Jul 30, 2021
Two-sided Marketplace: A Redefining Business Model To Look
Building an online marketplace or two-sided marketplace is probably the hardest thing you can do, you know; a few weeks ago, an event organized for marketplace founders dinner. Because I felt like there needs to be almost like, you see a meeting type for those founders who have decided to build a two-sided marketplace. I don’t know if you know what a marketplace is, but like Etsy and eBay or clarity, my startup it’s where you build a platform.
But then you hope that people on the supply side and the demand side come together to complete a transaction and get a lot of value from that. The reason why so challenging is you have got both sides of the market to figure out when you build a conventional online business.
How Does The Two-sided Marketplace Model Works?
Even you build any business, you have a customer, and you have a service, and you deliver it, but with any marketplace, you have that exact concept times two, so what I want to talk about is how do you do that effectively.
You know I can only speak from my experience for entrepreneurs to get advice from experts real-world experts with expertise over the phone to grow their dreams and businesses forward. You know I’ve completed hundreds of calls in the last month. It’s been increasing thirty percent month-over-month. It’s taken on, and the challenge, though it is initially, is getting the flywheel going right.
I mean, everybody that’s tried to start always says, in the beginning, how do you start? Here’s my suggestion to your number one focus on one use case, right so? For us, it was marketing as a topic and within marketing SEO right.
So if you’re doing a vacation rental site, you know, like an Airbnb or VRBO or home away, maybe you would start with tree houses now that sounds crazy. But you might even begin with tree houses in Europe or even within a specific city in Europe, but focusing on a very focus use case and and and even a product set helps you streamline the experience.
Because if you’re trying to do too many things within a broader market and something’s taken off, it’s tough to understand what is working once you know what’s working. Then you can add-on or stack on as I like to say, pile on these different tangential markets, so I started with SEO and marketing. Then we added other types of marketing like Facebook marketing growth hacking online marketing content marketing and then from that from a marketing bucket.
I then tacked on business development then sales, and we just kept expanding spending. In contrast, you know, two years into it almost I have different category thing. We have four thousand categories and many other topics, and that’s how I believe in starting by building online marketplaces — a very focused use case focus on doing one thing well in making it niche.
Sometimes people call it uncomfortably narrow as a niche so try to think am I uncomfortably thin as to how specific this marketplace deliverable is the other thing. I would say is focus on the demand side you know a lot of people they think its okay to concern.
Advantages Of Two-sided Marketplace Business
Well, I want to do this kind of two-sided marketplace. I need a bunch of supply and supply is the people delivering the service.
So if it’s buyers and sellers, it’s the sellers. I would argue that it is better and easier to focus on a narrow offering to fake the supply or essentially pay this apply to be there I mean Ketter.com was famous for. You know when they started their black car service they didn’t have ten thousand black cars signed up day one they went to a company and said look you’ve got 12 cars how would I pay you to have them respond to these messages on this iPhone app that they gave them and then that black car service would tally up all the drives and send him one invoice.
It is a multi-billion I think they just raised that you know sixteen billion-dollar valuation companies started with that same concept. So fake the supply or restrict it to a particular use case where that you can control and deliver on that promise and focus on the demanding focus on finding the ideal customer that has that use case that needs to for your marketplace you know those are the two big things.
Then the third thing I’m going to say is I believe the world has gone from a 1.0 version of a marketplace to a 2.0 to now where we’re in a 3.0 and a 3.0 well. I’ll start with the one was eBay one was Craigslist, where it was kind of a free-for-all a 2.0 is more like a curated, very focused two-sided online marketplace with identity and privacy.
The Trust would be more like an Airbnb or an Etsy or kind of like leveraging social Trust to build liquidity in their marketplace.
Here the Third Kind is what we see now where essentially they’re fixing the supply or the demand the supply side of what you get right, and that would be you know joyfulhome.com for home cleaning services Uber and Lyft for delivering we’re you know I guess the way to look at is they set the price right.
Whereas you know in the in TaskRunner would be a 2.0 example, but a three is where you say look this is the offering this is what we deliver on we own that brand that consistency those people might be contractors to us on the supply side. But I will hold the experience we will be responsible for that, and the price is fixed, so there’s this consistent ever going. But what they said is look no, we want to reduce
The friction and build liquidity, and they said look everything’s five bucks everything’s bought in this format you know what you get the person’s offering is precisely that thing and when you take the first you know all these strategies.
Wrapping up — The Best Two-Marketplace Software
Put together, it helps you build a marketplace with liquidity. One focuses on a very narrow, uncomfortably narrow niche offering to focus on the demand side versus a supply and then third, figure out is at a 2.0 or 3.0 offering.
It’s even easier sometimes to go three and maybe backfill to a 2.0. Those are my ideas on how to build liquidity in an eCommerce two-sided marketplace. Many entrepreneurs and founders are facing right now, and I hope that I brought all the essential value to you from the above article.
If you’re passionate about starting a two-sided marketplace or any kind of online marketplace, I can help you get your free expert consultation as quickly as possible.
