This post was originally posted on LinkedIn (and subsequently updated), and is the first in a series of articles and case studies we’ll publish from MOHARA investigating the current and evolving state of the online marketplace.
The Greeks said it first. In fact, Wikipedia tells me this aphorism reached number 8 in the list of top 147 pithy truths from the Delphi – also home to the Oracle of all wisdom, so it’s probably worth bearing in mind.
Business is buying and selling
Knowing thyself – what kind of business you’re actually doing – is fundamental. How can you serve your customers properly when you don’t know who your customers are?
All business involves one person buying something, and one person selling something, whether that’s a pair of shoes in your shop, your services as a hairdresser or an app from the app store. The difference about marketplaces is that you don’t own anything, you don’t take a position in the transaction. Basically, you introduce two other parties, and sell your introduction or advertising services to one or both parties. This brings lots of advantages – you don’t have the risk of the stock becoming obsolescent, for example.
But it also brings significant downsides, eg you need to make visiting or transacting via your marketplace more obvious and logical than buyer and seller discovering or transacting directing, and you need to fund the liquidity in the market until there is sufficient for it to be self-supporting.