Kahuna partnered with Altimeter Research and digital futurist Brian Solis on a first-of-its-kind research report on the state of digital marketplaces. This original research is based on a survey on managers and executives at 100 leading marketplaces. The survey questions spanned business strategy and execution questions, with the result compiled by the data science team at Altimeter. Brian Solis delivers a sharp narrative that connects the rise of online marketplaces to the emerging platform economy and the well-established evolution of customer experiences, the latter of which he has been a leading voice on.
Digital marketplaces represent a new and exciting frontier in online commerce, bringing together sellers and buyers in specific category in a online version of the Grand Bazaar. This represents a massive shift in how goods and services are bought and sold. Analysts estimate that marketplaces will account for 40% of all global commerce by 2020.
Two-sided marketplaces are being embraced by media companies as a strategic direction for their classifieds businesses. Established industries, such as car sales and real estate brokers, are moving online, and portals represent an integral part of how business is done today. The advent of consumer services and transportation is another frontier in marketplaces. Food delivery services are a unique form of marketplace, referred to as three-sided platforms, to represent food sellers, buyers, and the critical delivery component.
Marketplaces are experiences and consumers and sellers alike expect more from platforms. Just bringing together buyers and sellers is not enough, the research shows. Consumers want choice, simplicity, and value-added services, while sellers expect marketing tools, content generation, pricing optimization, and more.
Key findings in the report include:
- Marketplaces are generating significant revenue, with two-thirds generating more than $50 million annually and one-third generating $100 million or more.
- New product launches, revenue growth and customer acquisition top the list of marketplace business objectives in 2019.
- Marketplaces cite four common customer-facing challenges in pursuing growth: competitive differentiation, buyer retention, buyer acquisition and social media engagement.
- Sellers disengage from marketplaces because platforms don’t provide “growth as a service.”
- To attract buyers, marketplaces go directly to where their attention is focused: social media, search, email, and postcards.
- Successful marketplaces put an emphasis on driving repeat business. 40% of marketplaces pin 60%-79% of transactions to repeat customers, and 31% say that 40% to 59% of repeat customers drive total transactions.
- In order to run a successful marketplace, platform operators need to embrace Kahuna’s Three Laws of Marketplaces.
The State (and Future) of Digital Marketplaces is available now for download. This research is a playbook for what you need to focus on in your digital marketplace and the “Must-Do List” provides valuable strategic advice on where you should focus your business strategy.