Billions are being spent in marketing and advertising trying to reach customers across a multitude of channels. Your target audience doesn't congregate automatically.

Suppliers never know who they will deal with. Service providers in particular can face misbehaviour, destruction of property, etc.

Suppliers want to get paid, and get paid on time. Also, they want to have some stability of income.

Consumers can spend hours looking up, contacting and comparing different suppliers. Platforms solve this.

It is difficult for consumers to estimate product-/service-quality up front. This creates uncertainty.

Consumers face the risk of paying for something they will never get. Platforms reduce scammers.

Marketplaces offer a platform where supply and demand can list, communicate, and complete (protected) transactions.

Marketplaces assist in filtering and matchmaking of the right solution

Through rating systems and otherwise, marketplaces can uphold a certain quality standard for both supplier and consumer.

Marketplaces are a platform to exchange value. By controlling the transaction they reduce risk on both payment- and delivery-side.

Marketplaces equalize the user experience of transactions, creating a sense of confidence and trust on both sides.

Removing friction from an existing transaction boosts user happiness and can set you apart like Uber ordering & payment vs traditional Taxis.

The more fragmented the market, the higher the value of an aggregation platform. Focus on a fragmented market.

Actively manage quality standards on your marketplace. If matchmaking is involved, match to the fastest, cheapest, highest quality supplier.

The more one side grows, the more value it creates for the other side. Same-side it actually causes negative network effects, f.i.: More Uber drivers = lower earnings.

Type: Network Effects

Marketplaces are hard to build, and therefore inherently defensible. If successful, you can provide sole access to a scarce resource: sellers and buyers.

Type: Cornered Resource

Marketplace success depends on Monopoly. The more scalable your marketplace, the faster you can capture market share, and control the price.

Type: Economies of Scale

Charge a fee on top of every transaction for use of the platform.

Charge for an increment of use, f.i. by the minute, by the mile, or both.

Allow third parties to claim screen real estate on your platform for advertising.

by Category and/or Geography. GOAT spun out an overlooked niche on eBay, and was able to set itself apart with an "Assurance of Authenticity".

Most successful marketplaces focused on supply first. They found supply drives demand. At Etsy, suppliers were the buyers as well.

Most marketplaces fail for lack of supply, not demand. Sell suppliers on projected demand and reduction of friction.

Funnel consumers to your platform and let the transactions take place. Optimize for a great first experience first.

If something is working in suburbs, expand to other suburbs, not city centers.

Taskrabbit focused on their most popular category: handyman work.

Target traffic on existing (inferior) platforms and funnel them to your platform.

OpenTable created a digital booking tool that could stand on its own without the demand side, to onboard early suppliers.

Referrals drove 1/3 of the demand side for companies like Uber and Instacart. Remove barriers for people to talk about your product and reward them for it.