{"id":512,"date":"2022-02-02T20:04:00","date_gmt":"2022-02-02T20:04:00","guid":{"rendered":"http:\/\/321-growth-academy-2023.local\/5-lessons-to-consider-when-growing-your-marketplace\/"},"modified":"2023-11-02T21:50:28","modified_gmt":"2023-11-02T21:50:28","slug":"5-lessons-to-consider-when-growing-your-marketplace","status":"publish","type":"post","link":"https:\/\/321growthacademy.com\/5-lessons-to-consider-when-growing-your-marketplace\/","title":{"rendered":"5 lessons to consider when growing your marketplace"},"content":{"rendered":"\n<p>Marketplace businesses are exciting, but growing them can also be challenging. Creating supply and demand, figuring out how to retain customers, and knowing how fast to scale the business are just a few of the challenges you\u2019ll likely face, and there\u2019s no \u201cone size fits all\u201d approach for solving them.<\/p>\n\n\n\n<p>Fortunately, there <em>are<\/em> plenty of success stories out there from entrepreneurs who managed to crack the block\u2014and <a href=\"https:\/\/www.linkedin.com\/in\/careyhouston\/\">Carey<\/a> got to talk with some of them at our last Growth Snacks event. Here are 5 key takeaways from our panel on growing your marketplace business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Our Panelists<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.linkedin.com\/in\/alinaturner\/\">Dr. Alina Turner <\/a>\u2013 Co President @ <a href=\"https:\/\/www.helpseeker.co\/\">HelpSeeker<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.linkedin.com\/in\/grantlahring\/\">Grant Lahring<\/a> \u2013 Head of Growth @ <a href=\"https:\/\/www.goodlawyer.ca\/\">Goodlawyer<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.linkedin.com\/in\/lauryn-vaughn\/\">Lauryn Vaughn<\/a> \u2013 CEO @ <a href=\"https:\/\/www.reupp.co\/\">ReUpp Technology<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.linkedin.com\/in\/maggie-young-735b40123\/\">Maggie Young<\/a> \u2013 CEO @ <a href=\"https:\/\/parkchamp.ca\/\">Parkchamp<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.linkedin.com\/in\/shanika-abeysinghe\/\">Shanika Abeysinghe<\/a> \u2013 Founder @ <a href=\"https:\/\/bessiebox.com\/\">Bessie<\/a><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Lesson #1: supply vs. demand: the \u201cchicken &amp; egg\u201d problem<\/h3>\n\n\n\n<p>The \u201cchicken &amp; egg\u201d problem is the single biggest hurdle most new marketplaces face. Basically, you\u2019ve got to establish supply and demand\u2014but when you start out with neither, it\u2019s hard to do. That\u2019s because you need to convince one side of the market to commit before the other.<\/p>\n\n\n\n<p>So what\u2019s the answer? Should you focus on supply first and hope the demand shows up, or try to build demand first and worry about meeting it later? Or can you balance the two, working on each side in lock step to drive transactions?<\/p>\n\n\n\n<p>According to our panel, most marketplaces focus on supply before demand (DoorDash, Etsy, and Eventbrite are just a few examples). Other companies like Zillow and Taskrabbit established demand first\u2014but for many marketplaces, <em>supply can actually create demand<\/em>.<\/p>\n\n\n\n<p>Don\u2019t believe us? Take it from our panelist, Lauryn Vaughn of ReUpp Technology:<\/p>\n\n\n\n<p><em>\u201cWhen we started, we really focused on supply. In early 2015, when you looked at the Canadian Landscape in Luxury Resale and what was out there, there was really very little available online. So for us, it was about creating momentum on the supply side<\/em><\/p>\n\n\n\n<p><em>\u201cWe did a lot of initiatives for marketing, so if you consigned more than 10 items you got a $100 gift card to Holt Renfrew or Nordstrom\u2014just some creative things in the community to try and build supply before we even had a platform or a business.\u201d<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Lesson #2: Constraining your market<\/h3>\n\n\n\n<p>In the early stages of growth, constraining your marketplace is vital. Why? Easy\u2014it means you reach critical mass (where you have enough producers and consumers to drive transactions consistently) <em>way<\/em> faster.<\/p>\n\n\n\n<p>There are two main ways to constrain a marketplace: by <em>geography<\/em> and by <em>category<\/em>. Let\u2019s break them down:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Constraining by geography: <\/strong>this is what you\u2019ll do anytime your marketplace requires supply and demand to be in the same physical place (like a ride-sharing service or a delivery app).<\/li>\n\n\n\n<li><strong>Constraining by category:<\/strong> this is what you\u2019ll do if your marketplace is global. For example, marketplaces that start online typically limit the product types they focus on so that they can attract an audience of people who are specifically looking for them (like how Amazon started out only selling books).<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Lesson #3: Kicking off growth (the right way)<\/h3>\n\n\n\n<p>The best way to grow your marketplace depends on whether you\u2019ve chosen to focus on supply or demand first (or whether you\u2019re trying to build them together). It also depends on how you\u2019ve chosen to constrain your marketplace.<\/p>\n\n\n\n<p>Skip the Dishes is a great example\u2014a company that focused on supply before demand and constrained their marketplace geographically. By starting out in a single city and using direct sales to build a local network of restaurants, they quickly reached critical mass and proved the business model for use in other cities.<\/p>\n\n\n\n<p>Then you\u2019ve got Etsy, which focused on demand and constrained their marketplace by category. By focusing on vintage items, craft supplies, and handmade goods, they tapped into an existing need for these items and continued to grow via strategic partnerships and smart PR.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Lesson #4: word of mouth matters<\/h3>\n\n\n\n<p>Having people talk about you is a <em>massive<\/em> indication that your product and market are right for each other. Most successful marketplaces consider word of mouth to be their most effective growth channel, even though it\u2019s not <em>really<\/em> a growth lever per se.<\/p>\n\n\n\n<p>So yes\u2014you <em>should<\/em> be spending on things like paid search and social media (especially for supply-side marketplaces) and SEO (for demand-side marketplaces). But it\u2019s also worth figuring out how much of your growth is coming from good old fashioned gossip, so you\u2019ve got an idea of whether your customers are excited about what you\u2019re doing.<\/p>\n\n\n\n<p>You should also make sure you\u2019re talking up <em>yourself<\/em>. Put simply, you can never be too forward about approaching prospects. In the words of our panelist, Grant Lahring of Goodlawyer:<\/p>\n\n\n\n<p><em>\u201cThe biggest question I get asked is, \u2018I\u2019m doing sales but it\u2019s just not working that well. What should I do?\u2019 And my first step is always to ask about volume.<\/em><\/p>\n\n\n\n<p><em>\u201cIt can be really discouraging to get a 10% conversion rate, for example\u2014you talked to 10 people and only one of them said yes. You might say that\u2019s terrible, but I would say that\u2019s typical. If you want to get 10 customers, then you should have approached 100. Think that way, and then it kind of becomes really clear what you have to do on the sales side. Is it wildy efficient? No, but that\u2019s not the point\u2014it\u2019s effective.\u201d<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Lesson #5: scaling slowly<\/h3>\n\n\n\n<p>Lastly, our panelists caution against scaling up your marketplace too fast. Instead, they recommend putting in the time to learn about other markets <em>before<\/em> you invest in them.<\/p>\n\n\n\n<p>For instance, maybe instead of expanding to the west coast as soon as you can, you drive out to Victoria and sleep on a friend\u2019s couch so you can make a local sale first. Will it help the business scale? No. But it <em>will <\/em>give you valuable firsthand knowledge of how that market is different\u2014which can help you plan how best to enter it <em>later<\/em>.<\/p>\n\n\n\n<p>Laying that kind of groundwork can also help you get a better understanding of what your value is to different customers. As panelist Shanika Abeysinghe of Bessie puts it:<\/p>\n\n\n\n<p><em>\u201cReally understanding the customer early on would have been helpful. Don\u2019t make the mistake of thinking that you\u2019ll be for everybody, because that\u2019s not real.\u201d<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Want more? Join our next Growth Snack!<\/h2>\n\n\n\n<p>Knowing what to focus on is one thing, but knowing how to do it effectively is another. If you\u2019re hungry to learn more about growing your business sustainably, make sure to sign up for our <a href=\"https:\/\/321growthacademy.com\/growth-snacks\/\">upcoming Growth Snacks events<\/a>!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">&nbsp;<\/h2>\n","protected":false},"excerpt":{"rendered":"<p>Marketplace businesses are exciting, but growing them can also be challenging. Creating supply and demand, figuring out how to retain customers, and knowing how fast to scale the business are just a few of the challenges you\u2019ll likely face, and there\u2019s no \u201cone size fits all\u201d approach for solving them. Fortunately, there are plenty of&hellip;<\/p>\n","protected":false},"author":2,"featured_media":513,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8,7],"tags":[],"class_list":["post-512","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing","category-sales"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>5 lessons to consider when growing your marketplace - 321 Growth Academy<\/title>\n<meta name=\"description\" content=\"Our last Growth Snacks event focused on challenges to consider when growing an online marketplace. 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