15. Stages of building a marketplace
Scaling & defending a
marketplace
As a marketplace figures out how to bring
buyers and sellers together and builds
liquidity, the virtuous cycle starts kicking
in.
3
Growing a marketplace
The virtuous cycle is the holy grail for
online marketplaces. In this positive
feedback loop, a high number of quality
suppliers attract more customers; then
more customers attract more suppliers to
join.
2
Seeding a marketplace
The earliest days in a marketplace are a
tricky time. There’s a chicken and egg
problem when it comes to supply and
demand: customers need supply, and
suppliers need customers
1
16. Stage 1: Seeding a marketplace (supply side)
Aggregate readily
accessible inventory05
● The last strategy is to aggregate inventory that’s already
listed somewhere, for example through affiliate programs.
Pay for inventory04
● During the early days at Boris’ startup JustBooks, their
first growth hack was buying books to list so they didn’t
have an empty site. When Uber launched in Seattle, they
paid town car drivers to idle.
Bring customers to a
provider03
● some restaurant delivery startups started out by scraping
the web for menus from local area restaurants. Then when
a customer places an order on their site, the startup goes
to the restaurant to get the order fulfilled.
Convince existing sellers to
list on your platform02
● Airbnb found some interesting ways to leverage the
existing supply on Craigslist, including emailing Craigslist
listers and encouraging them to check out Airbnb.
Identify unique inventory01
● Etsy went after the producers of hand-made goods. These
designers and crafters found their unique goods buried
within eBay’s massive inventory and typically resorted to
selling their items locally at craft shows, farmers’ markets,
17. Stage 2: Growing a marketplace (supply & demand)
A/B Testing | Analytics | Attribution | Personalization
Acquisition & Activation
Search
Virality
Paid
Affiliate
Framework
CRM Tools
Loyalty Program
Community & NFX
Retention & Engagement
Data Foundation
18. Stage 3: Scaling & defending a marketplace (Tools)
TRUST & SAFETY
Rating system, user
reviews, or testimonials
BUILD MOAT
Protect supply & win
buyer mindshare
SUPPORT POWER SELLERS
Power seller programs,
insurance, customer support
PREVENT LEAKAGE
Well designed rating
system, incentives
DEVELOP AN ECOSYSTEM
Leasing & financial services,
Mechanic, Property mgt
19. Secret sauce: successful marketplace startup
Go vertical
A startup can unbundle a generalized
marketplace and focus on creating the best
product for a specific vertical. Many
marketplaces have struck gold by picking one
thing and doing it extremely well.
Develop a 10x better product
“a 10x product and save people money” is the
undercurrent running through dozens of
breakout companies, including Uber, Airbnb,
and WhatsApp
Unique inventory
a marketplace startup can focus on the supply
side, and identify opportunities to bring unique
inventory to underserved markets. This strategy
certainly helped Airbnb against HomeAway, as
well as Etsy vs. eBay.
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01 02
23. Fragmentation
Are there lots of
buyers & sellers?
Relationships
Monogamy vs
playing the field?
Frequency
How often do the
transactions
occur?
Payment & trust
Is payment
inherent part of
marketplace?
Expansion
Can we create new
supply/demand &
expand market?
Marketplace success factors