I am developing my pitch deck for a local services double side marketplace and I am not sure which are the best strategies (and cheap).
For two sided marketplaces, I recommend having strategies for the following areas:
1) Strategies for solving the chicken-and-egg problem in the beginning, as many multi-sided marketplaces fail to gain traction due to this problem. Buyers need sellers in order to show interest; sellers need buyer in order to come. Some strategies to solve the chicken-and-egg problem:
a) Determine which side "makes or breaks" your business, and find key initial anchor tenants on that side. Usually, it's the buyers, as sellers will go where there's demand. Pay/give incentives to those initial anchor tenants if you have to.
b) Keep it to an initial segment or two in order to establish critical mass. Don't be all over the place. Establish a niche first where your buyers and sellers can meet.
c) Fake it till you make it. The founders can pretend to be buyer/or seller in the beginning. Also make some convincing "fake" profiles so that the marketplace does not look to empty.
2) Strategies that create and maintain high value-add interactions between all sides in the marketplace. The marketplace needs to help buyers and sellers capture consistent value effectively and efficiently. Once you solve the chicken-and-egg problem, you need your users to stick. Some strategies:
a) Create a reputation system to ensure quality buyer and seller interactions.
b) Give your sellers adequate tools for creating products and services.
c) Optimize how your buyers can best search and filter the products, services, and sellers they need.
d) Be very clear how buyers and sellers can transact for goods and services. Make the process simple and easy to follow.
I see this post is a bit old but I hope you're still looking for answers! You asked for a hack, so I'm thinking you've exhausted some of the more standard ideas. I don't know much about your business, but local services probably tells me just enough....
One problem with two-sided markets is you need demand for both sides. But demand is difficult to drum up if one side sees lack of demand on the other. And so it goes. One way to solve for this is to use a matching algorithm to match someone making a request with local service providers. What this does is it keeps the small number of actual providers from being exposed to the end user. So they'll still have a decent user experience if you can effectively communicate the small return to them. I used this technique when I founded my music company. We hadn't yet cleared the 7 million tracks from the major labels, so to make it appear as if we had every song ever written, I developed an algorithm that matched personal attributes (mood, things they enjoy, etc.) and delivered music that matched their profile. Obviously, it came from the database we had which was much smaller at the time. The second thing we did was remove search so that the diminutive size of our catalogue would not be exposed. Of course, we changed up everything once all the clearances were in place. But these two tactics were instrumental in landing more paying clients, the "other side" of the market (in our world). Lots more but no room. PLS upvote so others can read it.
There are so many answers to this question, but really it depends on what the market is. The first question to ask yourself is, where do your users (both kinds of profile) already hang out? Where do they live online?
Maybe there are certain social networks, certain forums, certain publications. Go there first.
Even more critically, the best way to growth hack for something like this is to take an experimental mindset. Choose 3 or 4 different user acquisition techniques and run a small, time-bound test to see which one performs best. Then, ask yourself why this method outperformed the others. Take that knowledge and choose a few more methods and test them. Rinse and repeat.
It will be high effort at first, but you'll learn fast. It's always better to just start and get your hands dirty than spend much time trying to find the 'best' strategies.
The platform’s business model is to take a percentage of the transacted value for connecting producers and consumers. The platform does not own the supply chain of value, but rather controls the network of third-party producers of value and the consumers coming to the platform to consume that value. Two-sided marketplaces can be difficult to successfully execute, but many of today’s most profitable start-ups are two-sided marketplaces. One of the most popular two-sided marketplaces is Uber.
Uber’s marketplace connects drivers with riders. Uber is one of the largest transportation companies in the world, but it does not own have any cars or full-time drivers on its balance sheet. Other notable two-sided marketplaces include Airbnb, Etsy, Craigslist, and Handy. Since two-sided marketplaces are the product of their network, they are difficult to establish and maintain once created.
During the ideation phase of starting a marketplace business, it is best to go into a field in which you have expertise in. He was able to identify first-hand a problem in the industry and create a platform to solve the problem. One of the major keys to creating a successful two-sided marketplace is nailing the core transaction. The core transaction is the set of actions consumers and producers must complete to exchange value.
Companies must plan what transaction will occur on their platform to properly scale their marketplace and target the right type of users for their platform. For Uber’s core transaction, drivers make themselves available for rides and ride-seekers submit requests for rides. On eBay, producers list their products on the site for sale and consumers purchase those items. In every transaction, one party always makes the initial connection that sparks the transaction and begins the process of exchange.
Once consumers find what they are looking for, they consume the value being created by the other party. Lastly, consumers create value after consumption through some form of compensation, usually monetary, thus concluding the core transaction. The chicken-and-egg problem is the sink-or-swim moment for most two-sided marketplaces. Initially, a platform does not generate enough value to attract new users. Without one party using the platform, there is no incentive for the other party to join or stay. Read more specifics about their execution in the link above to learn how to attract a critical mass of producers and consumers to the platform. Once you solve the chicken-and-egg problem for your two-sided marketplace, you must ensure your platform is liquid. Craigslist is an example of a very liquid two-sided marketplace. This is because there is an extremely high probability that someone listing an item, service or request on the platform will relate to an interested party, no matter the location or time. Craigslist enables a lot of transaction of value. One way to guarantee two-sided marketplace liquidity is analysing your platform’s product/market fit. And when it comes, you will know it as your platform will grow exponentially.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
