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How would you jumpstart growth for a marketplace startup?
Jumpstart #4! What are the strategies and tactics you'd use to spark growth in a new marketplace business? Check out the first 3 Jumpstart posts:
I think it's all about building the supply-side first. I wrote about this here: http://morganbrown.co/supply-hacking/
Basically the idea for a marketplace is that you need liquidity. To build liquidity you need supply.
@nilanp writes a lot about this. You need to get supply in order to deliver the must-have experience to your buy-side users.
Gagan at Lyft talks a lot about this too, how they built Udemy supply from existing courses on YouTube and at Lyft how they paid drivers $20/hour just to sit around.
We actually work on supply here at GrowthHackers. Our growth studies are supply and we're constantly looking for the best content, which the community drives.
So supply first and that's how to get the liquidity you need to deliver a wow experience.
When you have a Chicken/Egg problem with marketplaces, what's the quickest way to define your "supply" side. Is it simply defining which users are your "buy-side" users?
Exactly - Sangeet's written about this on his Platformed blog as well
100% right. Think of a traditional marketplace in the "real world". You can get visitors, but if the sellers didn't set shop first, nothings gets sold.
Fully agree with supply side hacking. When we started BootstrapBay (our marketplace for themes and templates), the first few themes were actually designed by my co-founder but we posted them as fake theme shops we invented. We wanted to give the illusion that theme authors were already listing.
From there, we reached out to as many theme designers as we could to get them to list with us. Since there were already some themes on there, some of them were willing to list.
Only when we had a decent amount of themes listed did we work on getting customers.
We also did a ton of content marketing. I wrote a ton of blog posts about the Bootstrap framework and made a bunch of tutorials. This brought in a lot of people interested in Bootstrap and exposed them to our themes. It also helped our search rankings considerably.
Great stuff @cgimmer! How long did you have to hack the supply side before it became self-sustaining?
We only hacked the supply at the beginning. After we released the first few themes ourselves, we reached out to all the designers we could and slowly but surely we started filling supply.
As you'd expect, the first 2-3 months were pretty tough but it got easier as the marketplace started building momentum.
The "fake it until you make it" tactic might sound a bit fishy, but many times it's the only way when you have a chicken-and-egg problem on your hands.
Don't make it a marketplace - make it a service for the demand side.
Conventional Startup 101 wisdom is bootstrap the supply side and that will jumpstart the flywheel; reality is that you're often not solving a coordination problem but rather an excess capacity problem or some other issue where your demand needs are much stronger, more consistent, or otherwise incongruent with the supply needs as they currently stand.
We have some customers at Indicative that have taken this approach and are doing amazingly well after they figured out that they weren't seeding a marketplace but rather solving a major problem for the demand side by seamlessly managing the supply side for customers.
Great insight and playbook. You can definitely build a service to start and concierge customers early, handling the management aspect as you mentioned. You still need the supply aggregated though, whether you choose to be a broker/intermediary or not.
Ultimately you can scale it up to be a true marketplace over time.
This is the strategy we finally settled on for our startup when it launches - ie concierge for the demand side by providing highly curated/relevant results (solves a major problem of spending loads of time finding (maybe) great travel resources).
This of course simultaneously helps build supply of "live" results (which we need so people have an idea of what they to expect when they submit a concierge request.
If demand gets too heavy, we'll open up the supply side ie - let others curate results and then we have a marketplace!
Good part about the concierge service model is also that it opens up a lot of possibilities on charging from day 1 (people seem to be relatively more comfortable paying for a service done by a live person)
Right - you still bootstrap the supply side, but you execute the demand side as a service. Typically you'll need significantly less supply providers, and it's much easier to find them, onboard them, and utilize them.
Totally agree, this is the strategy we used when launching our marketplace that became Smartshoot.com. We did a combo of proactive outreach and reactive sourcing as we landing new high-touch clients. That gave us the runway to build out a massive marketplace of creative professionals and inbound demand from people needing content.
That's what we're starting to see with our business. We started out trying to solve the "mutual issue" of connecting the two sides and realized it wasn't working. Now we're working on providing true value to the supply side before we really have a big following from the customer. It's all about value and if you can create enough from the beginning the marketplace should be able to come into fruition.
From my experience - definitely supply first, but it also has to be localised. Having too limited local supply won't create sufficient demand and will stretch resources far too thin.
As for tricks - creating healthy community and local brand heroes help a lot and it's actually pretty cheap. Couchsurfing is a great example.
Hi Lukasz! Could you elaborate on local brand heroes tactic? I don't know the Couchsurfing example. Thanks!
Two-sided markets, like dating, jobs, and ebay-style ecommerce, face "empty room" problems.
One tactic is to grow niche market by niche market. It's easier to build a densely active tiny market than to try boiling an ocean. Before taking on Etsy, consider bringing artisanal knitted Star Wars buyers/sellers together. And follow Lyft's and Uber's examples by making a market city by city.
Sometimes one side has more power in a two-sided market. Dating has been like that. That's why you see variations on "girls drink free" nights at bars; one side in, the other follows.
Agree on supply side. For Mashape (API marketplace), one of the things we did was to document the APIs on our platform first, then reach out to the actual API creators to get them to "claim" their API and take over maintaining it. This helped us to seed content on the marketplace.
I think a huge part of early success in a marketplace is hustle. AirBNB is a classic example https://growthhackers.com/companies/airbnb/ . Morgan titled a section of the study “Pure, Unadulterated Hustle in the Face of Initial Resistance".
FYI on the other side of the growth equation re: marketplaces.
How XaaS startups can capitalize on the existing marketplaces of the cloud superpowers.
Marketpalces are always 2 sided platforms and often struggles to take off because one side doesn't deliver what it is supposed to deliver.
I myself tried to build a marketplace back in 2012 which was hybrid model of elance + project management. We had plenty of freelancers at one side but no one to post work for them (there were other problems too).
I think only those marketplaces where there is organic demand from both sides will take off and grow, the rest which needs lot of resources to sustain one side will eventually shut down because marketplaces work on wafer thin margins.
I think it is all about letting the Internet users you are available. "Build it, and they will come," doesn't work for the Internet.
You will need to first make sure you have everything in place at your website, that is, something that will appeal to your visitors. I would suggest for an eCommerce store and also a blog to offer a free gift, something of value, so that you can capture the email address.
Before you start your promotion, Send out a press release, each day, for three days. Use a different service each day, that way you can reach more viewers. Start this on Wednesday to end on Friday, your promotion to start on Saturday.
You can even use social media to get the word out that yourwebsite.com has a promotion giving away "x" for free and will only last for "x" number of days.
A month or so before you start this promotion, if you also join forums in your niche and help the members there, possibly befriending someone there, they can also let others in their circle to know about your promotion that starts on "X" day.
The more places you go to put the word out that "YOU" are in business, the beter your initial start will be.
As others have mentioned here, I recommend starting with a specific local market and then roll out market by market (if applicable for your marketplace) vs. launching nationally.
Here's my story: I launched MyTherapistMatch.com ("MTM"), a matching service for therapists and clients, and made the mistake of launching nationally. In the case of MTM, therapists were happy to sign up as a paying member of the site, as long as we could drive them qualified leads (therapy clients). This meant that as we signed up therapists across the US, we needed to spread our marketing $$ across many geos, with locally targeted PPC being the largest driver of qualified traffic. Since we were bootstrapped, we used a portion of the therapist's monthly subscription fees to fund the paid search budget. The challenge ended up being that the CPAs for therapy client leads ended up being often more than the therapist's entire subscription fee for a month. That, plus we had a hard time driving leads at all for some therapists in tricky geos.
If we had instead saturated our local market, Los Angeles, we would have been able to concentrate our PPC budget and SEO strategy in LA to reach critical mass. Then move on repeat in the next largest market.
The easiest way to determine the 'supply-side' is to figure out which side is more willing to wait. Marketplaces are all about connecting one side which needs something immediately with the other side that is usually willing to wait a little while.
Think about the Uber/Lift setup. Drivers are willing to wait a lot longer than passengers. A passenger will open the app, ask for a driver and wait maybe 10 minutes max before trying other transportation. A driver, on the other hand, is willing to drive around for hours and probably even try again for a few days if they know the market is just starting.
It's similar with theme marketplaces. Someone selling a theme is willing to wait weeks or months to make a sale of their theme. They don't really care when it happens, they just want the sale eventually. On the other hand, if you're in the middle of designing your site and want a theme immediately, you'll buy what's available. You're not going to wait weeks for a particular theme except in extreme cases.
At Axial, where I worked, the 'supply-side' was actually what most people would call the demand side. We were helping companies get bought and sold. Early on, we were connecting private equity groups (who buy companies) with investment bankers (who sell companies). Even though the private equity groups were they buyers, they were willing to wait around longer for a deal to come by. Investment bankers, on the other hand, needed to connect with buyers immediately in order to sell the deal. So, we went out and got a huge group of private equity groups signed on first because we knew they would give us 6 months to a year before they said we didn't work. Once we had a hundred or so PE groups (buyers), we went to investment banks and asked them to let us connect them with buyers they didn't know. Since they needed immediate gratification, it worked. From there, the market started to grow.
I definitely agree with the idea of supply-side hacking, but figure out what's really your supply. In our case, the supply would seem to be companies, but in reality the supply was capital. Whoever is willing to wait longer is your inventory and the time constrained side is your retail buyer.
Love this conversation. One thing I'd like to point out, is that balancing supply and demand is an ongoing process, long after the initial hack, and like with all things growth, what works in the beginning doesnt work 6 months down the line.
At LawnStarter (marketplace for lawn care professionals), we recruited companies over winter with the promise of new jobs. It was a challenge keeping them engaged during this seasonal period where not much is happening. Then come spring, our demand far exceeded our supply, but the lawn care professionals were too busy, so we had to get creative.
Some great input here already.
I think by starting small/niche you find a better chance as others say. City by city approach is interesting and I'd like to find out a bit more about that.
Quick question...can somebody please define supply-side ? For example, in Lyft, the supply-side are the Riders or the Drivers ?
Thanks in advance
supply=drivers (provide the service)
demand=riders (consume the service)
My understanding is that supply would be drivers (the product) and demand would be the riders (the demand) @assamese.
As others have mentioned here, I recommend starting with a local, market by market approach (if applicable for your marketplace) vs. launching nationally.
Thanks, @coreyquinn for sharing. Like you, very interested in the convergence of health/ sharing economy. I'm founder of @UpliftCare - a marketplace that redefines home care and connects caregivers to care receivers, on demand. We're launching in 2 months, thank you for your timely advice. Love your insight on localized PPC/SEO to gain traction - certainly a better bang for your buck. All the best!
Really great insight. I'm a part of @AskAlmond, a marketplace that connects dietitians to clients and offers a telemedicine platform. We are currently running our beta, and one of the things we've seen is high CPC for SEM when trying to address a larger geography.
We're in this exact situation right now, where we're building a consumer marketplace based around a new social video platform we're calling 'Vervid.' The approach we're taking is to onboard a few brands within our network and allow them to embed calls-to-action (i.e., a "Buy" or "Sign Up" button) for other users to click through to an external site. This will allow us to test adoptability of this feature before taking the time to bring the entire transaction internal to our app. In other words, we're using a rudimentary proof of concept to determine whether we're even close to being on the right track and, if so, we'll invest the time to build those features out even further.
Trada, a PPC marketplace, has some pretty interesting case studies for this: https://www.youtube.com/v/SVGEkQ8yqFM%26autoplay=1
Thanks to Cody Boyte for answering my question (the question was - what is the supply-side in a market-place?). So, according to Cody, the supply-side is the side who is willing to wait (as opposed to the demand-side who would not wait)
We are espronto.com and our app provides a crowd-sourced impromptu virtual-butler service in Manhattan.
Our supply-side are the job-seekers (ie. Butlers) and the demand-side are the job-posters. In our case, we did build the supply-side first - we went around to college campuses to sign up a bunch of college kids - that was relatively easy. It has much harder to gain adoption on the demand-side ie. finding people who want (and, pay for) our service. We are in the middle of executing a number of growth channels & I will update when the results trickle in.
In the meantime, suggestions are welcome....yes, we are looking to hire growth consultants
I agree most of you guys. I would start with the supply side, as long as it's not an ad/content related business. Most of the time, content/ad related aggregators/marketplaces requires to start with demand side
Good afternoon ,
I’m starting to create a marketplace like eBay or Amazon , but I don’t really know how to start to get traffic to my side and to get people to list items on my website. My website is merqatuz.com. I would appreciate any suggestions that help me to get more sing ups and sellers on this kind of website .
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