How To Create And Recognize Opportunities For Marketplaces?
The digital marketplaces are our future. They develop rapidly, in almost every sector and field. One of the biggest, Amazon Business, surpassed 10 billion USD in annualized sales in 2018. Marketplaces are not a fad. They are a significant shift in the way we sell and purchase products and services on the Internet. Are you ready for this revolution? Or, perhaps, you think of ideas to build your own marketplace? You’re in the right place, just read on.
The marketplaces are undoubtedly the next Internet revolution, right after social media. Just think about these mind-boggling numbers: Currently, marketplaces contribute 1.7 trillion USD to the global economy each year and, in retail eCommerce, they account for as much as 50% of sales annually! So, marketplaces. What are they, and why this question should absorb you?
Digital marketplaces – back to the roots of commerce
Frankly, they are no innovation! It’s just a modern representation of exactly the same way people used to trade in the past. The digital marketplaces simply co-locate people who want to sell, with people who want to buy. Whether it’s a product (Amazon), service (AirBnb), information (Yelp), or an investment (Kickstarter). The marketplaces are multidisciplinary hubs to trade on the Internet. A new, better version of eCommerce.
There are various types of marketplaces and business ideas behind them. We can indicate four major business models for the marketplaces:
- Subscription business model (eBay)
- Commission-based business model (AirBnb, Booking.com)
- Listing fee business model (Etsy)
- Paid promotions business model (OLX, YouTube)
The borders of possibilities with marketplaces are extremely wide. This begs the question, what to do to come up with another great idea for a new marketplace? Well, we would like to share our way of thinking about them, as well as some of our thoughts that we came up with during our analysis and multiple brainstorms.
The way to find next Amazon
Just like with any other business, you have to think about the demand, instead of your opinion. In order to do so, analyze:
- How many entities are present in a given market?
- Is this market growing noticeably every month, every year?
- Is this market scattered?
If you thought ‘yes’ for the second and third questions, you probably are on the right track. Also, it is valid to think only about large markets. Don’t try to invent an entirely new market from scratch. Find yourself a place in an already existing market.
The next step should be to examine if similar solutions already exist on the market and whether they sufficiently meet the needs of customers. Find out who already operates on your market (use Google and Crunchbase for that), and what do they offer. Keep in mind that the presence of other solutions, similar to yours, does not invalidate the legitimacy of implementing your idea. If that statement were true, we would never have had Google (AltaVista was first). It is worth checking how successful the given website is. This can be done using Similarweb.com.
If you find out that there is already a major player, and it is prevalent, you should probably step away. The rivalry will be time-consuming and awfully costly, with no guarantee of success. However, if you find out that the existing platform is not very popular, you should analyze its offer. Maybe you can do it better?
You are confident of your idea, what next?
For the sake of this article, let’s assume that you are convinced of the possibility to improve existing, currently, ineffective solutions or you really are the very first person with such an idea. Now, you should consider if the possible reason that there are no competitors is that, in reality, your idea does not eliminate any common problem, or doesn’t improve the functioning of a given industry. How to verify such doubts?
Here’s what you should do. Look through articles, blogs, Facebook groups and internet forums about the subject your marketplace is related to. Google Trends may also be a useful tool. You have to establish if there is a demand on the market that your idea may satisfy. This is the key question in this entire marketplace issue.
That’s enough theory.
Time for some marketplaces examples. Here’s what we have in store:
Our first idea was to create a marketplace for personal trainers. According to Prezentmarzeń.pl research from 2018, 34% of surveyed Poles are engaged in sports. 37% of active Poles train at least once a week. And the gym and fitness is the third most popular sport activity in Poland with 19% indications. We have also analyzed the currently available solutions in the field of searching and comparing available trainers. There is presently just one website where the consumer can arrange and meet with a selected trainer, but the website does not record a large number of visits, and we see elements on the site that could be improved.
Another trend, clearly visible on western markets, which we decided to examine, is the growing need for adults to have a hobby. In America, such platforms dedicated to this phenomenon have been mushrooming for several years now. Just consider takelessons.com with over 1.83M entries monthly. In Poland, we can also observe the rapid development of companies and organizations that fix on hobbies, from ballet lessons for adults, carpentry for women and sewing lessons to razor shaving courses for men. We’ve identified a chance to create a tool on the Polish market that will combine dispersed initiatives supporting the development of various interests and hobbies.
Watch out for the blind alleys!
The path we took in the quest for the new marketplace ideas has led us into many dead ends. The first area we abandoned due to the presence of an effective solution that enjoyed great popularity in the chosen market was a platform for aggregating services of the car mechanics. The visible upward trend had encouraged us to perform further analysis, but later we saw the lack of potential of this solution. The case is similar to the private lessons market. Young Poles are increasingly using private lessons, but we have identified as many as six sites collecting data on this type of service providers, of which one has around 900,000 visits monthly!
Following the megatrend–population ageing, we examined the potential of a marketplace for older adults. And the fact of the matter is we lack a tool that would easily show initiatives organized for older people, e.g. classes in the senior clubs, or access to support from foundations and volunteers. However, we realize the challenge of creating such a tool is still to overcome a technological barrier.
Another concept from a completely different category was a marketplace for the interior designers and people seeking this type of service. It turned out that this segment is not as significant as we expected, and the need to hire an interior designer is still in its infancy in Poland. In addition, customers use the interior design services sporadically, just every few years.
As you can see, an insightful analysis is a key to your success. What looks promising at first, might end up as a total failure. You have to confront your idea with your potential customers. If there is a potential, but primarily a demand – go for it! If you want to talk about your marketplace ideas and the ways to design them, build and promote – give us a call, and let’s chat!