Tips to Scale a Two Way Marketplace

Amazon recently became the third most valuable company in the world behind Alphabet and Apple. This also makes Amazon the world’s largest two-sided marketplace.

Amazon’s model has inspired millions of startups, from Airbnb to a talent booking app for musicians and comedians. Unfortunately, there are too many countless instances where two-sided marketplaces have failed because they cannot scale.

Scaling a two-sided marketplace is an incredibly complex process that involves meeting both demand and supply to facilitate exchange. Here, we’re going to discuss five tips to help you scale your two-sided marketplace.

Tap into Other Communities

Two-sided marketplaces can be incredibly fragmented and hard to identify audiences to target first. Using an online community, such as a social community or industry community, you can pull a large share of users to your marketplace by integrating with that platform.

The key is to find networks that already incorporate other marketplaces to form a relationship with. These places also serve as great venues for advertising and promotional campaigns. You can search for communities by influencers, community forums, social media groups, etc.

Generally, a social community will supply you with the demand and an online community of industry experts will provide you with supply. Be sure to offer value through faster exchanges, greater transparency, or more individual control over their services/products.

Build Your Own Community

Integrating other communities into your own will allow you to start fostering your own. But before you even do this or even have your product fully fleshed out, you can begin building your own community through online marketing beforehand. One of the best tips for achieving thought leadership and producing authoritative content, such as a white paper, book, or frequent guest posting.

Try to focus on acquiring early adopters who will remain the biggest advocates for your product. Reward people who remain with the service with special discounts until the marketplace grows large enough in size. Engage with your most passionate users over social media and share any user-generated content they post on your site.

Build Trust with Safety and Transparency

Two-sided marketplaces are the most vulnerable to fraud and other illicit activity, so it’s essential to focus on developing safeguards for users of your service.

It’s also keen to promote transparency between buyers and sellers to prevent fraud and position your service as fair-minded. Leveraging a review system is the best way to do this and features to report abuse.

Decide Which Side to Scale First

This is often referred to as the chicken-and-egg scenario, but which side drives the other to the market? In my opinion, developing the demand side will naturally bring suppliers to the service, although it depends on the service. This is a little more complex, but tapping into social circles through celebrities, influencers, and paid advertising is your best bet to get people to the app early. Of course, your strongest advocates may be the sellers or supply side of the app. One hand feeds the other.

Create an All-Inclusive Ecosystem

Finally, it’s essential to start out small as you develop. But as you scale, you may want to consider adding more features, such as social elements to your app and integrated payment services, to make your service a one-stop-shop. You wouldn’t want to go onto Uber to book a ride only to find a yellow cab taxi come to your door. You’ll face fierce competition the more your service grows, and other established players begin to incorporate the same ideas. Be sure to add value, such as lowering transaction fees, to keep more users on your service.