Marketplaces are all the rage these days, in truth, marketplaces have been around since ancient times. A marketplace usually exists to connect sellers of goods or services with buyers. The marketplace itself usually benefits by selling space to sellers or by taking a cut of the transaction.
This post is focused on service marketplaces that are connecting and democratizing human capital in a way that has never been possible. Things like vetting, payments, reviews and support have been researched and A/B tested to an art.
Technologist and blogger Sangeet Paul Choudary has a series of great posts on strategies to kick-start your marketplace.
Let’s say you have now achieved a critical mass in your marketplace and enough relevant transactions are occurring that it’s starting to look good.
Which factors make your marketplace the go-to place for my business. What makes me come back for repeat business. Is the marketplace only useful in connecting me, the buyer, to the right seller. How do you prevent leakage.
Here are some factors that are hallmarks of a successful marketplace strategy. These factors add that depth to a marketplace, the extras that delight both, your consumers and producers.
While there are new and easy ways for sellers to directly charge customers, having a centralized payments system allows a marketplace to engender that trust by using standardized payment systems. The marketplace is able to offer multiple ways to complete the transaction, Paypal, credit cards and perhaps invoices for the more traditional enterprise client who might order in bulk. A trustworthy payment system will also go a long ways in curtailing leakage. What is a reasonable leakage percentage?
While most marketplaces have guidelines for sellers for conflict resolutions, in the world of service marketplaces the transactions usually have that shade of gray that only platform service guidelines and rating systems will not solve. While not cheap, the ability to provide a human at the other end of a phone number is usually what stands between your consumers and sellers having a fulfilling transaction and becoming evangelists and never coming back. Other benefits include marketing campaigns, customer specific analytics and clear data to show which areas in your platform add friction to the workflow.
Being able to track and be part of the final exchange of goods is ideal for a marketplace. At Smartshoot we stay with the transaction right to the end and beyond by offering hosting and distribution services for videos contracted on the site. Other reasons for a marketplace to be part of the final delivery is to collect data about customer satisfaction ratings, referrals, social media mentions and provide opportunity for repeat transactions.
One of the key reasons for the success of Ebay has been early access to APIs. These API’s allowed an ecosystem of providers to develop around the basic platform. These providers included payment systems (Paypal), bulk listing management tools, warranty services and even web developers who built horrible looking listing pages. When their livelihood was tied to the bigger platform, it was in everyone’s interest to see Ebay succeed.
Your consumers and providers could communicate with each other through a set of limited period throwaway email address, but then you have seen the mess trying to sell your old Macbook on Craigslist. Providing a clean centralized collaboration system that allows private and public collaboration increases the chances that a contact will lead to completion of the transaction.