Building a marketplace between buyers and sellers is notoriously difficult, but when it goes right, boy does it go right.
This type of business venture is not for the faint-hearted, however. It takes courage, faith and a large amount of brazen recklessness veiled as confidence to keep pushing ahead in a market that might seem to be going nowhere. The pivot point for a marketplace business is markedly different to that of a more traditional business model. It can take years for your marketplace to gain traction, and even longer to reach your break out point.
Typically though, for those marketplaces that nail it, the end results can transform entire markets. If your marketplace has got it right enough to reach those heights of success, the chances are that you will be largely untouchable by any number of startups who want to follow in your trailblazing footsteps.
There are so many considerations when it comes to getting your e-Marketplace right, and many of them depend on your individual niche. There are a range of things all e-commerce platforms need to do to construct a thriving marketplace for buyers and sellers, and here are three of them:
1. Respond to Pain Points
Your marketplace needs to provide a solution to buyers and sellers alike, but the value proposition for each side of the market will be different. You have a far higher chance of operating a successful marketplace if you can identify the ‘what’s in it for me?’ factor that is so crucial to attracting and maintaining your users.
The biggest challenge facing your eMarketplace, aside from solving the infamous ‘chicken and egg’ situation, is keeping your users once you have attracted them to trade together on your platform. What is to stop them from cutting out the middleman?
Solving a real pain point on at least one side of the market will really help avoid disintermediation. Which side should have the priority largely depends on whether it is a buyer’s or seller’s market. Generally, though, even if a marketplace has negative points for sellers, their main objective is attracting buyers, so if you have a lot of them they will take the rough with the smooth. The key is taking the time to really understand your users, and how to make them happy.
2. Mitigate risk to add value
Controlling the risk of operating online transactions will be a service that keeps your users loyal. Providing an easy-to-use platform using automated, secure, online payment gateways is a huge plus for both buyer and seller. It is also a huge plus point for you, the marketplace operator, because you get paid immediately.
Support and mediation services when things go wrong is also a major plus point for both buyer’s and sellers, who feel secure and protected, as in eBay’s Buyer Protection and resolution center.
Rating systems and the ability to read and respond to feedback also builds trust between buyers and sellers, and all these factors of safety, security, and protection build an environment that keeps users returning.
3. Tighten your focus (at least in the beginning)
There are many potential strategies to overcome the chicken and egg problem of supply and demand in a new online marketplace. The challenge of client acquisition is there for all startups, but for your eMarketplace it is double the work.
For your platform to be sustainable, and to make most efficient use of your resources in the early stages, it needs to make progress in smaller verticals or country-specific markets before horizontal or global growth can be considered.
Once you have truly nailed your vertical or geographical market, horizontal growth may just be a natural process, and your client base may organically lead you in the direction you are supposed to go.
The right eMarketplace platform
Your marketplace will not be built overnight, but where there is massive growth potential, with the right market conditions, careful planning, and ensuring your eMarketplace can walk before you try to make it run, the potential for how your platform could work at scale is essentially without limit.
ProcurePort’s state of the art technology and expert knowledge and consulting services can help you turn your eMarketplace idea into a successful, profitable reality. Contact our team of experts to find out how we can quickly and economically build and deploy your marketplace.