Is Your Marketplace Struggling? Here Is Why

Hey everyone,

In this week's newsletter, I want to talk about why marketplaces fail to gain traction. These insights come from building Unicorn Factory and helping other first-time founders build their marketplaces through the MVMP program.

What Goes Wrong

1. The First Version is Too Complex and Never Gets Published
   When people are new to building with no-code tools, they often make the first version of their marketplace too complicated. They think that a complex platform is necessary for success, but this usually leads to delays or the marketplace never getting launched at all.
2. No Idea How to Attract Buyers
   A common issue is that after building their marketplace, founders have no idea how to attract buyers. They might have a plan for building the supply side, but without buyers, the marketplace won’t gain any momentum.
3. Buyer Traffic Doesn't Convert
   Even if they manage to attract buyers, many marketplaces struggle with turning this traffic into action. People visit the site but don’t sign up, use the platform, or hire anyone. This leads to a lack of engagement and eventually causes the marketplace to fizzle out.
4. Weak Business Model
   Many founders choose a business model that isn’t sustainable for their marketplace. They often copy successful marketplaces without considering the scale at which those marketplaces operate. For instance, charging a 5% commission on a $10 transaction won’t sustain your business unless you’re processing thousands of transactions weekly.

What to Do Instead

1. Talk to Customers Before Building the Platform
   One of the most important things is to know if you can find customers before building a marketplace. This can be done through methods like creating lead magnets, which help you understand who your customer is, their key problems, and where you can find them.
2. Keep the First Version Simple
   Don’t make the initial version of your site too complicated. Ease into learning no-code tools and do a lot of the fulfillment manually. This gives you flexibility to make changes based on customer feedback.
3. Use Customer Feedback to Guide Development
   Let your customers tell you what to focus on next. Instead of building your dream features, solve the most common problems they have with your platform. This adds real value to the customer experience.

If you're thinking about building your own marketplace, I'd love to help you create a game plan. Just schedule a call with me here.

Best,
Connor

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