How to build a two sided marketplace and be successful. First of all, what is a two-sided marketplace? A two-sided marketplace is an offering where both vendors and buyers gain due to the principality of buyer and seller.
For instance, the cars of your is broke down. You will want to get repair as soon as possible. Due to the advent of mobile apps technology, your first preference would be going for apps like GoMechnic or Pitstop to find a suitable mechanic. The app will give out a list of suitable mechanics in your vicinity and you can get work done by hiring a suitable professional.
This whole process is a two-sided online marketplace. In the above situation, the marketplace is tending to the needs of both service provider and consumer simultaneously. Thus, a 2-sided marketplace creation.
Besides, many online platforms use AI and machine learning aspects for sellers and buyers matchmaking.
In 2020, the sales figures of the online marketplace were 2,67 trillion.
So, if you are thinking of venturing into the footsteps of marketplace giants like eBay, Airbnb and many others, this blog is your go-to guide.
This blog will tell you how to build a two-sided Marketplace and its overview.
Business Model for Marketplace
The basics here is to create a platform that can bridge the gap between the buyer and sellers. Plus, the platform is should be trustworthy that can find a suitable exchange value for sellers and buyers.
Thus, the first step in this direction is should be deciding your business model that’s fits your eCommerce space.
Buyers Two-sided Marketplace
`The today business marketing strategies while formulating their strategies first understand their audience characteristics and then proceeds on.
Nowadays, you will see consumers are reluctant to pay shipping charges, instead, they look for alternate options. Many don’t like to wait for their product deliveries or wants to try before buying it.
The two-sided marketplace will not only give consumers lesser shipping prices but better delivery choices. As there will be more businesses which means a more competitive market, this will give consumers a driving seat. Moreover, a localized vendor will be able to provide the same product or services at lesser costs and in time.
Sellers Two-sided Marketplace
What is a sharing economy? An economic system in which assets and services are shared on the internet either for free or a certain fee.
Big marketplace giants like Uber or Airbnb has emerged as leaders in sharing economy. Sellers Two-sided Marketplace can leverage the same sharing principle for their growth.
Let’s apply the renting business in a two-sided Marketplace. Because of sharing concept, both tenant and landlord can meet their opposite needs simultaneously. The consumer is coming because he can easily find a place to live. But the question is why the seller should be coming to your platform.
User is coming to your app/website to avail services they wish but the seller is purely coming on for better reach and higher value.
So, it is important to offer sellers a better value and toolset. Higher traffic on your website/app and the popularity of the platform should be enough to incite sellers to join you.
Start-ups Two-sided Marketplace
For entrepreneurs, a two-sided marketplace business is the older better it is. Because of the value and better reach, the older ones can drive it more efficiently.
Startups can use networking leverage when it comes to how to build a two-sided marketplace. They can work simultaneously both on seller and buyer to why they should be coming to their platform.
They can offer attractive offers to sellers to come and enlist here, whereas they can offer consumers freebies and discounts to come.
Two-Sided marketplace Revenue Model
- Commission fee – The owner can charge a certain fixed fee on sellers earnings
- Subscription fee – When your marketplace become a popular figure, you can start subscription fees for additional services.
- Listing charges – You can ask sellers a certain amount for their product listing
- Advertisements – Place other brands and businesses ads on your platforms
Finding Right Audience
Identifying the right audience and then targeting it is a key component of any business strategy.
You don’t want to sell coffee to a tea-lover that’s why audience targeting becomes so important. Leverage your business system in the community can actively participate and address the issues to find the right audience for your business.
- Personal savings, and beginners luck and then proceeding on with cash from initial sales.
- An angel investor, especially if you wanna go for a solo run.
- If you want to create a larger marketplace, go for venture capitalist firm funding.
- Y-combinator or seed rocket
The next step should be on your mind after achieving the above steps. It should be the creation of MVP in your effort on how to build a two-sided marketplace.
MVP or Minimum Viable Product is defined as the final product that can be shipped to your customers. More so, this product version may not include all features at the start as it will be most probably a beta version.
Here an experienced developer can help you ride out the rest of the process of how to build a two-sided Marketplace. With more inputs from both buyers and sellers, you can test and experiment with your MVP. Thus resulting in the final version of your two-sided marketplace with all end-to-end features.