Expand your market reach with global two-sided marketplaces that connect supply and demand for products or services that address problems and meet the needs of businesses, consumers, and communities alike.
Learn to leverage AI Agents to automate network effects, connecting and enhancing your customers’ voices to grow your business and stay ahead of churn and competition.
AI Marketplace Strategies
AI marketplaces extend beyond SaaS and e-commerce strategies to cater to both sides of the market, automating interactions and decisions between customers and suppliers. Getting both sides’ relationship and trust-building features, content, and transactions right requires balancing value for all users and leveraging AI algorithms to automate and personalise key processes, thereby driving costs down.
Case example: Amazon
When Amazon decided to sell products from other retailers, in addition to its network of suppliers and publishers, it took a bold step 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 in designing and building differentiated products and services 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. These marketplaces create new opportunities for customers and suppliers to access markets globally.
Success Factors
Marketplaces face several challenges, primarily in delivering quality services and maintaining consistent customer experiences. Finding a standard model that meets the needs of all participants in the target market requires careful consideration of key factors. If executed well, a shared platform should establish common standards and rules that encourage information exchange and new behaviours, build trust and drive repeat transactions.
No fixed rules or guidelines can guarantee marketplace success, but paying attention to key principles will provide a more substantial roadmap. Our experience makes us an excellent partner for defining and delivering 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
- Features and hooks that make switching costs high
- Leverage social media and viral referrals to drive high growth
Our focus is on turning marketplace ideas and challenges into factual propositions and global business opportunities. Please don’t hesitate to contact us to discuss your goals and explore potential areas for collaboration.
Vertical vs Horizontal
A vertical marketplace specialises in one sector. For example, OpenDoors provides a high-quality real estate purchasing experience with features that simplify the market. In contrast, a horizontal. Marketplaces often start vertically and then move horizontally once their brands develop awareness and credibility. For example, Uber now offers a food delivery service in addition to its original car-sharing service. A lot depends on the chosen brand; for instance, OpenDoor may struggle to move into sectors other than real estate.
Marketplace Challenges
A thriving marketplace opens new economic and community benefits, but it faces multiple unique challenges that it must overcome to survive.
| Two sided proposition | Focusing solely on one side of the market is insufficient. 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? |
| The focus is too broad (initially) | This is a common problem for many startups and is particularly challenging for marketplaces. A great idea may not gain traction in practice or generate other unforeseen issues for participants. |
| Strong competition | 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. Network effects, partnering, and relevant marketing around intent and topics (e.g., SEO, Social, Content, Features) can be competitive. |
| Lack of trust & brand awareness | Focusing solely on one side of the market is insufficient. You need to attend to both buyers and sellers, as well as potentially more participants in your marketplace. The question arises: How do you attract either side of the market when one is absent? |
| Chicken and egg growth | Expect competition to rise and attempt to undermine your platform’s growth opportunities, either through traditional broker-type business or more straightforward use of technology. A clear strategy is needed to capture multiple customer segments. |
| Disintermediation leaks | By bringing buyers and sellers together on one platform, the risk arises that they will continue to trade outside your platform. The incentives and benefits must remain high enough to deter such actions. |
| Development plans | The ability to reach critical mass and then scale fast requires careful consideration of technology choices. Open-source technology, custom development, SaaS, and serverless options are available, but there is plenty of room to make the wrong choice. |
| Lack of actionable insights | The ability to reach critical mass and then scale fast requires careful consideration of technology choices. Open-source technology, custom development, SaaS, and serverless options are available; however, there is still plenty of room for making the wrong choice. |