Your SlideShare is downloading. ×
0
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Fundamentals of Consumer Marketplaces - Rishi Dean
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Fundamentals of Consumer Marketplaces - Rishi Dean

2,833

Published on

11 factors to identify and execute successful consumer marketplaces

11 factors to identify and execute successful consumer marketplaces

Published in: Business, Technology
1 Comment
19 Likes
Statistics
Notes
  • its broken. your presentation has missing frames.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total Views
2,833
On Slideshare
0
From Embeds
0
Number of Embeds
11
Actions
Shares
0
Downloads
0
Comments
1
Likes
19
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • Marketplace models, connecting buyers and sellers
  • Been on the ground floor of many startups, shaping and growing themBeen in big companies and little ones, and involved in different capacities with all typesSeen the good, the bad, and the uglyMade some many mistakes, which I’ll share, so you don’t have to
  • The internet has proven to be an unprecedented medium to connect individuals and enable markets to be formed that would otherwise be prove to be too inefficient, if not impossible, to exist in an "offline" capacity. One such dominant online business model is the person-to-person (P2P) marketplace, whereby individuals can connect with other individuals across geographic distance to provide goods & services to buyers. There are many such examples that form the basis of many companies matching long-tail supply and demand.Helping to make inefficient commerce efficientProviding economic opportunity and empowerment to their sellers/hosts, enabling them to earn meaningful income
  • Payments: Paypal, SquareAd Supported: Facebook, LinkedIn, YouTube, Google, AOL, Yahoo, Pandora, Hulu, Twitter Others: Dropbox, Evernote, Skype
  • Number of people who will transact:% addressable / obtainableto go online at allLikelihood of marketplace success and penetrationFrequency of transactionFrequent purchase cycles (Yelp, GrubHub, OpenTable, Uber) Marketplace is a utility Easier to build brand awareness and referral growthAverage transaction sizee.g. CustomMade vs. Sittercity
  • Consolidate fragmented markets via technologyExcess capacityFriction / Opacity: middlemenProviding economic opportunity and empowerment to their sellers/hosts, enabling them to earn meaningful income“Found money” for suppliersDeliver new or enhanced experiencesWorkflow efficienciesTransparency
  • Does user n+1 have a better experience than user n?
  • Many platforms have little use until critical mass is achievedMarquee or exclusive access to supply
  • Conversion Rate: A conversion range of 30-60% is a reasonable expectationSubstitutes: The harder it is to find a good elsewhere, the lower the conversion rate may bePrice dispersion: The variation of price across sellers of same good) is a sign of the inefficiency of your market, and in turn, illiquidityMicro market variation: within (sitters and nannies) can also cause illiquidityThe higher your average selling price, the lower the conversion rate may be
  • Can capture value commensurate with what you create (i.e. you can “tax” / charge for it)Where is the revenue coming fromSearch vs. ListTransactionWho is being “subsidized” by the platformFor optimal revenue subsidize the most price-sensitive group
  • How do you define your market & sub-markets?What is the setup to go from one market to another? In some markets signing up suppliers is relative easy. In others, it can be a painfully slow process that requires lots of touch and local presence. High friction supplier signup can be a barrier to entry if you are able to build a successful marketplace, but hard in the early stagesCommunity-driven, populated with passionate users who evangelize the service – can you aggregate demand?Platforms upon which their community of users continually expands into new verticals
  • “Always on”Sudden / private marketplaces based on proximity / placepayments
  • Groups who interactA system that greatly improves interactionAdoption creates value for users – gets better as others use it, without action by ownerSolved chicken & egg problem – can prime pump, get usage by groups. Many such systems have little value until broadly useScale matters, and you can get leading scaleCan own, and deter users from moving to lower cost alternativesCan tax – i.e. you can charge for it
  • Transcript

    • 1. Fundamentals of consumer marketplacebusiness models[ 11 factors to identify and execute successful consumer marketplaces ]rishi@rishidean.comwww.rishidean.comPresentation to CustomMadeJun 20, 2013
    • 2. Outline Background + economic underpinnings Select an industry Execute the model Protect & grow the platform Opportunities ahead2Rishi Dean – www.rishidean.com
    • 3. My JourneyStarted /Ground FloorAdvise /VolunteerCurrently3Rishi Dean – www.rishidean.com
    • 4. Marketplaces arethe foundation ofthe internet4Rishi Dean – www.rishidean.com
    • 5. Pipes vs. Platforms?*Inspired by: @sanguithttp://platformed.info/why-business-models-fail-pipes-vs-platforms/5Rishi Dean – www.rishidean.comDominant Offline“Create & push”B2B / B2CDominant Online“Facilitate interactions”P2P / B2B
    • 6. Your best bet to make $1 billion~20 years of consumer internet24 public companies >$1B, 2x acquisitions~2 multi-billion dollar companies / year2/3 are “marketplace” businesses Source: James Slavet,Greylock6Rishi Dean – www.rishidean.com
    • 7. 7Rishi Dean – www.rishidean.comKey variantsTransaction initiatorBuy-side? Sell-side? Combo?Transacted itemProduct? Service? Commodity?Market scopeHorizontal?Vertical? Niche?Revenue modelSubscription?Transaction?
    • 8. The internet makes markets efficient8Rishi Dean – www.rishidean.comCommerce eBay, Craigslist,Amazon Marketplace, …Auto Uber, Lyft, RelayRides, …Child Care Sittercity,Care, …Dating Match.com, eHarmony, okCupid, …Custom Goods CustomMade, Etsy, …ExamplesErrands TaskRabbit, Zaarly, Exec, …Travel Airbnb, Expedia, Priceline, …Skills oDesk, Skillshare, …
    • 9. But first…Platform economics9Rishi Dean – www.rishidean.com
    • 10. 2-sided network incentives10Rishi Dean – www.rishidean.comDemand Supply1) InitialAdoption1) InitialAdoption2) Same-sideEffects2) Same-sideEffects3) Cross-Network Effects Why do buyers initiallyadopt?Phase 1: Initial Adoption Why do sellers initiallyadopt? How do more buyers helpone another?Phase 2:Same-side Effects How do more sellers helpone another? Increase in liquidityPhase 3:Cross-side Effects  Increased liquidityStrategies forTwo-Sided MarketsHBRARTICLES |Thomas R. Eisenmann, Geoffrey Parker, MarshallW.Van Alstyne | Oct 1, 2006Platform
    • 11. Consumer marketplaces are aspecial case of these platformsStrategies for Two-Sided MarketsHBR ARTICLES | Thomas R. Eisenmann, Geoffrey Parker, Marshall W. Van Alstyne | Oct 1, 200611Rishi Dean – www.rishidean.com
    • 12. …almost every successfultech business is aplatform, many of thoseare marketplaces12Rishi Dean – www.rishidean.com
    • 13. IndustrySelection13Rishi Dean – www.rishidean.com
    • 14. 14Rishi Dean – www.rishidean.comCharacteristics of good industriesBigRipePlentiful
    • 15. 15Rishi Dean – www.rishidean.comAddressable customersFrequency of transactionTransaction sizePotential amount transacted via theplatform is large
    • 16. 16Rishi Dean – www.rishidean.comConsolidate fragmentedmarketsEconomic empowermentDeliver new enhancedexperiencesMarkets primed for disruption
    • 17. 17Rishi Dean – www.rishidean.com“Ownable” network effectsGroups who interactMore users = more valueScale mattersCan own it
    • 18. Service DesignGaining traction18Rishi Dean – www.rishidean.com
    • 19. 3 keys of gaining initial traction19Rishi Dean – www.rishidean.com Adoption Liquidity Pricing
    • 20. 20Rishi Dean – www.rishidean.com10x value proposition“Prime the pump”Lock in scarce supplyAttract users and provide instant utilityOnboarding +Activation
    • 21. 21Rishi Dean – www.rishidean.comLiquidity: users can find whatthey’re looking forSubstitutesPrice dispersionMarket segmentationPricing
    • 22. 22Rishi Dean – www.rishidean.comCapture value commensurate withwhat you createSources of revenueSide of subsidyPayment schemeOutput costs
    • 23. Service DesignSustainability23Rishi Dean – www.rishidean.com
    • 24. 3 levers of sustainability24Rishi Dean – www.rishidean.com Control Scale Competition
    • 25. 25Rishi Dean – www.rishidean.comControl of the customer lifecycleIntermediate thetransactionAvoid defectionRepeat behaviorData cycle
    • 26. 26Rishi Dean – www.rishidean.comScaling up within and acrosssegmentsMarkets & segmentsNew market setupLow friction vs.leverageCommunity-driven
    • 27. 27Rishi Dean – www.rishidean.comCreating long-term advantageWinner take all?Share or fight forcontrol?Threat of envelopmentSwitching costs
    • 28. OpportunitiesAhead28Rishi Dean – www.rishidean.com
    • 29. 29Rishi Dean – www.rishidean.comMobileFollow the customerLocation / ProximityImmediacy“Moment of truth”
    • 30. 30Rishi Dean – www.rishidean.comHigh-consideration P2P servicesTrust firstOffline firstReputationSocial graph
    • 31. Takeaway: “Ownable NetworkEffects” Backbone of the internet & the most lucrative consumer biz model Select an attractive industry Big market by expected total transaction volume Ripe for technology-enabled consolidation Plentiful to attain and own the network effect Gain initial traction Adoption: overcome “chicken & egg” Liquidity: expectation you can find what you’re looking for Pricing: capture value commensurate with what you create, but allow for growth Sustainability Control: ensure value across all touchpoints of customer lifecycle Scale: Cost-effective expansion into new markets / segments / verticals Competition: Create a “moat” around the castle with high switching costs and lockout Opportunities ahead Mobile: Always on systems for ad-hoc marketplaces based on proximity & affinity Social /Trust: Unlock high consideration P2P verticals31Rishi Dean – www.rishidean.com
    • 32. “There is nosecretingredient”32Rishi Dean – www.rishidean.com
    • 33. Additional Resources33Rishi Dean – www.rishidean.com HBRArticle: Strategies forTwo-SidedMarkets (Oct 1, 2006) BillGurley’s “Above the Crowd” Blog Sangeet Paul Choudary’s “PlatformThinking“Blog
    • 34. I’m here to help34Rishi Dean – www.rishidean.com Email: rishi@rishidean.com Blog: rishidean.com Twitter: @rishidean

    ×