Challenges of Operating a Double-Sided Marketplace

What’s the difference between building a double-sided marketplace startup and originating with an all-new enterprise? Here’s the answer: the struggles are simply incomparable.

When it comes to operating a double-sided marketplace, you need to look beyond what’s on the surface. Though the business model worked well for Airbnb and eBay, there’s no immediate guarantee it will treat you in a similar way. Due to the rapidly increasing competition, chances are likely that double-sided marketplaces are filled with challenges in the initial phase. In this article, we’ll highlight those challenges.

Striking the Double-Sided Balance

Running a double-sided marketplace requires double the work, so this is often where you may find it difficult to strike the perfect balance. First and foremost, you need to partner with a sufficient number of suppliers. After all, this is how the marketplace proves to be attractive to your customers.

Even if you manage to have enough suppliers, you still need to ensure you’re attracting enough buyers. If done in a timely manner, your suppliers can be sure that the market will sustain for a long period of time, and that invites buyer confidence.

Obtaining the help of an ad-tech company that can create a bridge between both your suppliers and buyers is absolutely critical at this juncture. Let’s take as an example. By partnering with a technology-focused platform such as this vetted one, you can be sure to beat the double-sided marketplace blues.

Retaining Suppliers

Are you investing enough of your time and effort into maintaining your supplier base? As an owner of a double-sided marketplace, you may often face issues such: ensuring the supplier information is up-to-date; consistently helping suppliers increase their turnover; helping them increase their earnings; and promising financial security while ensuring consistency.

Suppliers need to be reassured that they’ll receive a high amount of profit from your business. If you fail to implement relevant marketing strategies to retain these clients, you may lose them without warning. Consequently, this could negatively affect the growth of your business.

Keeping Loyal Buyers

What would you response be if a considerable amount of buyers suddenly decided to ditch your business? Perhaps you’d want to opt for the shutdown option in this scenario.

Regardless of the industry your double-sided marketplace startup is in, one thing is for sure: your buyers will meet your suppliers. When they establish a trustworthy relationship, there are chances that the buyers may collaborate in order to cut the additional cost. If the suppliers accept their offer, they’ll have an opportunity to snatch your buyers. If they pull one over on you, your business will absolutely suffer – and the damage could be irreparable.

Still, keep the faith because there is a way around this potential challenge. Investing in modern technology to remain on the cutting edge with your double-sided marketplace may help you save the deal for the long-term.

Don’t Spend More Than You Make

Picture this: you’ve downloaded the Uber app and booked your first ride. You’re waiting. And waiting. And waiting. The car arrives, but definitely not on time. Now you’re disappointed.

What exactly happened?

Due to lack of drivers, the service (in this case Uber) wasn’t delivered on the expected timeline. This faux paus indicates that the company managed to increase its customer base, but there were limited suppliers. That’s because it overspent on advertising to buyers rather than spending equally on both buyers and suppliers.  

Overspending on one side can be extremely dangerous for double-sided marketplaces. In the above-mentioned scenario, this led to a decrease in brand image – and it could have easily been avoided to save a lot of headache for everyone.

Gen George