Some people have online marketplace ideas that they simply believe in. Other people want to be part of a prosperous industry and will think of an idea so that they can be a part of it. Either way, the aim of the game is to build a marketplace that is successful with a large vendor and customer base and, of course, frequent transactions.
All good businesses start with the idea
And a good idea should be able to solve a tangible problem and improve people’s lives. Start with a simple idea, which you will undoubtedly be excited about. Then think through if that idea could be the next big thing, work out what the actual value is for your potential users and how you are going to implement it.
Not all marketplace business ideas have legs. If there aren’t enough people interested or have no need for the service you are proposing your marketplace won’t work. In fact, one of the most common reasons that a marketplace business fails is because it’s not offering a solution to a problem, in other words there is no need for it. And if there is no need for it people won’t use it.
It’s important to bear in mind that the key is solving a problem not just for customers, but for suppliers too. This is what makes a marketplace idea so important to nail at the outset. At this point it’s worth reiterating that the sooner you get the idea into the market with a Minimum Viable Product (MVP), even if on a small scale initially, the better, as it’s only then you’ll see how popular it is and its potential.
If you can tap into what is known as ‘idle assets’ you’re onto a good strategy. Digital marketplace examples like Vinted, the largest online international C2C marketplace in Europe dedicated to second-hand fashion, with a growing member base of 45 millions users.
In that vein, can you think of any areas in life where there are underutilised resources that could be put to good use? Or resources that could be used more efficiently by sharing them? This can be applied to all areas such as gardening (sharing seeds and plants), sports (selling used equipment), art (selling originals from individual artists).
Recently, the markets that have proved the most ripe for disruption, and therefore potentially the most successful start-ups have been in transportation and goods, and there are opportunities for finding solutions in all sorts of industries. It’s exciting times, marketplaces are taking off, and you’ll want to be a part of it.
How do I know where to look for a fragmented market?
In situations where there are multiple small players offering services rather than one major vendor, marketplaces boom. They are perfect for pooling products (or services) into one easily accessed area… and you want that area to be your business!
Peer to peer marketplace ideas like Etsy are a great example, there are many individuals who want to sell their crafts but previously didn’t have a far-reaching outlet. Marketplace changed all that. The benefit to vendors is that they have more potential clients to hand without having to do vast marketing or build their own site, the benefit to customers is that the marketplace provides them with a convenient one-stop-shop. Everyone is happy and both vendors and suppliers have a previous problem solved.
It’s also possible to improve upon an existing service by adding a trust element that wasn’t previously there. A good example here is Airbnb. The available apartments are backed up with verifications and constantly updated reviews. This removes the element of being unsure that you should interact with an individual renting out an apartment as you are dealing with something much bigger with a good reputation; it no longer feels risky.
When thinking of your own marketplace idea, take a look at old-fashioned classified ads. That way you can see the type of things that people are selling and looking for, then have a think if there’s an opportunity to improve the buying and selling of those items if you add the trust element that is currently missing. Later on we’ll talk in more depth about how to build that all important trust and gain a good reputation.
Think about platforms as either being horizontal or vertical
Going back to the classified ads example, these are horizontal platforms which are a combination of completely different and random categories. There are also vertical platforms, Airbnb is an example of this. It has only one offering and problem that it is trying to solve. The benefit of vertical platforms is that, with only one thing to focus on, they have the potential to do it extremely well.
Marketplaces need to solve a problem that ACTUALLY needs solving. They also need to have a targeted focus, particularly in the early days where you are probably working on a budget. There’s no two ways about it, being able to target your message to a specific group is a lot easier than trying to aim at a broad market. You can be more clear and concise with your messaging which means your proposition will be crystal clear.
It doesn’t always come naturally to narrow your focus but it’s important that you do. It may take a little while in the early stages to work out where you can narrow your proposition, but once that has been done, your marketplace has a much better chance of success. Did you know Amazon only started out selling one product? Just books – and only once that marketplace was nailed did they look at expansion. Just because your marketplace is niche, doesn’t mean it has to be small. The aim is to build a community around that niche marketplace.
You might have an idea that you feel others are already trying to make a success. In that case, again, think about narrowing it down. That can be done either with the product or service you’re offering, or the size of the geographical area you’re offering it to.
You’ll need to put in the research hours in these early stages. It may well be that someone else is already successfully operating a marketplace that looks remarkably similar to your idea, or thinking of launching one. That’s not a reason not to do it – just make sure yours is better! At the risk of repetition, you might achieve that by being more targeted than they are with a very specific focus.
There’s a few steps in these early days that are advised when doing your research into online marketplace trends, competitors and potential competitors.
Google is a really useful tool. It’s the fast and simple way to see if there is anything glaringly obvious already offered along the same lines as your idea. Make sure you keep a list of all that look comparable in any way – and then look at each of them in turn. That includes finding out as much about their history as you can – if you can see that they refined their offering at some point it’s worth considering the reasons behind this, their experience will be useful to you.
If listed on Companies House you can also investigate how they are doing financially and how it has changed.
We would also suggest that you tell people about your online marketplace ideas. Don’t worry about them stealing it, if it’s a good idea someone somewhere may also be working on it, but the feedback you’ll get will be invaluable so don’t let that put you off. Not everyone who has a good idea has the commitment and drive to move it forward and turn it into a successful marketplace. Use people’s comments – be they positive or negative – to help you refine your idea until it’s something that you know people want. The same people you are telling are your potential customers so you need to know how they feel about your offering. We know YOU think it’s great, but unless other people feel the same way it’s not going to work.
To summarise, a sustainable marketplace is built on a great idea. That idea needs to be something that is solving a problem for vendors and customers alike, keep it narrow and refined and create your own niche.
Bear in mind the need for trust so that, even if you’re taking an idea that already exists in the wider sense, it’s your marketplace that people will use as they will get the added benefit of peace of mind. Research that area, talk about it, test the water… and when you’re happy that your idea is sound, it’s time to look at ways to validate it.