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What are the best marketplace ideas?
If you want to set up your own, profitable marketplace business, this guide is for you. Today, you learn exactly what marketplace idea you should choose to build a successful business right from the start.
Ready to dive right in? Let’s go.
Why you should start a marketplace business
First things first: Why should you start a marketplace business?
One of the main reasons is this: Marketplaces are here to stay. Consumers and businesses want convenience, choice, and price alternatives. For example, it was estimated by 2020 marketplaces would account for 40% of the global online retail market.
The great thing about marketplace businesses is that they can be extremely profitable and scalable. You see, you as the marketplace platform provider don’t have to worry about things like inventory or shipping. As you don’t have extra costs to think about, a much bigger chunk of your revenue is profit.
But how do you come up with marketplace ideas? That’s what we’ll look at next.
The best way to ensure that your marketplace idea will be successful
One of the biggest mistakes new marketplace business owners make is this:
They go for a business idea that sounds good to them without considering if it’s something their customers want.
Let me explain:
To build a business that works in the long term, your business has to solve a problem. And that problem must be something your customers are aware of.
Often, marketplace business startups describe their service as something that will help make a market more sustainable or build a community around an idea.
The thing is: People use marketplaces pretty much for the same reasons that they buy products in general. Things like quality, price, and convenience are what matter most.
Even though community and other values can be important for users, that’s not the main reason they use a marketplace.
Take Etsy, the marketplace for handmade crafts. It has a strong community and many people probably use Etsy because of this community. But it also offers a lot of convenience, choice, quality, and different price levels. These things matter to Etsy’s user base.
But how do you make sure that YOUR idea solves a problem for your customers? Here’s how.
Step 1: Research your market
Some businesses are based on the founders’ own experiences.
Take Airbnb, the marketplace for vacation rentals. The founders launched this marketplace because they realized that people needed a place to stay during a busy conference when hotels were booked out in San Francisco. At the same time, high rents in the city meant that people would be more than happy to rent out a spare room.
But while you might have identified a problem, you need to make sure that you ARE solving a real problem for other people (and don’t risk working on an idea that doesn’t pan out), you need to do some research.
First, go where your target audience is hanging out. This could be a site like Reddit, Facebook groups, Quora, or an online forum.
What are people talking about? What are their biggest pains and fears?
You can also use keyword research to uncover a profitable marketplace niche (so, search terms people are already looking for). Here's a guide on how to use this strategy.
That’s information you can use to make your idea even better.
Second, interview people in your target audience. So, jump on the phone with them or meet up for a coffee and ask them questions about your business idea.
Note: You shouldn’t ask if they would use your platform (most of them will say yes to be nice to you!) but instead, ask them about their problems. WHY would they use your platform? How urgent is the need for them to use it?
Step 2: Analyze your competition
One of the biggest fears new marketplace owners have is this:
That they’ll enter a crowded market, which will make it impossible for them to stand out.
Not true! You see, competition is often a sign that there’s a market for your idea. Even if there’s a marketplace that serves the same audience as you, you can stand out with your marketplace.
For example, you might offer better service, more options, or better prices. Or you might serve a specific niche within that audience (like a local community).
That’s why you need to research your competition to see what’s already out there.
Are there competitors in your niche so that you can be sure that your niche can be profitable? And how can you stand out from those competitors?
Step 3: Niche down
When you’re choosing your idea, you will need to choose a specific problem to solve. In other words: You will need to niche down.
Why? Because you need to speak to a specific audience.
For example, if you were to build a general ecommerce marketplace that sells everything under the sun, you would have to compete with marketplaces like Amazon, which is one of the biggest companies in the world with a massive budget. It can offer things like next day deliveries and has a huge variety of products.
It would be extremely difficult for a new startup to convince Amazon users to switch to its own platform.
But if this startup would talk to a specific segment of Amazon’s user base, things might look different. For example, a marketplace that would focus on high-end interior design might be able to stand out.
How to test your marketplace idea and make sure it’s profitable
Now you know what a successful marketplace idea looks like. But how do you test it to make sure that your idea will work?
That’s best done with a Minimum Viable Marketplace (MVP marketplace). This is the first iteration of your marketplace platform. The idea is to figure out if people are willing to use and pay for your service.
Start by getting a few beta users to use your platform. You will need to address the chicken-and-egg problem, so getting as many sellers as buyers to your platform.
To validate your idea, you can organically start reaching out to sellers who are already selling on other platforms to try your platform. When you start seeing transactions, you know that people are willing to pay for your service.
The best marketplace ideas you can use today
Want to know what some of our favorite marketplace ideas are? Here are some of the most interesting ideas to choose from:
1. Ecommerce marketplace
Ecommerce marketplaces are growing fast. The most obvious example is Amazon, but also other major ecommerce marketplaces like Etsy are good examples of where the industry is going.
2. Talent marketplace
Freelancing and consulting are growing fast. One in three Americans is a freelancer and half of the population is projected to move into the gig economy within the next few years. At the same time, companies often benefit from flexible contracts.
That’s why talent marketplaces like Upwork (a marketplace for freelancers) and Toptal (a marketplace for tech workers) are growing fast.
3. Rental marketplace
Airbnb is one of the biggest marketplace businesses today. And what does it offer? That’s right: Vacation rentals.
People need accommodation and transport. These are things most are willing to pay for. It doesn’t end with vacation rentals, though. People need to rent venues like event spaces and transportation like boats.
4. Experience marketplace
Did you know that 74% of Americans want experiences instead of products? And what better way to provide them than with marketplaces?
Airbnb has its own marketplace for travel experiences. The market is huge, though. Just think about it: Experiences could include specific travel experiences, extreme sports experiences, experiences for gifts, music experiences, and so forth.
5. Housekeeping marketplace
Another big market for marketplaces is housekeeping. Marketplaces like TaskRabbit are already doing is by offering different types of services for the home.
Other housekeeping marketplace ideas include cleaning, pet care, as well as elderly or childcare.
6. B2B marketplace
Marketplace ideas aren’t limited to business to consumer marketplaces. A B2B marketplace offers a specific service or product for B2B businesses. These could be expert services or tools or machines for a specific type of business. In fact, the Chinese marketplace Alibaba is one of the most prominent B2B marketplaces out there.
Want to learn how to build a B2B marketplace? Here’s our guide on how to start one.
7. Niche marketplace
Finally, your marketplace idea can be a niche marketplace. These marketplaces cater to a specific type of customer. For example, niche marketplaces include wedding marketplaces and travel marketplaces.
Choose the right marketplace platform to start building a marketplace business
Once you’ve decided on an idea, it’s time to build your marketplace. To do that, you need a marketplace website.
Now, when you’re just starting out and building your first MVP marketplace, you don’t need a site with a ton of features. Instead, you just need a few basic features, like payment methods, profiles, and listings.
When you start scaling your business, you will need more features. At this point, your users will request more support. Plus, you’ll want to be able to add tools like your own blog and more sophisticated messaging tools. You might even need options to customize your own marketplace.
Here at Kreezalid, we’ve developed a marketplace website builder for both stages of your business. You can use our drag-and-drop website builder or customize your own platform from scratch. Take a look at all the features we offer here.
Want to get started today?
There you have it! Now you know how to find the best marketplace ideas… And how YOU can find a profitable marketplace idea.
What it comes down to is solving people’s problems and giving them what they want. You also need to test your idea and make sure it’s a marketplace idea that people want to use.
Ready to get started building your own marketplace? Get a 14-day free trial of our marketplace builder at Kreezalid.