It is confusing for the marketplace owners whether to chase the sellers or customers. This is what is termed as a chicken-egg problem, whether to run after chickens(sellers) or wait for the eggs(buyers). Numerous businesses in the past have faced similar situations and still won the game by adopting effective strategies. This slide talks about various strategies and examines with a case study on how to solve this conundrum. For more info, visit -https://www.rentallscript.com/how-to-solve-chicken-egg-problem-in-marketplace/

1. Chicken Egg
Problem in the
Marketplace: How
to solve it?

2. What is termed as a chicken-egg
problem?
A common dilemma an entrepreneur comes across is bringing
in the initial customers.
It is confusing whether to chase the sellers or customers. This
is known as chicken-egg problem, whether to run after
chickens(sellers) or wait for the eggs(buyers).
2

3. Numerous businesses in
the past have faced similar
situations and still won the
game by adopting effective
strategies.
Let’s examines with case studies on how
to solve this conundrum.
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4. 1. Start small
Target a small audience initially.
Learn the do’s and don’ts of the business.
Achieve the initial goals of the marketplace and begin scaling
to a place where supply and demand not met.
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5. Cont..
▫ Craigslist started in San
Francisco by Craig Newmark
by mailing local events and
shows.
▫ When he began to find
online people, the
community started growing,
and individuals began to
contribute to it by sharing
their updates.
▫ Soon a need for the website
came. Rest is history.
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6. 2. Utilize the online community
Find a community who are already present but dissatisfied
with the current system.
Discover the loophole and fix it by designing a better system
than the present.
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7. Do you know the story of how
Etsy started?
When Etsy co-founders graduated from college, they started doing freelancing website
building projects.
At that time, they got hiked with the project about building community forums for crafters.
When they went through the conversations of people, they understood how they were
dissatisfied with eBay.
So, they saw this as an opportunity and built a website exclusively to see handmade and
crafted items.
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8. 3. Act as a seller/owner
Begin by being an owner and start your service.
After an initial number of users get used to your platform, you
can open up to other sellers turning into a two-sided
marketplace.
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9. Cont..
▫ Amazon started the
business solely by taking
orders from customers and
home-delivered the items.
▫ After the success and
planned to scale to other
countries, it opened the
marketplace to other small
owners to set up an online
store in the Amazon
platform.
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10. 4. Monetary subsidies
To bring sellers on board, offering a monetary wage until
people start using it is a reasonable approach.
It has also a possible risk of losing investments when the plan
doesn’t work out.
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11. Cont..
▫ When Uber first started in
Seattle, they paid drivers
even though customers
were unsure about this
service.
▫ After gaining initial traction
of users, other drivers
considered a profitable
opportunity.
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12. 5. Bringing high-value owners
When a prominent seller enters the marketplace, the
customers of the sellers will engage the platform as well.
In this way, the clients of the seller can convert into the
customer of the platform.
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13. Cont..
For instance, when a big brand
like Nike, Calvin Klein or Adidas
market their clothing in an
e-commerce store, customers
shop in the e-commerce store to
buy the brands.
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14. 6. Encouraging owners to bring in the
audience
When the seller/owner also take the initiative to bring in the
users, it is less pressure for the marketplace owners to bring in
the customer.
Both the marketplace owners and sellers work together to
bring in the audience.
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15. In a nutshell We illustrated with a real-time example of on
how they launched and solved the supply
and demand of their marketplace.
Not every strategy would suit to your
marketplace.
Examine each option, weigh the pros and
cons or tweak any approach suiting to your
marketplace and solve it.
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