Some individuals have an online marketplace idea that they deeply believe in, while others want to be part of a thriving industry and will come up with ideas in order to join in. In any case, the ultimate objective is to create a successful marketplace, characterised by a large vendor and customer base, along with regular transactions.
All successful businesses begin with an idea, and a good marketplace idea should be capable of addressing a real problem and enhancing people’s lives. Start with a basic idea that you will undoubtedly be passionate about. Next, ponder if that idea could be the next significant innovation, determine its real value for potential users, and plan how to implement it.
Not every marketplace idea has potential
If there aren’t enough interested people or there is no demand for the service you’re proposing, your marketplace will not succeed. In fact, one of the most prevalent reasons for a marketplace business’s failure is that it does not offer a solution to a problem, which means there is no need for it. If there is no demand for it, people will not use it.
Solve a problem
It is important to remember that the key is to solve a problem not just for customers, but for suppliers as well. This is what makes perfecting a marketplace idea so crucial at the beginning. At this stage, it is worth emphasising that the sooner you introduce your idea to the market with a Minimum Viable Product (MVP), even if initially on a small scale, the better, as this allows you to see how popular and potentially successful it is.
Tapping into what is known as ‘idle assets’ can be an effective strategy. Like the digital marketplace Vinted, the largest online international C2C marketplace in Europe dedicated to second-hand fashion, have a growing member base of 45 million users.
With this in mind, can you identify areas in life where there are underutilised resources that could be employed more effectively, or resources that could be used more efficiently by sharing them? This principle can be applied across various sectors, such as gardening (sharing seeds and plants), sports (selling used equipment), or art (selling original works by individual artists).
In recent times, the markets that have proven to be the most ripe for disruption and, therefore, potentially the most successful startups have been in transportation and goods. There are opportunities for finding solutions in a wide array of industries. These are exciting times, as marketplaces are taking off, and you will want to be a part of it.
How can one identify a fragmented market?
In situations where multiple small players offer services instead of a single dominant vendor, marketplaces thrive. These platforms excel at pooling products (or services) into one easily accessible area, and you want that area to be your business!
Peer-to-peer marketplace ideas like Etsy are prime examples, as many individuals want to sell their crafts but previously lacked a far-reaching outlet. Marketplaces changed all that. Vendors benefit from having more potential clients readily available without extensive marketing or building their own websites, while customers enjoy the convenience of a one-stop-shop. Both vendors and suppliers have previous problems resolved.
It is also possible to improve an existing service by incorporating a trust element that was not previously present. Airbnb is a good example in this regard. The available apartments come with verifications and regularly updated reviews, which removes the element of uncertainty when interacting with an individual renting out an apartment. You are dealing with a larger, reputable entity, so the process no longer feels risky.
When considering your own marketplace idea, examine old-fashioned classified ads to see the types of items people are selling and looking for. Then, consider if there is an opportunity to enhance the buying and selling process of those items by adding the trust element that is currently missing. Later on, we will delve deeper into how to build that crucial trust and establish a good reputation.
Think of platforms as either horizontal or vertical
Going back to the classified ads example, these are horizontal platforms that encompass a combination of completely different and unrelated categories. Conversely, there are vertical platforms, like Airbnb, which focus on solving a single problem. The advantage of vertical platforms is that, with only one aspect to concentrate on, they have the potential to excel in their niche.
Marketplaces need to address a problem that genuinely requires a solution. They must also maintain a targeted focus, particularly during the early stages when budgets might be limited. Undoubtedly, targeting a specific group is far easier than aiming for a broad market, allowing for clearer and more concise messaging, which means your proposition will be unambiguous.
Narrowing your focus may not come naturally, but it is essential. It may take some time during the early stages to determine where you can refine your proposition, but once that is accomplished, your marketplace stands a much better chance of success.
Did you know that Amazon initially sold only one product? They started with books, and only after successfully establishing that marketplace did they consider expansion. Just because your marketplace is niche, it doesn’t mean it has to be small. The goal is to create a community centred around that niche marketplace.
You might have an idea that you think others are already trying to make successful. In that case, consider narrowing it down further, either by refining the product or service you’re offering or by limiting the geographical area you’re targeting.
Investing time in research during these early stages is essential. It’s possible that someone else is already operating a successful marketplace that closely resembles your idea, or they may be planning to launch one. This shouldn’t deter you – just ensure that yours is better! You might achieve this by targeting a more specific focus than your competitors.
There are several recommended steps to take in the early stages when researching online marketplace trends, competitors, and potential competitors.
Google is an incredibly useful tool. It provides a quick and easy way to see if there is anything glaringly obvious already offered that is similar to your idea. Make sure you keep a list of all the comparable offerings, and then examine each of them in turn. This includes learning as much about their history as possible. If you notice that they refined their offering at some point, consider the reasons behind this – their experience could be beneficial to you.
If they are listed on Companies House, you can also investigate their financial performance and how it has changed over time.
We also recommend discussing your online marketplace ideas with others. Don’t worry about them stealing your idea; if it’s a good idea, someone else might already be working on it. However, the feedback you receive will be invaluable, so don’t let this concern deter you. Not everyone with a good idea possesses the commitment and drive to advance it and transform it into a successful marketplace. Utilise people’s comments, whether positive or negative, to refine your idea until you know it’s something people want.
The same people you’re discussing your idea with are your potential customers, so you need to understand their feelings about your offering. While you may believe your idea is fantastic, it won’t succeed unless others feel the same way.
A sustainable marketplace is built on a great marketplace idea. This idea must address a problem for both vendors and customers while remaining narrow and refined to establish your niche. Consider the need for trust so that, even if your idea already exists in a broader sense, people will choose your marketplace for the added benefit of peace of mind.
Conduct thorough research in your chosen area, discuss it with others, and test the waters. Once you are confident that your idea is sound, you can begin exploring ways to validate your marketplace.