Compared to traditional e-commerce, most of a marketplace’s unique challenges come from the marketplace having two sides to it: customers and providers. When launching a marketplace, this means you need to solve the chicken and egg problem—how to get customers with little supply options and how to get marketplace supply with only a few customers. It can be argued, however, that the problem is not as bad with marketplaces as it is with some other cases—social networks, for example. In almost all cases, it makes sense to start building a marketplace’s audience from the supply side. Because of this, the best way to solve a marketplace’s chicken and egg problem is to seed the marketplace. You should focus on signing up your product and service providers and getting them to list their products or services with your platform. In fact, trying to grow both sides of the marketplace early on is a common mistake for marketplace entrepreneurs.
It is important for your marketplace to have a solid value proposition for the initial supply. You need to be able to offer them something that is way better than existing alternatives. You might be in a situation where you are creating a completely unique marketplace—at least in your area—and don’t have a ready source of supply from existing marketplace sites. If this is the case, the strategy to find providers depends on the type of providers you are planning to target.
Finding professional service providers (like plumbers, electricians, carpenters, etc.) should not be too difficult as most of them will likely have some kind of online presence. Even if they do not have their own website, they should be listed in a business directory. You could start from sites like Yelp or the Yellow Pages in the U.S. or simply use Google. You should be able to compile a big enough list with these methods. This is a challenge that I am experiencing myself because the primary question being asked by businesses that I am recruiting to join Dealium is “Why should I join Dealium if there are no Consumers signed up yet to view my business on your platform?” That is a very valid question and stresses the importance of choosing the right channels to reach potential customers as well. You have to hang out where your customer are such as social media and other platforms that interests your potential customers in order to introduce yourself and how you can help them solve their most pressing problems.
It is important to use a Node Saturation strategy when launching a new venture. You have to start with a single market or two in a specific geography and grow your audience slowly. Trying to target too many industries at once is like trying to boil the ocean, it’s simply not possible. If you don’t have a niche focus to start then you won’t reach anyone because your message is to general. Your intended target wants your messaging to speak directly to them. We typically only pay attention to things that directly affect us and that is why you focusing on the right customer with the right message is key.
Now that you have found people to contact, how can you convince them to list their products or services on your platform and build to your marketplace supply? After all, you still do not have any customers on your platform, and listing requires some effort from the providers. At this point, it is important to do things that don’t scale. If possible, meet your first 50 to 100 providers in person. Take an hour with them to explain how your platform works and your unique value proposition to them. Help them build their profile, list their products or services, and listen to their feedback. This approach is slow, but it is a great way to get to know your providers, receive feedback on your product (remember, you’re still in the process of validating your concept), and ensure the quality of the initial marketplace supply.
Once your market starts to build and suppliers and customers start to find one another, referrals typical tend to accelerate. When a great customer experience has taken place, the customer tends to tell others like family and friends and that is when the viral effect starts to take place. Customer referrals are the proven and most effective way to grow any marketplace. Nothing helps a business grow faster than then existing customers tell others they should experience the same business too. My soon to launch business, Dealium, will help facilitate small businesses growing by providing a technology platform that connects small businesses to consumers using referrals.
Dealium is a SaaS B2B Referral Marketing Technology Platform that directly connects small businesses with new customers through our proprietary algorithm-based referral code sharing technology incorporated with the customer’s SMS, Email & Social Media. Dealium creates brand awareness, brand exposure & new customer acquisition opportunities for our small business subscribers while allowing their customers to save time, money & oftentimes frustration searching for reputable local small businesses.
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