Wondering which common marketplace building mistakes to avoid? Before the advent of the internet, no one would have imagined that businesses or persons could make billions of dollars without owning a product or service. But multi-vendor marketplaces like Fiverr, Airbnb, eBay, and Etsy have defiled economic principles.
Not only have these marketplaces built a formidable brand that acts as a mediator between sellers and buyers, but they have also created a goldmine for aspiring entrepreneurs to offer their products and services.
Building a marketplace is, no doubt, a financially promising endeavor. However, it isn't a walk in the park. There are dangers to look out for and tons of mistakes to avoid too. Which, of course, is the purpose of this article. Let's begin, shall we?
1. Failing to conduct an adequate market research
Market research is inarguably one of the most important aspects when establishing any business, even if it's a coffee shop. Through research, you discover who your potential customers are, your competitors, and a detailed overview of the industry.
Failing to conduct adequate market research before commencing operation is the quickest way to lay waste to your business. Many believe that market research is the foundation of every business as the information you gather will determine the approaches to adopt, especially regarding marketing.
When you know your target audience in and out, their requirements, pain points, motives, and drives, you begin to develop a system specifically tailored for them. Going forward, you discover that knowledge of your target, competitors, and industry aid further in helping you personalize your services.
2. Overestimating your potentials and resources
Even giant marketplaces can sometimes be seduced into overestimating themselves - biting more than they can chew only to hit rock bottom when it fails to pan out. When Amazon launched its first smartphone, Fire, hoping to take a bite of the ever-growing mobile industry, it flopped, costing the company over $170 million.
Both big and small startups often overestimate their capabilities, leading to a pitiable fall that could have been mitigated had they been realistic. Before you go ahead to translate your business model to reality, first evaluate your weaknesses and strengths. Be pragmatic about it, and ensure you bring the right talents on board to help you achieve your goals.
This is among the top marketplace building mistakes - working with newbies and hoping to beat the experts. That is merely wishful thinking. You have to bring in the right guns and ensure you're working in line with your capabilities and resources.
3. Not managing your marketplace properly
Marketplaces exist to solve problems, to serve as a link between sellers and buyers. However, running a marketplace with limited control over the goods and services provided will be your undoing.
Let's face the fact; there will come a time when a consumer will end up getting subpar goods and services, for which they will blame your platform. If this experience is to continue, you're sure of losing your target market to your competitors unless you're a monopolist.
Before you start accepting your target market into your platform, it is important to set an arbitration process in place to address poor transactions. It could entail the steps and responses to give when such a situation arises.
You need to maintain the trust your target market has for your marketplace, and it ensures weeding out bad sellers or buyers without hesitation. In business, trust is a priceless commodity that will never be able to buy.
4. Aiming for quick overnight success
Pouring in resources and more resources on an untested idea to hit it big overnight is a recipe for bankruptcy unless you're trying to replicate an existing business model that has been proven to work.
But even at that, aspiring to hit success overnight is one of the marketplace building mistakes you should avoid at all cost. Before you go all in, you first need to test the waters, and it takes time. For a start, it might make sense to forget about the millions of potential targets globally and start from your locality.
Starting with a few local prospects will help you build the muscles needed to serve a more global market due to the new experience and knowledge you have amassed. When you have fully conquered the local market, you can slowly progress to the next, and the next until your marketplace has gone global.
It doesn't happen overnight. It takes time, and expecting your business model to kick off overnight is simply not realistic.
5. Not building your brand early
To quote Robert Kiyosaki, "If you're not a brand, you are a commodity." A brand can last till the very end of time. You don't want your target audience to have the impression that your offers can be made available by another marketplace. When you build a solid brand, you're able to build a loyal base of customers who wouldn't mind becoming unpaid marketers by spreading the word.
Building a brand that helps people instantly recognize your brand is a painstaking job, but you can do it with the right mechanics in place. An important aspect, however, is your brand's personality. Not to be dramatic, but your brand's personality is one of the first things you need to consider long before your launch your marketplace.
From the name, logo, colors, tone of voice… And even style of content. Not building your brand early is a marketplace building mistake you should avoid at all costs. But when you get it from the start, establishing a formidable brand that becomes a household name becomes much easier.
- What makes my brand stand out from my competitors?
- Is my approach to solving my prospect's problem unique?
- Why would my prospects choose my brand over others?
If you can answer these questions, you're on your way to building a brand that can withstand the waves and storms.
6. Not being human
Your target market doesn't expect you to be perfect. Far from it. Most marketplaces, in a bid to present an air of infallibility to the outside world, tend to fix things in the dark. They often reason that customers will lose trust in their marketplace should they be found making a mistake, or tackling a problem.
But on the other hand, it isn't true. This fallacy is one of the top marketplace building mistakes most founders make, and you shouldn't. The point is, your target market expects you to make mistakes or to encounter a problem.
It is one of the inevitables of life. What interests them most is not the problem but how your marketplace will go about solving it. Covering up the problem shows a lack of transparency, which could lead to distrust. But if you tackle the problem head-on and share the positive result with your audience, you position your marketplace as an entity that promptly resolves problems as they arise.
7. Neglecting user experience
You're in business because of your target market, and you'd be nailing your marketplace to the cross if you fail to provide a smooth and seamless experience for your users. Don't be that guy who clutters his marketplace with tons of elements and flashy colors, with no clear direction.
Not only will your target market hate you for it, but Google will also spite you, and probably sink your marketplace into oblivion. User experience is imperative, and this means blowing vast sums of cash on honing your UI to almost perfection. Yes, ALMOST perfection.
Bad user experience is also one of the marketplace building mistakes made by founders. Try by all means not to join the bandwagon but rather distinguish your marketplace by ensuring your marketplace is smooth and easy to navigate. Get this right, and you'll never have any reason to complain about poor returns.
As you continue to deliver value and make an impact, don't forget the golden rule - paying your sellers instantly without any delay. It encourages more transactions and rapport, and they will love your platform even more. That is why marketplaces and professionals use Gigapay, a payment infrastructure that promises instant payment. Instead of waiting hours or days, they get paid instantly.
Want to know how it works? Feel free to book a demo, and we'd be excited to walk you through how our system works.