Extend your market reach with global 2+ sided marketplaces that connect supply and demand for products or services that solve problems, and serve the needs of businesses, consumers, and communities alike.
Learn to leverage AI Agents to automate network effects, connecting and enhancing the voice of your customers to grow your business and stay ahead of churn and competition.
AI Marketplace Strategies
AI marketplaces go beyond SaaS & e-commerce strategies to accommodate both sides of the market, automating interactions and decisions between customers and suppliers. Getting the relationship & trust building, features, content and transactions of both sides right requires balancing value for all users and leveraging AI algorithms so many key processes are automated, personalised and drive costs down.
Case example: Amazon
When Amazon decided to sell products from other retailers, and not just from its network of suppliers and publishers, it took a brave giant leap into the world of marketplaces. The shared platform strategy drove prices and margins down but created a virtuous cycle that generated superior customer experience. Amazon’s operational and tech excellence gave it an edge to design and build new products and services that were differentiated, with strong market fit and sustainable profit margins.
Many innovative marketplaces have emerged to create platforms that disrupt and reinvent established business models and supply chains. Examples include Uber, AirBnb, eBay, Etsy, Game, Otto, Mercado Libre and many others. They create new opportunities for customers and suppliers to access markets globally.
Success Factors
Marketplaces face several challenges, particularly when delivering quality services and consistent customer experiences. Finding a common model that meets the needs of all participants in the target market requires careful attention to core factors. A shared platform if executed well, should establish common standards and rules that encourage information exchange, new behaviours, build and trust and drive repeat transactions.
There are no fixed rules or guidelines that can guarantee marketplace success, but attention to key principles will give you a stronger roadmap. Our experience makes us an excellent partner to define and deliver new marketplaces. Some of the factors we consider for successful outcomes:
- Vertical sector specialisation and not horizontal generalists
- AI Technology strategy, tools and execution excellence
- Organisational design and operational processes
- Agile transformation and customer-centric governance
- Metrics and algorithms to drive competitive advantage
- Synergies and features to make the cost of leaving high
- Leverage social media, and viral referrals to drive high growth
Our focus is to turn marketplace ideas and challenges into real propositions and global business opportunities. Please contact us to discuss your goals and explore areas where we can collaborate.
Vertical or Horizontal
A vertical marketplace specialises in one sector. For example, OpenDoors provides a high-quality real estate purchasing experience, with features focused on simplifying the real estate market. In contrast a horizontal. Often, marketplaces start off vertically and then move progressively horizontally once their brands develop awareness and credibility. For example, Uber now provides a food delivery service, as well as its original car-sharing service. A lot depends on the chosen brand, for example, OpenDoor may struggle to move into other sectors other than real estate.
Marketplace Challenges
A successful marketplace opens new economic and community benefits, but it faces multiple quite unique challenges, which it must overcome to survive.
| Doesn’t solve a real problem | A common problem for many startups, it’s particularly challenging for marketplaces. A great idea may not gain traction in practice or generate other unforeseen problems for participants. |
| The focus is too broad (initially) | Attempting to care for all possible products and services that your sellers or buyers are interested in, risks diluting your expertise and ability to scale. It’s counter-intuitive but a narrow focus initially is often more effective to create liquidity. |
| Strong competition | Expect competition to rise and attempt to knock your platform’s chances of growing, either through traditional broker-type business or simpler use of technology. A clear strategy is needed to capture multiple customer segments. |
| Lack of trust & brand awareness | Establishing first-choice interest and trust to turn your TAM into real customers is a top priority of every marketplace. The problem is how to develop this from a zero base. Networks effects, partnering and relevant marketing around intent and topics (e.g. SEO, Social, Content, Features) can be competitive. |
| Chicken and egg growth | Focusing on just one side of the market is not enough. You need to attend to both buyers and sellers, and potentially more participants in your marketplace. The question arises, how do you attract either side of the market when one is absent? |
| Disintermediation leaks | By bringing buyers and sellers together on one platform, the risk arises they will continue to trade outside of your platform. The incentives and benefits need to remain high enough to discourage such actions. |
| Development plans | The ability to reach critical mass and then scale fast requires careful consideration of technology choices. Open-source tech, custom development, SaaS, and serverless are all available options, but plenty of room to make the wrong choice. |
| Lack of actionable insights | The diverse customer segments, multiple customer service touchpoints, and the multiple channels and different goals for the supply and demand side, can make tracking data and analytics about users very difficult. |
All of these problems will compound fundamentally the user experience, churn rates, growth, revenue and profits. For strategies and plans on how to overcome these challenges, please contact us. We’d like to discuss your ideas and initiatives and contribute to executing your strategy and vision.
