Marketplace businesses require a different team structure than traditional ecommerce businesses because they have (at least) two areas of focus: the buyer and seller sides.
Not only do marketplaces have to aggregate demand for the buyer side, but they also have to aggregate seller demand. This distinction between buyer and seller sides happens across more functions than just marketing— operations, experience, and product teams can also be separated along these lines.
Because of this unique structure, many successful marketplaces have developed distinct organizational charts to serve the needs of both buyer and seller sides.
In this article, we'll walk through the potential organizational structures of three kinds of marketplace models:
First off, let's dive into managed marketplaces.
This breed of marketplace enhances the marketplace customer experience by being directly involved in executing transactions.
A managed marketplace offers additional services designed to improve interactions between buyers and sellers. These services reduce friction points, boost client trust, and expedite fulfillment.
The added involvement in providing these services doesn't disrupt the connection between buyers and sellers. Instead, it facilitates and strengthens buyer/seller relationships.
Managed marketplaces often require more operational overhead because they use headcount to offer additional services alongside the marketplace offering.
For example, managed marketplace Bus.com understands that buyers may want to speak with a human. For this reason, they hired a team to offer human interaction on their average order value (AOV) transactions.
While early-stage managed marketplaces often scale functions with headcount, eventually, they'll want to automate and scale with tech. But there are barriers to growth for online-only managed marketplaces. For example, most business decisions made in the early stages put off automation until later, which means managed marketplaces can become personnel-heavy and develop technical issues.
When building a managed marketplace, focus on creating a strong operations team. You will need an operations leader to run the ship and a lot of supportive operational employees.
Check out this link to learn how Dana Hooshmand, a former Lyft and Groupon employee, hired operations roles for a marketplace.
Vestiaire Collective, a second-hand marketplace for luxury fashion, verifies the authenticity of luxury second-hand products from sellers before shipping products to buyers. This action increases trust with buyers and eases fulfillment processes for sellers.
DoorDash is a last-mile logistics company that connects buyers with restaurants and handles delivery. They offer a superior experience for both sellers and consumers by closing the gap between supply and demand.
Flexport is a maritime freight forwarder: they transport international cargo across oceans. It isn't a consumer app; it doesn't operate a point-to-point logistics network where only one driver is needed for each move. Instead, Flexport coordinates complexity across various asset owners to move goods across international borders.
“Our software plus human approach lets us take on an industry that impacts every human on the planet. Freight forwarding isn’t something that you can hack together in a weekend, and we offer our engineers work that’s more meaningful than building yet another photo-sharing app. At the same time, we offer the most talented people currently in the freight forwarding industry a chance to work at a company that understands the value of modern technology.”
—Ryan Petersen, Founder and CEO, Flexport
Flexport demonstrates how managed marketplaces can become involved in transactions through logistics (or fulfillment).
Peer-to-peer (P2P) marketplaces allow consumers to offer goods or services to other consumers.
These marketplaces are often product-led and promote platforms that enable consumers to connect. For example, think about the products Airbnb and Uber have created using the marketplace model.
Your product team is the star of the show in P2P marketplaces. These marketplaces focus on products, and many other business functions align closely with the product roadmap.
But, as we all know, even if you build a robust marketplace, consumers might not come. Creating an incredible product (or P2P marketplace) is not enough to generate consumer demand. You will also need marketing and growth functions to scale your marketplace.
Y Combinator connected with leaders at startups — like Airbnb, Uber, and Instacart — to learn how they think about hiring growth teams.
Facebook Marketplace brings together buyers and sellers who then interact directly. An individual user can be a buyer in some transactions and a seller in others. On the same platform, one person can fill either role.
Airbnb enables consumers to engage with the platform as both hosts and renters. When the company prepared for corporate adulthood, it established a seasoned leadership team with significant tenure at the company to add some structure to what was becoming a sprawling home-sharing marketplace.
Neighbor is a rapidly growing startup for self-storage.
While creating their growth team, Joseph Woodbury, CEO of Neighbor, said they needed to hire 10x, not 1x (engineers, digital marketers, etc.). He explained that not doing so would hurt their overall growth.
And Neighbor prioritized hiring the best, quickly scaling a team of 130+. They've raised $60M+ from top funds — like a16z and Fifth Wall — and strategic investors at DoorDash, StockX, and Uber.
A SaaS-enabled marketplace combines the elements of SaaS (software as a service) with a marketplace. The SaaS functions typically provide tools for the supply side that help suppliers better manage the demand from the marketplace.
SaaS-enabled marketplaces rely heavily on the sales function to generate demand. Many of them use local sales teams to penetrate markets. And eventually, they expand into new markets as they build a scaleable playbook for growth.
A SaaS-enabled marketplace team's three most important functions are product, customer support, and sales.
OpenTable offers restaurants a reservation management system to complete bookings through their app and over the phone. Consumers can download the OpenTable app to book reservations without having to call multiple restaurants to find an "open table." OpenTable founder Chuck Templeton built the company from the pain he saw his wife go through to get a reservation.
Notch uses an in-house sales model to acquire larger restaurants and restaurant groups, a centralized inside sales team to handle booking demos for all markets, and a team of account executives on the ground. The company quickly scaled to being used by over 1,500 restaurants and has raised more than $19M from top investors.
Regardless of the type of marketplace you build — SaaS-enabled, managed, or P2P — you will likely utilize many manual processes at the beginning of your journey to close technical gaps.
Once you've validated your business model and are ready for growth, you can use marketplace-enabling technology, like Nautical Commerce, instead of headcount to scale more efficiently.
As you find your USP (unique selling proposition), you should be focused on generating more marketing demand. Try not to worry about the underlying technology powering your marketplace.
Nautical can help you launch and scale your marketplace with a modern platform. As a result, you can leverage those who worked with you from the start to accelerate your growth.
Ready to launch your marketplace?
Chat with a Nautical marketplace expert today.