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MenuShould I go niche or be a general marketplace?
So I wanted to start a marketplace where businesses like restaurants or cafes or bakeries can sell off unused or old machines/equipment they no longer use. Would it make sense to be so niche or should I just be a marketplace where businesses can sell whatever unused/old inventory they have? Like unsold clothes?
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Good question. Which idea makes more sense? You could organize a survey to be distributed to a small group of people that represent your potential clients. See where the demand is and make your decision on that. The less-niche approach sounds sort of like Craigslist, which might be hard to compete with. For that reason, I'd probably go with the first idea. But you may want to survey your audience first.
Hello
This is a good idea. I think it’s great to have variety based on what you’re trying to do. Definitely would sound like a site people can sign up on and list their unsold items and with the right SEO you can attract these people and sell them memberships.
First, let me say I think you have a good idea. I think starting out, you should focus on niche. Considering your idea, the riche market you're going after seems to be quite broad (think of all the bakeries/cafes etc. you can find in just one major city).
By going niche, you can quickly become the "go-to" expert in the field. This will help with word of mouth advertising, referrals and especially Google.
Once you've mastered that model, you can consider branching out (including more categories) or duplicating the model for another niche.
If you go broad, you'll be competing with Craigslist, Amazon, Facebook, and a variety of other "generic competitors.
Great idea - good luck with it!
A business ideal with a good cause!
Either niche or a general marketplace depends on many factors:
1. how much money you have or can raise.
2. the management team's capabilities & networks
3. the outcome of the product-market fitness test
4. the level of operating challenges in handling the old items
5. Make a choice between going straight to build a business or split some resources to keep the company survive while slow down the building of the business.
6. The business environment that worth to consider
The points above not exhaustive, but relatively important to help you to answer your question.
Some will say that the right move is to specialize: to finely hone your brand to target a particular niche. The more in-depth your targeting, so the argument goes, the better your chance of convincing your target audience to buy from you. You certainly can’t please everyone, and it’s difficult to establish a unique identity while trying to serve multiple distinct groups.
Of course, others will contend the opposite: that you’ll get ahead by giving your brand common appeal and exposing it to as many people as possible. Niche targeting puts the fate of your business in the hands of a relatively-small group of customers.
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What's the average CAC value or range for a Marketplace client?
I think you're looking at this the wrong way. Your customer acquisition cost is not something you should benchmark against other businesses. Without knowing more, like your short and long-term goals, it's impossible to answer. Two companies with similar business models may have different answers to this question. A venture-backed startup trying to keep up with aggressive revenue goals may be able to stomach an astronomical CAC. A bootstrapped startup that is not seeking venture money may aim for slower growth and much lower CAC. I suggest setting up a call with a marketing or finance expert to determine what CAC is appropriate for your company and how to get there.TL
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Freemium v.s. free trial for a marketplace?
It depends on a number of factors but I'd boil it down to two key things to start: 1) What is your real cost to provide a free plan or trial? 2) Who exactly is your customer and what are they used to paying and who and how do they pay today? When you say "online workforce marketplace" it sounds as though you're placing virtual workers. If that's the case, or if you're paying for the supply side of the marketplace, the question is how much can you subsidize demand? Depending on where you're at in the process, I'd also question how much you can learn about the viability of your marketplace by offering a free version, assuming again, that free is actually a real cost to you. I was part of a SaaS project that started charging people for early access based mostly on just a good landing page (we clearly stated they were pre-paying) and were amazed at the response. I've also run a SaaS product that offered free trials and realized that the support costs and hand-holding and selling required to convert from free trial to paid wasn't worth it, this despite the product's significant average ARR. You might be better off providing a "more information" sign-up form (to capture more leads) and let them ask for a free trial while only showing your paid options. I've been amazed at the lead capture potential from a simple "have questions? Click here and we'll contact you" This is all the generalized advice I can offer based on the limited information I have, but happy to dive-in further if you'd like on a call.TW
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When creating a marketplace, does it make more sense to focus on stimulating demand first or supply?
Focus on the more difficult side of the marketplace. For instance, if you think it'll be easier to get suppliers, then focus first on getting buyers - always be working on your toughest problem (aka your biggest risk). You'll find some great blogging on Marketplace and Platform topics here http://platformed.info (read the ebook too!)CM
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How important is it for a marketplace startup to drive enough demand (customers) for your supply (sellers) to make a full time living off of it?
It's very important. (first, read this article by Josh Breinlinger - http://acrowdedspace.com/post/47647912203/a-critical-but-ignored-metric-for-marketplaces) The way you achieve success in a marketplace is by driving liquidity for both your supply & demand. Demand-side Liquidity = When users come to your marketplace, they can achieve their goals. Supply-side Liquidity = When supply comes to your marketplace they can achieve their goals... which are almost always to make money. If you're making a large amount of your supply-side users a full-time income, then you're helping them achieve liquidity. Now it's not so black and white and it doesn't always have to be a "full-time income." It depends what their goals are. E.g., 1) At Airbnb, renters aren't looking to quit their day jobs and become landlords full-time... they're just look to earn a substantial amount of income to offset their rent, mortgage, etc. So in this case, I would probably goal on # of renters that earn >$500 / month... and (in the first 1-5 years) try to grow this number by 10-20% MoM... and maybe by just 5% once you're in the mid-high tens of millions in yearly revenue. 2) At Kickstarter, the goal of the supply-side is to get their project successfully funded. They don't care if the project creator is "full-time"... they just want to make sure they meet their funding goal. This is why they talk about their 44% project success rate all the time - http://www.kickstarter.com/help/stats 3) At Udemy, our instructors want a substantial amount of their income to be driven from their Udemy course earnings... so we look at how many instructors are earning >$2k / month.DT
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What is the best pricing (business model) to apply to a marketplace?
I like to separate your question into 2 sub-questions: #1 How do we determine which side to charge? #2 How much is the right amount to charge? On #1, my answer is that you can charge the side(s) for whom you add the most value. In your examples, Uber really solves a big problem for drivers, it's that they sit idle for a good part of the day, so are willing to pay a lot for new leads. (their alternative is no work) Consumers are charged more for the convenience of a private car but they are probably not so much willing to pay more for a taxi, even if they can hail one from their phones. For AirBnB, it's a mix, it's a way for landlords to monetize idle capacity which they are willing to pay for, but it's also a way for a renter to pay less than they would normally pay for a hotel. On #2 (how much), I like to triangulate a number of factors: - What's the maximum amount I can charge one side, while still being a good deal for them. - How much do I need to charge so that I can become profitable? (the economics are quite different if you charge 3% vs. 12%) - What are comparable services charging for substitutes/competitive offerings? I will just add that there is no formulaic way to determine pricing strategies (curated vs. open), and it's a lot more about what's the comparable and what the value delivered is. That's how I approached the question while deciding the business model at ProBueno.com (my startup)MR
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