When creating your own marketplace, it’s important to include certain keys to make sure that it’s successful. This article provides certain elements that are essential for the smooth operation of your online marketplace. Aiming toward these will ensure that you are streamlining your business in the right direction.
What is a marketplace?
In other articles, we already explained in depth what a marketplace is, but we are going to give you some brushstrokes to introduce this topic.
An online marketplace is a web or app that puts sellers in contact with buyers. The owner of the marketplace has no inventory, as his business is none other than being an intermediary to facilitate transactions. Some examples of marketplaces are eBay, Etsy or AirBnB (or even Bla Bla Car!).
These platforms are very useful for buyers, which has meant that the number of existing marketplaces has skyrocketed in recent years. They are like shopping malls 2.0. More and more people want to do business with them, whether selling on Amazon or eBay or advertising their services on any of these platforms.
Users can access the entire inventory of vendors, online and without leaving home. Also, the marketplace does not have to own any product or service, but simply puts one party in contact with the other. For the seller, these tools are useful because they tend to receive more traffic than their own e-commerce. For buyers, marketplaces are an option that gives them confidence and facilitates the transaction.
If you want to create a marketplace, there are several things you should keep in mind.
8 Elements to a successful marketplace
As marketplaces are places of control and convenience, your service should make the matchmaking process effortless– a platform that connects seamlessly and in the right direction. Technology and research are key for achieving this.
Making the marketplace self-sustaining is essential; there should be the correct flow of supply and demand, without excess on either side that threatens the balance. This can be local in the beginning, and then expansion may happen. Starting small is crucial to achieving this.
The reason why people are taking alternative digital routes to the same service is based on price point. While it may not be the cheapest option, it should maintain a healthy profit margin while being lesser than the market premium. Various test runs are needed to optimise this variable, but once achieved, it works to attract your sellers.
Trust and Safety
This is still questioned in countries where internet penetration and services have not been embraced unequivocally. How do we trust something that is online and intangible? What is the guarantee? Well, review systems that can be verified are your best bet, along with collaborations with more legitimate businesses and governments.
Mobile first approach
Tying in with easy matching, this aspect helps boost demand immensely by having your service available everywhere, at the easy touch of a button. Thus apps and other software are valuable tools to capitalise on and invest in.
You should be revamping and renovating certain stagnant sectors of the market. Pulling customers toward yourself, which is a necessary side effect of no innovation, is essential for your growth.
Easy, simple, fast are the watchwords of the sharing economy, and its marketplaces. Thus, providing services efficiently, and instantly is necessary for success.
Chicken and Egg Problem
We have already mentioned the importance of supply and demand. In marketplaces, this can become a chicken and egg problem. Why?
When you have a marketplace, it’s hard to get started. Beyond the technical needs, you will need to concentrate a balanced number of buyers and sellers on the same platform. But where do you start? Attracting sellers without buyers is complicated. And vice versa! Which user will go to buy from a marketplace where there is no offer?
One way to solve this problem is to concentrate on a very specific market niche. It will be very difficult for you to attract users and sellers to an overly general marketplace. On the other hand, if you focus on a very specific product or service, you will receive fewer users but more willing to spend money. Once you start to have a higher volume of traffic, you can gradually expand your offer and be less specific.
We also recommend that you concentrate on creating a social networking community. It is not even necessary that your marketplace is already working. Share interesting publications related to the sector of your platform, and go generating community and engagement from minute 0. This will help you to convince sellers to register in your platform because those followers in social networks will be potential buyers once you launch your website.
These are some important tips when creating a marketplace. However, there are many more and nothing is simple. This online business model is hitting very hard, and many startups are choosing it. Do you have a marketplace? What advice would you give to anyone who wants to create such a platform?