Fiverr, Uber, AirBnB, or Thumbtack, you must have heard of these big names if you have interest in growing opportunities in the current on-demand economy. These service providers have successfully built two-sided marketplace platforms which connect both buyers in need of a service and sellers who offer it.
The rapid growth of on-demand economy can be seen by these quick numbers.
According to Intuit research in 2015, self-employed and contingent workforce is expected to increase from 36% at the moment to 43% of the U.S population by 2020. Fiverr generates close to 1 million digital transactions per month. Uber, AirBnB, and Thumbtack have been valued billions of dollars. It’s not hard to imagine how big the opportunities are in the service marketplace industry.
Post series: Start your business by creating a service marketplace platform
1. What you need to know to build a successful service marketplace
2. The first scene of MicrojobEngine – a complete service marketplace solution
So how do you make the first step in this attractive business field and generate profit?
To build a service marketplace that successfully connects sellers and buyers, one effective strategy is to find a niche market to develop and become the big player in that niche.
Do you know how the above successful service marketplace platforms started? Etsy was first launched as a community for crafters but today has impressively developed into the biggest handmade marketplace. Fiverr started with a simple option for its users: offering a service for $5 and seeing how many people are willing to pay for it. Now Fiverr is the biggest freelance service marketplace. Or Thumbtack, started with the question of how to help people find the right plumber, is now valued $1.25 billion in the local service marketplace.
Start that way! You can develop a vertical service marketplace with workers providing a specific kind of tasks/services. For example: a dedicated marketplace for small home maintenance tasks, or for auto mechanics, or one dedicated to marketing tasks, etc.
Or you can also build a horizontal service marketplace by providing a large range of generic tasks/services for a large set of sellers/workers, but starting from a local region and growing out.
After you have done thorough research to come up with the core ideas behind your marketplace, such as your main niche and your target sellers and buyers, it’s time connecting two sides of the market.
For launching a service marketplace, what are the main concerns you should take into account?
There are three main problems you need to solve when building a two-sided marketplace:
The “chicken and egg” problem: If buyers come to your site but find few sellers offering services, sooner or later will buyers leave. On the other hand, what attracts sellers if there are no buyers? Each side depends on each other, so the key thing is the ability to balance both seller and buyer acquisition. Once you manage to achieve it, network effects will start kicking in and your platform can take it from there to grow quickly. After that, you can enjoy the profit earned on each successful transaction and quickly accelerate your site.
Make your marketplace platform super convenient: If it’s easy and fast for a buyer to find the type of services they need, you have greater chance of placing a successful transaction. Also, in order to get more successful orders, you must have a stable payment system as well as a complete tracking system. It is very valuable if your website can connect all potential buyers and sellers fast and conveniently to provide them the best onsite experience.
Make your platform safe and reliable: Since buyers require efficient and reliable services, you must build a platform in which buyers are able to review, report & rate their purchased services. It will also help you build a high standard in overall quality & reliability for your marketplace. Also, you need to make it easy for sellers to manage to manage their services & orders, so that they can focus on doing their jobs instead of worrying about buyers & the order process. Lastly, risks need to be limited by a secure payment system and instant support services.
Once you understand your market and have in mind the solutions for those three issues, you have a great chance at building a successful marketplace.
Want more insights to address those problems successfully?
To help you solve the chicken and egg problem and approach your target market easier, we will continue to provide you with more insights from our expert network in the later posts.
Regarding building the platform for your business, the proper solution you need must cover the two latter problems: “convenience” and “reliability”. You may simply hire developers and start everything from scratch, but this decision will surely cost you around ten thousand dollars or more. A much better way is to find a provider who gives you an all-in-one service marketplace platform crafted exactly for your purposes. The choice is obvious!
EngineThemes has built many successful platform solutions, one of which is FreelanceEngine, our popular freelance marketplace theme. Now we bring all those experience and knowledge into MicrojobEngine, our latest theme, aiming to address the above problems.
MicrojobEngine development is reaching its very last stages. See how it helps you build a complete service marketplace platform here.