This is the second in a series of posts about how decentralization takes place in marketplaces - through an erosion of trust in intermediaries. In my first post, I examined how trust breaks down in suppliers and what that causes.

Customers losing trust happens when the marketplace no longer offers the level of convenience (through price or selection), or doesn’t invest in improving the fulfillment experience of a product or service sold in the marketplace. This is generally a slower process - one bad experience will not mean a customer writes off the marketplaces; but over time dissatisfaction can compound.

Additionally, supplier mistreatment creates a side effect of lost trust with customers. This is true especially in today’s ecosystem where customers are more discerning about the goods and services they consume.

The opportunity here is two sided. One is to provide customers with the same level of utility when purchasing directly from multiple suppliers. For example, discovery or managing your fulfillment experience (e.g shipping tracking). If the friction or cost of switching is too high customers will likely stay with the central marketplace.

There is also opportunity in offering services that the central marketplace probably wouldn’t provide because it’s against their ethos or values, or goes against their core business model. For example, offering easy data portability is not in Facebooks interest. DuckDuckGo is a good example here but not “technically” a marketplace. Lyft is another one, in that their ethos is much more friendly and supportive to their drivers at a time when people are losing trust in Uber.

Customer trust is tricky. Gaining it takes time. Losing it starts slowly and then fast. It pays to be proactive about some issues. Centralized Marketplaces carry an additional burden that they have to manage both sides. Decentralized marketplaces become stronger as bad suppliers fail, and overall customer experience goes up. This makes them inherently antifragile.

(This is an evolving set of thoughts and will likely be updated over time).