Questions

How important is it for a marketplace startup to drive enough demand (customers) for your supply (sellers) to make a full time living off of it?

4answers

It's very important.

(first, read this article by Josh Breinlinger - http://acrowdedspace.com/post/47647912203/a-critical-but-ignored-metric-for-marketplaces)

The way you achieve success in a marketplace is by driving liquidity for both your supply & demand.

Demand-side Liquidity = When users come to your marketplace, they can achieve their goals.

Supply-side Liquidity = When supply comes to your marketplace they can achieve their goals... which are almost always to make money.

If you're making a large amount of your supply-side users a full-time income, then you're helping them achieve liquidity.

Now it's not so black and white and it doesn't always have to be a "full-time income." It depends what their goals are.

E.g.,

1) At Airbnb, renters aren't looking to quit their day jobs and become landlords full-time... they're just look to earn a substantial amount of income to offset their rent, mortgage, etc. So in this case, I would probably goal on # of renters that earn >$500 / month... and (in the first 1-5 years) try to grow this number by 10-20% MoM... and maybe by just 5% once you're in the mid-high tens of millions in yearly revenue.

2) At Kickstarter, the goal of the supply-side is to get their project successfully funded. They don't care if the project creator is "full-time"... they just want to make sure they meet their funding goal. This is why they talk about their 44% project success rate all the time - http://www.kickstarter.com/help/stats

3) At Udemy, our instructors want a substantial amount of their income to be driven from their Udemy course earnings... so we look at how many instructors are earning >$2k / month.


Answered 6 years ago

Need more info in your question. Is it so that you the marketplace owner can make a living, or the suppliers?

Obviously the value of a marketplace is liquidity for both demand and supply. However, suppliers are more likely to bear the cost of "waiting" for demand, since they are the ones trying to make a buck (and because "those with the gold make the rules").

If you can build your marketplace in such a way that sellers are able to embrace it without immediate gratification (e.g. no opportunity cost to the seller), then you can build up supply to then take to the demand side.

It's a tough balancing act, kind of like "walking" a big piece of furniture across the room.


Answered 6 years ago

The answer depends on several factors, but much comes down to what alternatives they have. If it's costless for sellers to join your platform, and they are able to join competing platforms (multihoming, in the lingo of two-sided marketplaces) or earn money in other ways, then there's no need for them to make a full-time living off selling on your platform. On some classic platforms--including eBay--many sellers are happy to participate as a sideline.


Answered 3 months ago

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