Two-sided marketplaces are platforms that bring customers and merchants together to exchange services. Examples of such marketplaces are Airbnb, Fiverr, eBay, Etsy, Avito, Farfetch, Auto ru, Uber, BlaBlaCar, Upwork, Profi, YouDo, Apple store, Play market.
Features of Two-sided Marketplace
- Network effect: the value of a product for a user grows along with an increase in the number of users of the product
- Two-sided markets fail quickly if the value proposition for one side clearly doesn't match the needs of the other
- At the start, the “chicken or egg” problem is especially relevant: in order to have more consumers, more offers are needed, and in order to attract offers → more consumers are needed
- “Offers” are more valuable in this business model, and losing them due to interface complexity, long/difficult review, or any other obstacle is very detrimental to the growth of the platform.
- They earn in the format of Commission Based, Subscription Based, Lead fees, Advertising Fees