Why is speed to market everything when launching a marketplace? The faster a marketplace goes live, the faster it can validate the business model, expand, and tap into the growth potential of the network effect.
Now you’re probably thinking: Of course we want a speedy launch. But we also want to create a quality marketplace. Is it possible to quickly validate a marketplace quickly without sacrificing user experience?
Not only is it possible, it’s essential. In this article, you’ll learn:
Put simply, quick wins.
But, quick doesn’t mean launching a perfect marketplace. It means getting a minimum viable project off the ground, and building from there.
Some of the most successful marketplaces in the world will tell you the same thing.
Take Amazon for example. Amazon wasn't always the sell-all, same-day-delivery giant it is now. It began with Jeff Bezos buying books from distributors and shipping them to customers after every online order.
Even Airbnb started with the founders, hard on cash, renting out airbeds in their living room for cash. The marketplace hopped on its growth trajectory when two things happened. The founders changed the business model, making Airbnb a viable hotel competitor. And then homeowners realized the platform’s potential as a source for extra income.
The first version of your marketplace won’t be the final version.
Like with every business model, your marketplace will change over time. You’ll add more sellers, more product lines. As your marketplace grows, new directions will present themselves. The thing is, opportunities won’t emerge if your marketplace isn’t on the market. That’s why your first goal should be to create a minimum viable product. A minimum viable marketplace, if we may.
Launching a marketplace is a big feat. That’s why at Nautical, we’ve found the best go-to-market strategy for launching a marketplace is to build it in three phases: Crawl, walk, run.
This is an approach that everyone understands, because we’ve all been through it. As babies, we learn to crawl. Then, although shaky at first, we stand up and begin to walk. Finally, we’re running. The same concept can and should be applied to launching a new business model. Businesses need to fall down to understand their upper limits.
Before diving into the the three phases for launch, step 0 is determining what business outcomes you’re trying to achieve. Do you want to improve throughput? Expand your catalog? Increase efficiency? First thing’s first, get clear on your goals.
The goal: Validate your marketplace can function as envisioned. This early version demonstrates the marketplace’s potential. In other words, it’s the concept phase.
The purpose is to bring your business model to life with a MVP — either quickly through a plug-and-play marketplace platform or slowly through a custom build (skip ahead to the differences between the two.) The concept phase produces a marketplace prototype, complete with your company’s branding. At this stage, basic capabilities are established, including the seller experience, the purchase flow, and integrations like payment processing, tax, analytics, customer loyalty, and marketing.
The crawl phase seeks to answer questions like:
Keep in mind: You will fall on your face. That’s what the crawl phase is for. Learn what you can and can’t do, and adjust from there so you can start walking quicker. When you’re crawling, it’s okay to take risks. Learning what doesn’t work now will be much less painful than learning what doesn’t work later — after all, you’re closer to the ground.
The goal: Collect feedback and iron out any wrinkles in the buyer and seller experience.
This is the pilot phase — your marketplace’s testing ground.
Your marketplace is fully functional at this stage, and your focus is on the buyer’s experience. You want to test order flow from end-to-end and collect user feedback from a small segment of buyers and sellers included on an invite-only basis.
The pilot phase seeks to answer questions like:
The goal: The big launch.
This is the production phase, when you go live and expand. You’ve applied feedback from the pilot phase, and it’s time to send your minimum viable product into the world.
The production phase seeks to answer questions like:
Of course, this is just the beginning. From here, you can turn your eye to opportunity and expansion. You can open up supply, onboard more vendors, explore new shippers, and actively co-market with sellers. As your marketplace enters new dimensions, the technology that underpins its operations will need to adapt. For these reasons, establish your marketplace on a platform that can scale with you.
An essential factor in speed to market and the crawl, walk, run approach is platform. How you choose to platform your new marketplace will significantly impact speed and scalability.
A custom built marketplace is the most customizable option, as you can create the exact platform that you’re looking for. But, the reality is, it’s not often worth it.
A custom-built marketplace can take years (plus millions of dollars and many time-consuming iterations) to get market-ready. In other words, you could be crawling for a long time. Not ideal when speed to market is critical to outpacing the competition. Two to three years of development is plenty of time for competitors to make moves.
This option obstructs your ability to move through the crawl, walk, and run phases efficiently. What if buyers and sellers don’t respond to your marketplace as anticipated? What if your marketplace strategy needs to change? Even a slight change in the code would delay the time to market.
No matter what type of marketplace you’re running, the fundamental behind the scenes remain the same.
Using a PaaS gets you up-and-running much faster in comparison. You’ll still have to develop a unique idea, vet your business model, test the purchasing flow, and acquire sellers. But you skip building the technology from scratch.
Leveraging a PaaS model allows you to:
You can’t start running on day one. But, the sooner you validate the marketplace business model, the sooner you can scale your digital operations to become a leader in your industry.