How do you solve the chicken and the egg problem for an online marketplace with two distinct set of customers?

I am currently the CTO of a vibrant online marketplace.

As prior responders said, we started with demand. Once we had people who wanted to pay for our services, it was easier to find suppliers to fulfill the demand.

In addition, we started with a narrow focus, and then expanded. We are a local service marketplace, so that meant starting with one geography, then expanding to a second, and a third. After we had figured out the formula in three geographies, understood the dynamics of the business thoroughly, then we expanded nationwide.

As we roll out new features and services, we repeat this same pattern again and again: start in one geography, figure out the feature functionality/business dynamics/etc. then expand.

Coming back to the demand point for a moment, in every business, marketplace or not, demand is the hard problem. The fact that you're an online marketplace is irrelevant. So, to be a successful business, say focused on finding repeatable, scalable and affordable ways to generate demand and you'll be on the right path.

In most cases, I think it is easier to work on the demand side first by setting up a service that gives the future buyers some free service. For example, in your case, you likely are trying to target women who are into fashion and like to buy jewelry, clothing, etc. So, find out something you can build for that audience for free like online reviews, a widget that let's them virtually "try on" the jewelry, etc. Then once you have something that your target customers are interested in, you can start working on the supply side.

I have never seen a marketplace fail because they had lots of demand but not enough supply...

I agree with Jeff. It is pretty easy since you have already identified that you have two sets of customers (actually, I think you have "users" and "customers").

Think of the needs or painpoints of your customers and how you are going to help them solve it.

If you are really targeting small brands jewelry and accessories, and helping *them* reach female buyers, identify how you are different from sites like Pinterest of Etsy, which is doing what you are aiming to do.

What sets you apart and what service are you offering that will justify the fee/payment/goats that these shop owners will give you in return for what they cannot do on their own.

Demand is king. If there is no demand you can't create one. Don't try.
Don't stop taking massive action.
Best of Luck,
Michael T. Irvin
michaelirvin.net
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