One of the hardest business types to get started is a marketplace. This is because a marketplace requires an initial base of people supplying goods to attract people to buy goods. And, if there are no people buying goods (the case of a marketplace at the beginning), it’s going to be really hard to attract suppliers.
With this in mind, it seems almost trivial as to why any person would make the choice to build a marketplace.
The choice to build a marketplace is made because a person is confident that they have the ability to curate and organize a lot of high quality content or goods in a way that will give them a huge advantage over anything similar. A successful marketplace has the potential to become a seriously a massive business.
An example of a very successful online marketplace is Udemy. Udemy had a very hard time getting started, but once they were able to have their key growth moments, they powered forward to become the ultimate online marketplace for learning. Anybody can go on Udemy, find a course that interests them, and learn from experts around the planet.
How do you grow a marketplace?
1. Build the initial supply yourself. This is one of the best things you can do in the early days of building a marketplace. In the case of Udemy, they produced their own high quality courses. By producing and marketing their own courses in the beginning, they were able to provide social proof that people were using their site.
2. Make people feel like they’re guaranteed to be successful. Make people feel like if they use your marketplace, they’ll be successful. An example of this in action is with Kickstarter. Did you know that 50% of Kickstarter projects are fully funded? If you have stats like that clearly displayed on your website, everybody is going to be asking, “Where do I sign up?!”
3. Social proof is important. When a marketplace is first coming to life, it’s important to make the marketplace not feel like a ghost town. This means clearly displayed samples of success from both the suppliers and the buyers. A marketplace like Udemy may have done things like say, “This instructor made $20,000 with their course over the last 6 months!” On the buyer side, a marketplace might try to quickly build up their social following. This is a great social proof point because if somebody looks at your Twitter profile and they see you have 50,000 followers versus 500, they are a lot more likely to trust your marketplace and join.
4. Build supply from someone else. There is a lot of great content available under creative commons licenses. If you are starting a marketplace, this creative commons content is a great way to make the initial supply of high quality information and goods. Udemy used content that was available under the creative commons license to curate and craft some of their initial free courses.
5. Supply leads to demand! This is one of the most important things to remember when building a marketplace. If there is no supply, there will be zero demand. Make sure there is a great supply of content, so that people who demand the types of marketplace items you sell can fulfill their needs.
6. SEO is important. A marketplace business should focus on SEO when it’s getting started (and beyond just the beginning). This will make it so that it’s easier for potential customers to accidentally discover your website. For Udemy to improve their search rankings, this meant that some of their content needed to be unlocked and available to anybody. By unlocking portions of content, search engines will have more words and images available to be indexed.
7. Have your supply generate the demand. One of the best tactics for growing a marketplace is to have the supply generate the demand. For a site like Udemy, this meant incentivizing instructors to promote their courses. Udemy normally gives 70% of course revenue back to the instructor, but, if the instructor promoted their course themselves, they were offered 85% of the revenue. This led to instructors playing an integral part of Udemy’s growth.
These seven tips should help give you some low cost ideas on how to grow a marketplace. It’s always going to be difficult to grow a marketplace, but if the market is big enough and you’re able to become successful, it’s a fantastic business model.