Marketplace Lessons
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The document provides lessons and considerations for building successful marketplaces. It discusses characteristics of ideal marketplaces, factors to consider like rake levels and match types, techniques for optimizing like teaching users and tiering marketplaces, and challenges like disintermediation, fraud, and liquidity. The overall lessons focus on designing marketplaces that create value for both sides of the marketplace through network effects, quality controls, and evolving offerings to manage risks.
Marketplace Lessons
- 1. MARKETPLACE LESSONS // NOV 2018
- 2. Jackson Square Ventures | Confidential | 2 Hello, My Name is Josh
- 3. Jackson Square Ventures | Confidential | 3 Lessons from Three $B+ GMV Marketplaces acrowdedspace.com Jackson Square Ventures | Confidential | 3
- 4. Jackson Square Ventures | Confidential | 4 Marketplace Checklist â Productivity gains â Massive existing (inefficient) market â High fragmentation on both sides â In the payment flow â Frequency (recurrence) of usage â Irregular / non-monogamous usage â Standardization possibilities â Network effects on quality, cost, speed â Market expansion (unlock new supply / demand) â No disintermediation possible Ideal marketplaces have al l of these characteristics. Some of these can be deal-killers
- 5. Jackson Square Ventures | Confidential | 5 â Productivity gains â Massive existing (inefficient) market â High fragmentation on both sides â In the payment flow â Frequency (recurrence) of usage â Irregular / non-monogamous usage â Standardization possibilities â Network effects on quality, cost, speed â Market expansion (unlock new supply / demand) â No disintermediation possible Marketplace Checklist Nannies
- 6. Jackson Square Ventures | Confidential | 6 Marketplace Checklist â Productivity gains â Massive existing (inefficient) market â High fragmentation on both sides â In the payment flow â Frequency (recurrence) of usage â Irregular / non-monogamous usage â Standardization possibilities â Network effects on quality, cost, speed â Market expansion (unlock new supply / demand) â No disintermediation possible Aircraft Maintenance
- 7. Jackson Square Ventures | Confidential | 7 Marketplace Checklist â Productivity gains â Massive existing (inefficient) market â High fragmentation on both sides â In the payment flow â Frequency (recurrence) of usage â Irregular / non-monogamous usage â Standardization possibilities â Network effects on quality, cost, speed â Market expansion (unlock new supply / demand) â No disintermediation possible Locksmiths
- 8. Jackson Square Ventures | Confidential | 8Jackson Square Ventures | Confidential | 8 Frequency of Purchase Size of Transaction Plumbing Vertical (HighFrequency) Vertical (HighPrice) Horizontal Locksmith Sporting Goods Furniture Flights Hotels Taxi Meals Homes Cars Clothing Horizontal B2B Horizontal vs. Vertical Verticalize (buyer picks for high price) / (supplier picks for high frequency) Or group categories in horizontal; Or build a B2B platform
- 9. Jackson Square Ventures | Confidential | 9Jackson Square Ventures | Confidential | 9 50% 0% 20% High Rakes --Managed marketplace, monopoly (iOS), opacity Tiny â Long term, regularwork,users meet in person, paymentoff-platform Med â Quality control, insurance,compliance, scheduling and availability Low â Transparentfees, buyerbeware, high price goods / services Rake Factors High rake not necessarily better, just different More marketplace management â more rake
- 10. Jackson Square Ventures | Confidential | 10Jackson Square Ventures | Confidential | 10 Match Types Upwork,Craigslist Airbnb,Zillow Uber,Rev SupplierPicks Commodity Increasing Fill Ratio Buyer Buyer Buyer Supplier Supplier Supplier Buyer Picks Variety Double Commit Complex, custom stuff Marketplaces evolve to increasing fill ratio Supplier picks is easiest way to approach 100%
- 11. Jackson Square Ventures | Confidential | 11Jackson Square Ventures | Confidential | 11 Virtuous Cycles Lots of time here Ineffective Attract OptimizeScreen Not much time here Veryeffective Retain Expel Quality is never static (will increase or decrease) Donât waste too much time screening; Invest in O.R.E
- 12. Jackson Square Ventures | Confidential | 12Jackson Square Ventures | Confidential | 12 Desperation Curve Desperation Willingness to jump through hoops LowQuality HighQuality Hurdles can actually lower quality
- 13. Jackson Square Ventures | Confidential | 13Jackson Square Ventures | Confidential | 13 Teach Your Users âą Display successful transactions âą Match new and repeat users âą Use community forums on your site âą Have employees onboard every week All marketplaces are different and have a learning curve. Pay attention to the onboarding experience Craft a different experience for newbies and repeats
- 14. Jackson Square Ventures | Confidential | 14Jackson Square Ventures | Confidential | 14 Network Effect in Marketplaces Quality Market Penetration MaxNetworkEffects Reality Cost Market Penetration Uber UberX UberPool Driverless? Network effects often plateau Reinforce with new service offerings
- 15. Jackson Square Ventures | Confidential | 15Jackson Square Ventures | Confidential | 15 Tiering Marketplaces The classic 80/20 rule where 80% of the activity might come from 20% of your users. Segment users to reward and retain the most active users Make it easy for the best users 20% USERS 80% ACTIVITY
- 16. Jackson Square Ventures | Confidential | 16Jackson Square Ventures | Confidential | 16 Disintermediation Users often seek the best financial outcome Either increase value or decrease fee over time Time Perceived Value Total PerceivedValue FlatFee Disintermediationhappens here
- 17. Jackson Square Ventures | Confidential | 17Jackson Square Ventures | Confidential | 17 Feedback and False Signals 0% 20% 40% 60% 80% 100% Yelp oDesk Amazon (Books) Amazon (Toys) 5 4 3 2 1 Beware of false signals Ask for private feedback, 3 point scales, and use behavioral data
- 18. Jackson Square Ventures | Confidential | 18Jackson Square Ventures | Confidential | 18 Fraud Curve Time % of Fraudulent Transactions The Beginning First Fraud Over- correction Steady State Trust and safety is a part of every marketplace Zero fraud is bad -- means youâre underinvested in growth
- 19. Jackson Square Ventures | Confidential | 19Jackson Square Ventures | Confidential | 19 Master Marketplaces Master Commodity PayforAccess, Expertise Buyers PayforCostSavings, Speed,Convenience Suppliers ValuePrestige, Brand,Reputation ValueEarnings, Convenience, There is a new emerging class of marketplace Master marketplaces must be designed differently
- 20. Jackson Square Ventures | Confidential | 20Jackson Square Ventures | Confidential | 20 Liquidity Hacking Find Aggregators âą Physical (office / campus) â Zesty âą Enterprise client â Gigwalk, Wonolo âą Scrape â Craigslist Provide Value to One Side â Github Narrow your Focus â OfferUp Curation (reduce options) â YourMechanic Brute Force (do things that donât scale) - oDesk Solving the liquidity problem is the most important challenge Figure out your liquidity hack