{"id":42021,"date":"2023-10-20T15:18:09","date_gmt":"2023-10-20T15:18:09","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/your-startup-is-probably-a-marketplace-whether-you-like-it-or-not-startupsmart\/"},"modified":"2023-10-20T15:18:09","modified_gmt":"2023-10-20T15:18:09","slug":"your-startup-is-probably-a-marketplace-whether-you-like-it-or-not-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/your-startup-is-probably-a-marketplace-whether-you-like-it-or-not-startupsmart\/","title":{"rendered":"Your startup is probably a marketplace whether you like it or not – StartupSmart"},"content":{"rendered":"
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Most founders are surprised or think I\u2019m confused when I describe their startup as a marketplace.<\/p>\n

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They are used to thinking of marketplaces as online retail, auctions and deals sites only, not their app which connects plumbers with customer or helps singles find a date.<\/p>\n

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But if or when you realise you actually have two different types of customer and growing your business means finding a way to grow the number of both types of customer and the frequency with which they interact, it\u2019s time to face it: You are running a marketplace just as much as eBay is.<\/p>\n

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I\u2019m no economist but I know hacking the growth of a marketplace is hard. The biggest challenge in growing a marketplace is making sure you have enough buyers and sellers looking to buy and sell the same thing.<\/p>\n

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A market depends upon introducing enough buyers to sellers with enough variety of product or service and price so that a transaction occurs.<\/p>\n

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You need to find the right ratio between buyers and sellers: Is it 1:3, 1:30 or 300:1? You also need to establish the right range of prices – too great and some sellers won\u2019t get to make a sale, too narrow and some buyers won\u2019t get to buy.<\/p>\n

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And you need to grow the numbers of buyers, sellers, products\/services, prices and transactions as fast as you can to get enough data to learn these things, without running out of money or people.<\/p>\n

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Chances are you can\u2019t afford to spend enough on people or marketing to grow everything at once.<\/p>\n

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The number one question marketplace founders ask us at BlueChilli is: \u201cDo I focus on growing my buyers or my sellers?\u201d<\/p>\n

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Usually, if you\u2019re just getting started, you should find a way to reduce either the number of buyers, sellers or products to one.<\/p>\n

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For example, it\u2019s very hard to build a marketplace like eBay. The vast variety of goods and services that can be sold on a platform like eBay would make it very hard for you to ensure that each seller is introduced to many buyers while also ensuring each buyer is introduced to many sellers.<\/p>\n

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But if your marketplace begins by selling only one product – like a single model of one mobile phone per day – it will be easier to find merchants to get on your platform – they either want to sell that model of mobile phone or they don\u2019t – and to market to buyers – you are either looking to buy this particular model of mobile phone or you\u2019re not.<\/p>\n

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In the dating space it\u2019s impossible to just launch and suddenly have enough singles of every description for each single\u2019s preferences. But what if you narrow your \u2018seller\u2019 type to one and make your startup focus only on, say, placing female startup software engineers in Melbourne with the best first dates they\u2019ve ever had?<\/p>\n

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You need fewer \u2018buyers\u2019 (single people looking to date women in software engineering), and you\u2019re even more likely to see a transaction if you also reduce your products to one (for example,  by making all dates a pair programming exercise in a Slack channel you host).<\/p>\n

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Rarely – but sometimes – this strategy is so successful, early buyers and sellers go right through the whole conversion funnel to referral and each woman on your platform recruits you, say, another three of their single engineering friends.<\/p>\n

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Congratulations, you are now Uber-ish (itself another marketplace startup) \u2013 you don\u2019t need to sell more than one product, you can focus all your efforts on recruiting more \u2018drivers\u2019.<\/p>\n

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You don\u2019t always have to limit yourself to literally only one of that variable. It\u2019s usually possible to force the same experience by making the buyer feel like they have to buy or not-buy, one transaction at a time instead of viewing the whole marketplace of sellers at once.<\/p>\n

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Uber doesn\u2019t show you a list of available drivers and make you pick one, AirBnB doesn\u2019t let hosts see all the people searching for matching room listings, Once doesn\u2019t show you tomorrow\u2019s date recommendation until you\u2019ve rejected today\u2019s.<\/p>\n

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Are you sure your startup isn\u2019t a marketplace?<\/p>\n

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If your startup is a multiplayer online game, it\u2019s a marketplace. If it\u2019s a crowdfunding platform, it\u2019s a marketplace. If it\u2019s a streaming music player, it\u2019s a marketplace.<\/p>\n

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If it is, you need to make \u201creduce it to one\u201d your new catchphrase.<\/p>\n

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Alan Jones is BlueChilli\u2019s growth hacker. This piece was <\/em>originally published on the BlueChilli blog<\/em><\/strong>.<\/em><\/p>\n

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Follow StartupSmart on <\/em>Facebook<\/em><\/strong>, <\/em>Twitter<\/em><\/strong>, <\/em>LinkedIn<\/em><\/strong> and SoundCloud<\/strong>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

  Most founders are surprised or think I\u2019m confused when I describe their startup as a marketplace.   They are<\/p>\n","protected":false},"author":2,"featured_media":60568,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/42021"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=42021"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/42021\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/60568"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=42021"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=42021"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=42021"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}