When starting anything, mistakes are inevitable, they give you a chance to learn and improve yourself. However, in the marketplace, some mistakes are really costly and should be prevented immediately. Here are some suggestions for you:
1. Poor risk management
Let’s consider the cases of two giants: Airbnb and Uber
When an Airbnb apartment teetered on the edge of being trashed, it actually caused a media storm. A lot of time and effort were spent to respond to the press and support customers and when Hurricane Sandy drowned a large part of Manhattan, Airbnb was prepared and lent a hand by reducing prices and opening up homes to those that were displaced.
On the contrary, Uber made this mistake over and over again. Whether it is increasing surge pricing and defending it during a hostage situation in Syndey, Australia, or not running background checks on drivers in India, Uber has given the public a perception that the trust and safety of its customers are in the back seat.
2.Choosing a really bad name
A lot of marketplace operators, from the beginning, spent thousands of dollars and the massive effort on building marketplace, however, some of them even forget the important thing that is the name. Jen O’Neal told that when they first launched Tripping.com in Germany, they initially called their users ‘Trippers,’ which unfortunately translates to ‘gonorrhea’ in German! Nicht so gut. When building a global business, it’s good to check for translation issues.
In Europe, Airbnb also coped with this issue when European have not really understood the term ‘bed and breakfast’
3.Focusing Too Broadly
Richard Werbe is the founder of StudyPool, he runs a marketplace for student questions, he also agreed that the most serious he made was trying to sell too many types of verticals. They even had 30 different verticals at one point. What a mess! They decided to cut down to just one vertical. So what we can summarize here is find your current vertical market and focus on it.
4. Quantity and quality
If in a web store, it is so easy for you to manage the quality as well as quantity of products because they’re yours. In the marketplace, it is not as easy as that. Gary Swart said that in the very first days of running a marketplace, he hand-curated both buyers and sellers in our marketplace and the conversion rate is actually positive. But the problems came when he extended the scale, he was limited by the acquisition of both clients and freelancers and decided to go to low touch to scale faster. Finally, he sacrificed quality which ultimately hurt us in the long run. So it is really important to balance quality and quantity.
5. Thinking marketplace is so easy to exist
Easy come easy go. The potential of the marketplace makes business owners excited but wait a minute, it is not easy to reach product-market fit, liquidity, and scale. Generally, it will take you about 5 to 10 years. Remember that LoopNet exited in eight years and Airbnb is now valued at $13 billion, but it took 7 years. Building a successful marketplace is a long journey, it needs your passion and vision and time as well.
Thanks for watching my post. If you have any question, feel free to feedback here. I and colleagues are willing to support you. Goodluck!