Some disconnected thoughts on marketplaces:
- Online marketplaces create demand by bringing previously scarce or untapped supply and making it easily accessible. Focusing on supply is the tried and tested formula for growing marketplaces.
- Once bootstrapped, online marketplaces aggregate demand (users) and allow for suppliers of all types find new business. In this sense, an online marketplace is an MVP for a supplier (driver, merchant, etc) to test whether there is a market for their business. Once that is done, it likely serves them better to own the customer relationship directly. This is to avoid overreliance of their business on any one platform.
- Some marketplaces are resilient to individual suppliers leaving, and are easily substituted. Those are often more transactional and where there is no strong connection between the two sides (i.e. a rider doesn’t really care who their driver is).
- Some marketplaces are very sensitive to suppliers leaving, and can respond to this by enabling paths for suppliers to be successful both on and off platform.
- Marketplaces can think of themselves as ad networks for influential suppliers, providing better targeting for them and greater reach on platform (and potentially off platform too). This has the double benefit of serving as a source of additional revenue for the marketplace.
- To protect their marketplace, becoming a platform for other businesses to reach their suppliers can create an additional moat for the business. It becomes a one-stop shop for creators, and in addition creates another source of network effects.