Marketplaces are in demand due to the success of such platforms as Airbnb, Etsy and Fiverr, proving that the marketplace model scales well and can be applied in different business areas. In the coming years, we will see huge innovations in the creation and application of marketplaces. That is why now is the best time to create your own marketplace.
The necessary technologies for the creation of successful marketplaces are already out there, but it is still not an easy task. In this article, we want to share what we learned about building successful marketplace startups.
What to Start With
What you need to know first about building a marketplace startup is that there are no established instructions on how to do it right. Having a strategy and knowing successful cases is important, but you must be prepared to make a lot of efforts to develop your community and its prosperity.
Creating a successful marketplace requires a lot of work. To come up with an idea and launch a site is only a beginning. Although you do not need to have your own product, you need to solve the “chicken and egg” problem: how to convince others to bring their goods to your market when there are no buyers, and how to attract buyers when there are no goods yet.
Decide on what exactly you plan to create. Are you really passionate about a specific idea or are you just looking for a profitable niche? Remember that the more you are passionate about the subject area, the more chances you have to succeed.
If you plan to build a small business and ultimately support yourself and probably a small staff, it makes sense to focus on a smaller market. If you have a different plan, and you expect to receive money from a venture fund, your market should be huge. Regardless, let’s go through some common phrases you will face either way when creating a marketplace startup.
You need to figure out how to develop your marketplace. Can you write code? If not, do you have money to hire developers? Do you have experience launching a startup? Do you have previous experience in the niche? Do you have partners or are you alone? Answers to these questions will help you determine the best strategy for developing your idea. We recommend being pragmatic and taking into account both your strengths and weaknesses: your professional experience, education, contacts and finances. This will affect how you should start your business.
At the initial stage of the project, your main goal should be to develop and launch a minimum viable product (MVP) as soon as possible. It will help you present your idea on the market without risking or investing a lot of capital. The learning process begins only after you have something to offer to users, so it is crucial to do that early on. But mind that your MVP should have enough features to solve the underlying problem of your users.
Mind that developing a marketplace is a complex and time-consuming process that requires extensive experience and high qualifications. Trust only those specialists who understand the specifics as the most successful marketplace startups were created by truly professional teams the founders have put together.
Monetization is also one of the most important issues to think of when building a new marketplace. There are different types of monetization models: subscription, percentage of the transaction, payment for fixed packages, and others. That is why it is better to think about how you plan to make money with your marketplace in advance. In fact, it is a rather complicated question, so it needs to be very well considered at the stage of creating business logic. If you don’t pay enough attention at this stage, it can turn out to be very difficult to build the correct work of the marketplace so that it starts to make a profit.
Find Your Users
Another thing to emphasize is the importance of interacting with your users as soon as you start working on your project. And considering communication with users as something that is not so valuable is one of the most common mistakes when building a marketplace.
Various examples of successful marketplaces prove the importance of attracting users at every step of the way to solve all the big and small issues that change the way we live.
Talking to your users may take a lot of time and effort, but is well worth it in the long run. The platform you create is an important part of the puzzle, but it is your users and their level of involvement that really uplifts or disrupts your business.
Now, as we have considered the most important points that you need to know before proceeding with building your marketplace startup, you should be able to answer the question, “what business do I really want to build?” And start building!