 billion in revenue by 2024.
App marketplaces have benefits for all parties involved: the platform itself, its end customers, and those who create apps — the partners and developers.
For the platform, an app marketplace offers fast-paced, hands-free product innovation and integration. Of course, there is work involved in setting up and managing a marketplace. Once operational, however, partners take charge in independently building and maintaining additional product functionalities in the form of apps. App marketplaces can also lead to new revenue streams, with shared revenue on paid apps or partner sponsorships.
For end customers, an established marketplace can drastically improve the platform experience. Apps are a direct extension to the value proposition of a product they already use. Even paid apps improve the consumer's experience, as the issue of pricing is often far outweighed by the merit of purpose-specific functionalities and integrations for an existing solution.
For partners, the benefits of contributing to an app marketplace include exposure, distribution, and direct revenue generation. Publishing an app to a marketplace makes it discoverable by thousands of targeted users (exposure), who are also provided a convenient way to activate it (distribution). Whether the marketplace offers integrated monetization or the partner charges for their app externally, direct revenue is perhaps the most exciting prospect for many partners.
An app marketplace consists of several essential parts, including both the frontend interface that customers use and the required backend functionality
The major public-facing component of an app marketplace is the marketplace itself, where apps are listed. Its purpose is to enable consumers to discover, research, and install apps. The marketplace consists of a homepage, category and search results pages, as well as individual app details pages.
Depending on the decisions of both the platform and app partner, functional interactions with an app that occur post-installation can happen in multiple ways (that we’ll cover in later guides). Items like app versioning and invoicing can also be handled in a variety of ways depending on the core platform needs.
The homepage for the Shopify App Store.
A crucial partner-facing element of an app marketplace is the developer dashboard. This interface enables developers to submit and track the status of new apps, as well as manage existing apps. This includes editing app listings and rolling out updates, as well as monitoring listing traffic, app sales, and feedback.
The developer dashboard on OpenChannel's demo marketplace.
An app marketplace also includes an admin dashboard, where the platform owner can manage app listings and monitor the performance of the marketplace. Additionally, the admin dashboard provides marketplace administrators access to billing and support workflows. Smaller marketplaces may assign a single administrator to handle new app submissions within the admin dashboard, while larger marketplaces often create more complex review flows that require multiple teams.
The administrator dashboard on OpenChannel's demo marketplace.
We've looked at what an app marketplace is and what it includes, in practical terms. On the next page — App Types — we'll see what an "app" really is at the software level.