Identifying a brilliant idea or a potential business model can be exciting. But validating a marketplace concept is an essential first step before diving into design and development.
Your primary focus should be to launch your marketplace platform swiftly with a Minimum Viable Product (MVP). Only at this stage can you be entirely sure of its feasibility. There are numerous tasks we recommend taking beforehand.
How to validate a marketplace idea
Essentially, you want to avoid investing too much time and resources into a concept that might fail, just because you neglected to validate the business idea in the early phase. Remember, your personal conviction about the greatness of an idea doesn’t necessarily translate to market acceptance, leading to potential stress, disappointment, and financial loss.
Don’t allow your ego to prevent you from accepting feedback. You may have the most captivating logo and a concept that YOU perceive as perfect, but the people who count are those giving you feedback. If there is no audience for your marketplace, you don’t truly have a viable business.
Define your problem/solution fit
Start by defining your problem/solution fit. Your aim should be to pinpoint a problem and propose a solution within a specific market. Document your assumptions, your value proposition, the customer segments, your distribution strategy, revenue streams… and confirm all these assumptions. Avoid guessing or approximating, and deal strictly with facts. If any assumption is incorrect, refine it until it’s accurate, ensuring you don’t waste resources on false premises.
Read as many resources as you can to guide your approach to validating your idea. You’ll understand how to identify potential users, conduct interviews, and catalog the information gleaned.
Solve one core problem
Keep the core problem you’re trying to solve front and centre. Which individuals face this problem? How are they currently addressing it? What unique approach are you bringing to solve their issue? Does your solution simplify life and provide an optimal solution? Consider these questions from both the vendor and customer perspective.
Offer value to your users
When engaging with vendors, deliberate on your pricing strategy (for instance, taking a 15% commission on every booking or sale). If they don’t see the value of your offering worth such a cut, revise it until they do.
Gather feedback
The best validation comes from interacting directly with real people. Feedback from potential users is invaluable. You’ll comprehend the actual problems they want resolved, which may differ from your initial assumption, allowing you to adjust your idea accordingly.
Ensure you converse with a diverse group of individuals in your focus groups. You may discover that your product resonates with certain demographics more than others. With this insight, you can refine your offering. Remember, a product loved by a small number of users is far superior to one that many people feel indifferent about.
Research your customer base
Different assumptions require different validation strategies. For example, if you presume having 20,000 potential customers in a region with a population of 200,000, how can you authenticate this? Online tools like SEMrush can assist, helping you determine how often specific keywords related to your area are searched.
If you can estimate the number of potential customers, you can project if attracting all or a fraction of them would make your marketplace viable and profitable.
What are the search results when you Google the service you plan to offer? If many results come up, you might need to invest in top positioning and ensure your offering surpasses existing ones.
Conclusion
Neglecting validating a marketplace concept early on can lead to substantial losses, both in terms of finances and time. Document everything about your idea, consult your target market, potential vendors, customers, and gather real-world data. After this process, you’ll be significantly closer to finding the perfect problem/solution fit.
An additional word on Minimum Viable Products (MVPs) – they truly offer a proven method to speedily bring your product to market while reducing your initial investment. Here at markko, we have a dedicated team to design, build, and launch a marketplace that offers just enough features for your first users.
Remember, some of the world’s most recognised brands began as MVPs – think Airbnb, Twitter, Spotify. Their trajectories have undoubtedly been impressive. By following a thorough validation process and making use of the MVP strategy, you set your marketplace idea on the path to similar success.