4 Steps To Build A Successful Online Marketplace

The time is ripe for online marketplace startups. This approach can help you launch strong and connect with the right people at the right time.

The time is ripe for online marketplace startups. Peer-to-peer rentals, booking various services, B2B networks or exchanges for buyers and sellers–anything’s possible. In an age when web and mobile apps like Uber, Lyft, Airbnb and Upwork are thriving, it’s time to get into the game.

However, your idea will go nowhere without an intelligent launch. As a partner and head of product at Swiss Commerce, a UX/UI web agency, here’s an inside look at what I’ve learned. This measured approach can help your business launch strong and connect with the right people at the right time.

 

1. Plan a soft launch

The soft launch of an online marketplace tempers expectations with strategy. An online marketplace has two main components: customers and providers. Bear in mind that, initially, there will be limited activity on the demand side. Providers generally have a larger motive to enter a marketplace since they’re driven by potential revenue.

A soft launch requires that you address the age-old “chicken or egg” issue. The goal is to connect with customers–despite limited supply; yet acquire supply with minimal customers. Build a marketplace audience from the supply side first.

 

2. Seed and attract providers first

A strong online marketplace soft launch requires a focus on seeding efforts. The goal is to sign up quality and relevant service or product providers—this is a crucial step before customers acquisition. The trick is not to play both sides of the fence (providers and customers) too soon.

 

Photo: NordWood Themes, Unsplash/YFS Magazine
Photo: NordWood Themes, Unsplash/YFS Magazine

Here are a few ways to find, identify and connect with ideal providers:

 

  • Establish your value proposition

    Create a solid value proposition to present to potential providers. How is your marketplace superior to the one(s) they are currently using? Do you offer lower fees, higher pay, a superior user experience, a more appealing brand, and a more trustworthy app environment? These are just a few examples of selling points of value to providers.

  • Find existing providers

    Contact providers that are already active in similar marketplaces. Check Facebook and Yahoo groups, Craiglist, Etsy or any other relevant platform. Using your value proposition, create a simple pitch email that can be personalized. Invite potential providers to your new marketplace. Airbnb, for example, had great success with this strategy during its soft launch.

  • Search directories, aggregators and offline resources

    Use online and offline resources to connect with potential providers. Make liberal use of Google searches for your target provider profile, but don’t neglect offline business directories and aggregators. Depending on your marketplace, the Yellow Pages, Chamber of Commerce meetings, hobby clubs, networking groups, Meetups, trade associations, online forums and internet review sites like Yelp can be gold mines. Be proactive.

 

With a clear profile of your ideal candidate and a solid value proposition, you can zero in on new providers and bring them on board. Consider offering exclusivity, at least at first; make your online marketplace by invitation only. This will help create buzz, focus on quality versus quantity, and compel other providers to seek you out.

As for customers, establish key partnerships with communities relevant to your provider offering. This will show the potential upside and pave the way for your next phase, the hard launch.

 

3. Transition into a hard launch

At this stage, balance demand and supply: a healthy ratio is key. High-quality providers naturally bring in customers, and word will spread. Prioritize quality and integrity at your core. After a successful soft launch, you’ll have a respectable user base and some transactions in queue.

 

Photo: Lilly Rum, Unsplash/YFS Magazine
Photo: Lilly Rum, Unsplash/YFS Magazine

 

4. Leverage growth channels

As you build momentum, growth can vary. Find ideal growth channels with five basic steps:

 

  • Brainstorm ideas

  • Zero in on the most promising ones

  • Test each idea for about a month

  • Implement the most effective channels

  • Fine-tune as needed

 

Some of the most effective tools and methods for growth during and after a public launch include:

 

  • Search engine optimization (SEO)

  • Sales, coupons and discounts

  • Viral marketing

  • Free giveaways

  • Content marketing and blogging

  • Social media marketing

  • Pay-per-click ads (e.g., Google AdWords)

  • Email marketing

  • Community building

  • Strategic partnerships

  • Cross-marketing campaigns

  • Specialize in successful areas

  • Capitalize on new trends

  • Scale to other areas (e.g. marketplaces)

 

As for your growth rate, have realistic expectations. Before you reach critical mass, search filter options can be reduced to allow for a broader search result. Parameters like distance and age range can be limited initially, and then gradually expanded once you’re ready to grow.

 

Building an online marketplace

Building an online marketplace business usually takes longer than other online business models. In some cases, it can take three years or more to gain momentum. But don’t lose faith: After all, it took Airbnb about four years to really take off. The same time frame could hold true for your own burgeoning online marketplace business.

 

This article has been edited.

Kiyan Barelli is the co-founder of Swiss Commerce, a strategy-led UX/UI digital web agency headquartered in New York since 1998.

 

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