Marketplace apps are possibly the hottest startups right now. Uber, Airbnb and Groupon all have reached billion dollar valuations at an unprecedented rate. Not surprisingly, VC investments in seed stage marketplace apps is soaring.
However, more than any other app, the success of a marketplace depends on the fast execution, engaging design and scalable technology. You’ll likely have one chance to get right, before the copycats enter the market. Make the best out of it.
All marketplaces initially struggle with the chicken-and-egg problem. To get buyers, you need sellers, and to get sellers, you need buyers. one can’t make it work without the other.
Fraud and spam detection are absolutely critical. Especially in the early days, you need to build a reputation, trust and deliver a flawless customer experience.
Most marketplace startups are easy to copy. The best answer to copycats is fast execution. And to execute fast, you need a reliable and highly scalable technology.
As most marketplaces get their revenue from transaction fees, acquiring users at a high cost can be a killer. Apps like Uber and Airbnb have designed referral engines to lower their CAC.
Given the time it takes to solve the chicken and egg problem, you’ll need to give yourself enough time to build your business. This means doing things efficiently so you can increase your runaway.
Many marketplace apps target highly regulated markets. There are two choices: either grow fast like Uber and let regulators adjust or design your product strategy knowing where you stand.
For a marketplace to disrupt an existing industry, it has to grow at a breakneck pace. With little margin for error, you’ll have to find users who are going to love your app soon and define a minimum viable product so you can test your assumptions early and rapidly.
The rest comes down to moving fast, and building a reliable product with viable sales and distribution model.
mCommerce – the extraordinary growth of mobile: How annual sales growth rates compare – traditional retail vs. online vs. mobile. Explore the steady rise of smartphone apps for mobile shopping. Mobile share of commerce transactions – which retail sectors are leading the way? iPhones, iPads or Android devices – which scores the most transactions (and where)?
