We work with the marketplace for seven years, I started the project Kabanchik.ua (and then it was called “Throw a Pig”) with a partner in 2012. I found that there is no convenient platform to search artists for residential and business orders. Thus was born our marketplace.
Six months later, we were selected in start-up accelerator EastLabs and received knowledge by which we could accelerate the growth of the project. This has helped us to move into a phase of scaling in Ukraine.
For these purposes, we have attracted angel investment, and in 2014, after it had bought the holding EVO, which includes resources such as Prom.ua, Bigl.ua, Shafa.ua, Zakupki.prom.ua and others.
Now “Hog” works in 70 cities of Ukraine, Belarus and Kazakhstan. The number of visits to the platform in Ukraine reaches 3 million visits.
Already in EVO my partner and I launched a new marketplace — Crafta.ua. It brings together craftsmen handmade goods to the connoisseurs of the copyright work. This project also became the leader of its niche and use it on your talent to earn 20 thousand Ukrainian masters.
For seven years working on “the Hog” and “Crafty” we got a lot of experience who are eager to share with all the founders of the marketplace. So I want to tell you how to scale the marketplace.
What is the power of the marketplace
The marketplace win from their predecessors, online stores, according to several parameters. First of all, they have a network effect, which ensures long-term durability.
The network effect is direct and indirect. In a direct network effect each new member increases the value of the network. Example — social networking. The more friends there are, the more value.
Roman Kirigetov. Photo: archive of the company
For commodity networks, which include the marketplace, which is characteristic of indirect network effects. In this case, the increase of one side of the pad increases the value of the second. For example, the more iPhones Apple sells, the more developers of their software of interest to write for them programs.
The classic online stores a limited number of products, in contrast to the marketplace. For example, a supplier of refrigerators loaded to the set your content. The buyer was looking for a fridge and went to your marketplace. And then bought food for the dog and a baby gift. He buys it all already from other suppliers.
Therefore, the content one provider helps to attract buyers and to other sellers.
Accordingly, online shopping can not rely on network effects, which helps the marketplace faster scale.
Focus on the strengths
First and foremost, pay attention to which categories are most success and where you are able to provide good liquidity. You can’t be good at everything at once. This is a normal process — to identify their strengths and focus on it.
In “the Hog” it was a courier service and cleaning. In “Kraft” is better sold purses and accessories. We made a bet on it, and added more of these goods and services in the newsletter and advertising.
Be patient: building a successful marketplace takes years
In my experience I can say that the period of construction of the marketplace — about four years old and upward. The first year is a critical period, then there is liquidity and a stable traffic. This is the growth phase to three to five years.
“Boar” took five years to reach the goals that we set for ourselves. We now operate in Ukraine, Kazakhstan and Belarus.
Regularly monitor metrics
One of the metrics that need to be controlled at the stage of growth: the ratio of consumers to producers. It is important that vendors have the lion’s share of the profit from you and you became almost the only source of income for them. If you share a supplier, you take 30% of income and more, it is a good indicator. At this stage, customers experience and your profile and your ranking, what’s good for you.
Photo: archive of the company
In “the Hog”, we argue as follows: if the contractor receives less than five orders per month, so we do not give him value. In this case, we can pause the flow of new performers to give existing an opportunity to earn extra money.
The next important metric of a failed transaction. We always analyze the reasons why they are not closed and polled customers for analysis. If, for example, the reason that the client found the contractor “on the side”, so we do not quickly picked by him or he does not agree with our choices, and so on.
Another metric that is useful to you:
life cycle assessment of the client. If the online store takes all the margin product, the marketplace gets only a percentage from the transaction, which initially is difficult to attract paid traffic. So see how much a customer brings in a year. If you pay for the cost of the customer with the first order — you just found a gold mine;
the conversion of the deal: as shown on marketplace users really become his clients;
re-orders. You want the number of orders per user is constantly increasing. In the developed makretplace the share of orders from old customers must be at least 50%, better 70%, or more.
product quantity for a single supplier. Your goal: to make sure that the suppliers you have loaded as much of the product. Two or three of the item is rarely sold. The more the provider loads, the more effect is given to the supplier.
Create maximum trust and security
When you only develop your marketplace is a welcoming community, but when you become popular, you have crooks. Because there is already important to pay attention to security.
In “the Hog” we managed to weed out 99.9% of fraud by requiring verification of each specialist. In 2012, when we started, couldn’t afford it, people still do not put much credence in all sorts of identity checks. Then have customers come to our office for a personal confirmation.
It was difficult and long, a year later we switched to Skype verification, which reduced the time from 30 minutes to two. Now we ask people to take pictures with their documents and people are willing to go for it, so how about a “Hog” is already good buzz.
Also, we care about the quality of services provided, has created the so-called user moderation. After each job our players get ratings and reviews. The evaluation is divided in three categories: quality of work, politeness and punctuality.
To make the wow service, we equated all grades from one to four. That is, you either take 5, or do not do at maximum! And it gave a stunning result: the performers began to exceed expectations wah effects. Like plumbers wear Shoe covers, towels, and even candy for the children all at will.
Focus on strong players
At the stage of scaling you need reliable partners who do the lion’s share of your orders. It’s your power sellers, and they need to concentrate. We called them “superesportes”.
Photo: archive of the company
To get into this caste, you had to have a rating of 90% and get at least 10 reviews in the category. Superisolated the first to receive notifications about new orders. Given that tasks dismantled in seconds, preference in five minutes significant.
Growth in the ecosystem
The next stage of development of the marketplace — growth in the ecosystem. Here to its core connected third-party services that improve the customer experience. Why in his time Prom bought a “Hog”? Because the Prom is already quite scaled and began to look for new solutions.
For example, when people buy the boiler, we understand that they do not need the boiler, and warm water. So, it may establish a specialist from a “Pig”. Same with buying a company Prom the marketplace Shafa: in the first platform, you can buy new things, second they can sell.
To prevent the loss of users
At the stage of scaling need to work to ensure that users do not run away to other marketplaces. For this they provide maximum liquidity to the supplier received a large share of the orders through him. Also encourage users of different buns. For example, we give a discount card, free education and other benefits.
Your users are your content. So take care to protect it and try to win a place in the brain of the buyer, not only in the browser’s bookmarks.
As you can see, the scaling of the marketplace is a long process, the preparation of which takes up to five years. So don’t be afraid to experiment, regularly track the metrics, protect the content and encourage users to exceed expectations.
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Cover photo: archive of the company
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