March and April saw us hosting our monthly Office Hours event in Shoreditch, London.
On both of these occasions, we were treated to the sultry environs of Soho Works, nestled at the top of the iconic Tea Building just off Shoreditch High Street. If you haven’t been, then check it out - if only for the very cool lifts (or elevators for our US friends!).
Both events were a roaring success - and definitely worth it to meet with so many interesting people and discuss so many cool digital product ideas. Ranging from finance apps for students, to gaming hubs and fitness apps, we saw some groundbreaking concepts that really showcase the wealth of innovation talent in London at the moment.
But perhaps our hottest topic of both events was the Digital Marketplace. So we thought we’d jot down just a few thoughts about what these are and how to approach them, just in case you too are looking at building an MVP or digital product in this area.
What is a Marketplace?
A Marketplace, aka a double-sided or two-sided market, is when two user groups interact via a platform, usually to the benefit of both parties. Think Upwork, or Airbnb, or even Uber - they all have one user group providing the product or service, and another user group buying that same product or service.
Back in 2017, these marketplaces were truly disruptive - now, however, they are commonplace, with consumers and service providers pretty much expecting the simplicity and speed they offer as the norm.
This is predominantly why marketplaces have taken off in the past few years - they epitomise the ‘sharing economy’ and bring the customer and service provider together in a truly seamless and convenient way. They also create dependency in consumers, breaking down what is known as ‘the network effect’ and creating the impression of transparency and trust, something that companies of all sizes are of course eager to capitalise on as they try to win the hearts and minds of their own customers.
What things do I need to take into account when building a Marketplace?
Despite some of the most valuable companies in the world being marketplaces, they are perhaps one of the most complex types of digital product to build. With this in mind, we’ve put together a few pointers should you be considering going down this route, and especially if you’re looking to tackle an MVP of this nature.
Focus on one side to begin with
Whilst this may feel a bit counter-intuitive given it’s a double-sided marketplace you’re looking to build, actually the key to building a successful marketplace in the long run can be to focus on just one side of that marketplace in the initial stages. It’s what Josh Breinlinger (previously of oDesk) calls the ‘chicken or egg problem’.
Be narrow and engage with your customers deeply so that you can build a strong network and community focused on the needs of just one group.
It’s actually how one of the well-known taxi apps started out - by building up a network of taxi drivers (the sellers) before then launching to the end customer (the buyers) with a much more robust and compelling proposition.
Deliver value to your one-sided marketplace
Connected to step 1 is the need to be laser focused on what value you are bringing to your one-sided marketplace.
Why are you bringing this group of people together? And what are you giving them that no other app or company can give them?
It’s all about building trust at this stage, an idea that’s covered very neatly by former Head of Product at Threadflip, Anan Iyer in this article.
One best practice noted by Iyer is that of setting up community spaces where service providers can connect directly to share challenges and ideas - your platform or marketplace then becomes more of a trusted forum where people can gather and chat, rather than just be sold to.
A few things to note in this regard though, as this sort of venture sounds so much easier than it actually is!
First up, create a great user interface and make the whole customer experience (including any payment processes) completely frictionless. Then invest in ongoing social proof and testimonials so that the value you are offering remains relevant and topical at all times.
Own the ‘Delivery’ network
Once you’ve established that first side of your marketplace, you will then want to start owning the delivery network as part of the ongoing value you can give back to that group of individuals or companies.
For example, can you facilitate communications better between suppliers in that network? Can you create a better environment for communicating, such that the alternative, i.e. direct communication, is a poorer overall experience? This is especially important if there is some form of commission or fee involved in using the network or marketplace.
Take Upwork for example, they charge a not-insubstantial commission rate on a freelancer’s first job with a particular client. On the flip side, however, that freelancer has payment protection built in to the platform and as long as they keep all communications to the Upwork messaging service, then they also have a built-in paper trail that provides extra protection and reassurance.
With Yard Lynk, for example, the focus has been on optimising the whole delivery process for tool and plant hire - this could be in the form of taking up unused space on delivery vehicles, thereby reducing overall costs to both the seller and the buyer.
If you’d like to check out the work we’ve been doing in this area, then why not head on over to the ‘Our Work’ page here.
And if you’ve got a marketplace idea, then don’t hesitate to get in touch so our crack product team can give you more great advice on how to get started.