Peer-to-peer marketplaces are incredibly popular nowadays. The proliferation of E-commerce shopping during the latest lockdown, due to COVID-1
Peer-to-peer marketplaces are incredibly popular nowadays. The proliferation of E-commerce shopping during the latest lockdown, due to COVID-19 has introduced many new companies, brands, and competition. Marketplaces do have the unique ability to provide the perfect balance of versatility and convenience all within online stores and with ease of access with just an internet connection.
Nonetheless, building a successful marketplace can be quite a challenging task, to say the least. It can take many years of experience to succeed and build and when starting from scratch this can indeed be time-consuming as well as costly. But this alone should not deter you. In this blog, we will discuss some of the most common pitfalls. Obstacles you may also potentially land yourself in, as well as tips on how to get yourself out and succeed.
A P2P marketplace is essentially an online business platform, that helps sellers or people looking to purchase, sell, connect with buyers or providers of products or services. Uniquely, both users’ groups can exchange goods or services and change their roles as buyers or sellers. So, one day you may be a seller of fashion items through your e-commerce store, whilst another day purchasing goods from a fabrics provider.
Some of the best-known marketplaces worldwide include Etsy, eBay, Airbnb, and Amazon. According to statistics by the Official National Statistics (ONS, 2019), the e-commerce market has been growing by 17-18% annually. In addition, PwC’s “Sharing or Paring” report predicts that this market, by 2025 will be worth $355 billion. There’s no doubt that P2P marketplaces are a great business model. This is why we want to help you launch your platform by addressing the three main reason why P2P marketplaces fail, so you don’t make these mistakes.
Lesson 1: Find the right problem to solve
As an aspiring entrepreneur, it is always important to validate your idea before bringing it to life on the marketplace. Many P2P marketplaces fail due to a lack of innovation and an oversaturated idea that brings nothing unique to the market. More so, driving your full focus into sustainability and for a sense of community may not greatly increase consumption experience as these values are not as high on some consumers' priority when compared with getting a lower price, better quality, or simply for seeking convenience.
Have your idea crystal clear. Be certain about what you offer and if it solves a problem for your customers.
Lesson 2: Don’t appeal your services to everyone
When services appeal to everyone the services may lead to services that nobody wants to engage with. While it does not necessarily mean that having a wide focus is a recipe for failure. It could prevent you from finding traction for any vertical sales.
Consumers want to affiliate with a brand with a single purpose that they can trust. Take the time to research a niche with low competitiveness and high value for the customers. This is one of the most important things for P2P marketplaces. You need to narrow down your focus. Find the needs of your specific audience and have them covered prior to any selling.
Lesson 3: Find a P2P Business model that scales
If you want to build a successful business that enjoys longevity, it can involve tough decisions that can sometimes conflict with the original values of your concept.
In order to scale up, you need to define the needs of your customers, acquire demand, and/or generate demand for a product or service. With many examples out there making it "Big" without major venture capital funding (See companies Freecycle, CouchSurfing, and StreetBank, they show that it is possible to scale a marketplace without the need for Venture Capital money. You can scale up to build a profitable local marketplace. Growing a marketplace comes down to deploying helpful growth tips and working hard.
As you scale your business and start to use multi vendors, management can become more difficult and time-consuming. Consider using a management solution service to help you stay in control of your own marketplace with seamless eCommerce integration.
Now that we have discussed the 3 most common reasons P2P marketplaces fail, make sure to take a closer look at your business. You will then be able to find ways to prevent them from occurring or take the necessary actions to resolve them. The key to a successful market place is to have your ideas validated, focus on a niche and consider bootstrapping with a small local business.
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