4 Important Strategies & Lessons in Growing & Scaling an Online Marketplace Business
Starting any business is hard and comes with many challenges, but growing is even harder. In building a marketplace, one of the most difficult tasks is to maintain the balance in supply and demand. You want to make sure you have enough buyers and sellers to keep the business running. Problems in scaling a marketplace are unavoidable, and they can take many forms. It could be an angry customer that received a wrong order, or a clash with the local government and traditional industries in operational regulations. So what are 4 key thoughts you need to consider when you need to scale your marketplace?
1) Don’t expand or pivot too quickly
You want your marketplace to see signs of traction as soon as possible. That’s understandable, but you need to be patient and accept the fact that it takes time. It’s not the end of the world if you haven’t seen any significant growth after 9–12 months from launching. Remember that you need to create both buyer and seller communities, and that’s no small task. Reassess and changing your market’s direction too soon or expanding too early could be harmful in the long run; the foundation needs to be solid before you can move on to the next step — otherwise, it’ll crash later. It took 10 years for Etsy to aim for IPO and 7 years for Airbnb to be valued at $13 billion. The bottom line is, stick to your plan as long as you can and be patient.
2) Narrow your market focus strategically
It’s most likely that marketplaces have limited resources when starting out. With that in mind, it’s wise to not overspend your budget on targeting multiple markets. Instead, focus on building a single or few markets. You need to make sure that your business effort in smaller and vertical markets will work before you expand. Location plays a big role too, for example; if your marketplace connects farmers with buyers and you’re reaching out to coastal cities — it won’t work well. When you’re narrowing your focus, you’ll have more time and hands to offer personalization in your service. It can be beneficial because creating a unique experience for customers can ultimately boost trust in your branding.
3) Build trust with users
The marketplace industry relies heavily on trust and it requires a lot of effort to build it. Your marketplace needs to be trustworthy and reliable in order for people to use it. If buyers don’t trust the sellers on your marketplace platform, your business is stuck. Having efficient background checks, adequate insurance, a legitimate customer rating system, testimonials are just some things people look for when using a marketplace. Being transparent in the way you operate your marketplace is one of the easiest ways to gain credibility. It’s also crucial to deliver what you promise. If you claim to be “the cheapest and fastest delivery service” or “homestay experience better than Airbnb,” you need to prove it. Failing to do so will cause customers to think twice about trusting your brand and using your service.
4) Do something extraordinary
You’ve followed the book step-by-step in scaling, yet you’re unsatisfied with the result. Try to do something extraordinary! Deliver something unexpected and amazing to your customer. From sending coffee mugs to new customers and having groceries delivered in reusable shopping bags, to free movie tickets on birthdays, these surprises will leave a pleasant impression for customers. It varies depending on the type of marketplace, but offering special gestures in scaling your marketplace will set you apart from other competitors. Unique experience matters and this is a good reason for people to come back and to choose your marketplace.
To check all the boxes on the list of things to do in scaling a marketplace is tricky. But you can prioritize them and add more as you go. In the early stages of your marketplace development, it’s important to know that you’re constantly adapting to the needs of the people and the trend in the market. Consider different routes and don’t hesitate to look for inspiration from others, as doing so will just make it much easier for you to grow your marketplace.
Article: Kenneth Low is CMO and co-founder of Arcadier, the world’s leading Marketplace SaaS company that powers next-generation marketplace ideas. You can follow Arcadier on Twitter, Facebook, and LinkedIn for more news and updates.