DOS AND DON’TS WHEN STARTING PEER- TO- PEER MARKETPLACE

The sharing economy, or the peer-to-peer marketplace, is booming and will continue to boom for the next ten years! Platforms like Airbnb, Etsy, Uber, & Fiverr have proven that the marketplace model is scalable and can work in any business industry.

Even though the timing is right and the technology is available, there is still a lot that goes into building a thriving marketplace. I started Traveling Munchkin two years ago, and here I share what you should do and what common mistakes to avoid when starting.

Do – Solve the Chicken & Egg Problem

A peer-to-peer marketplace requires you to either convince others to bring their inventory onto an empty platform with no customers yet, or to attract buyers when you do not have inventory for them. You will also have to creatively think of how you will find them. For the most part, it is usually easier to find the sellers and then the customers. You will also want to find quality sellers initially, as your validation will depend on their service and commitment to your platform.

Don’t – Do Any Random Marketplace.

It is essential to know that starting a marketplace requires a lot of time, effort & dedication. The more passionate you are about the subject area, the more likely you are to succeed. It is also important to keep in mind the value of the service. The product/service value must be high enough for the seller to provide the service or product, and the product/service must

be expensive enough for the customers not to just buy it for short term use. For example, if you had a marketplace exclusively for renting out tools to consumers, it might not be worth it for a consumer to pay $20 for rental when purchasing it for $50 and vice versa as a seller. A car or space are examples that are too expensive to buy for short term use, so it is usually better to rent out on a marketplace.

Do – Start by creating your Minimum Viable Product as soon as possible.

You might have a great idea, and all your friends might agree with you, but if you do not test out the idea to your demographics, you might end up with a platform with nobody using it. When starting, launch a minimum viable product as soon as possible. It does not have to be perfect, but it will help you validate your business idea without investing a lot of capital upfront. Why? Because the learning curve only starts when you have something to offer for your users, so it is crucial to get there as soon as possible. Keep in mind; your platform only needs enough features to solve your supplier & consumers’ core problems. Some great off the shelf platforms to start with include Idyaflow, Arcadier & Sharetribe.

Don’t – Focus on Building the “Perfect” Platform.

That was one of the biggest mistakes I learned from. I was one of the entrepreneurs that wanted to develop a platform like Airbnb in the initial phase - one that “has all the features, it works worldwide, and all kinds of people can use it.” Having a global vision is important, but no successful business is where they first started (remember Airbnb and couch surfing?). Everyone started at a minimum viable product, and it is essential to focus on the main features for your users and not get lost in all the sparkles and jazz.

Do – Engage with your users early on, even if you haven’t launched yet.

What I have learned early on when starting Traveling Munchkin, you must engage with your users and hear their concerns throughout the whole process while using your platform. Do your sellers need reassurance with an insurance policy in place? How do you ensure your customers feel confident with the product/service they are getting?

A peer-to- peer marketplace requires you to either convince others to bring their inventory

onto an empty platform with no customers yet, or to attract buyers when you do not have

inventory for them.

What validations or safety checks are you doing for both customers & sellers to make it not ‘Craigslist’ like? How can you make your platform trustworthy? Is the check-out process easy enough to find what they need?

Don’t – Don’t be the “Walmart” of the marketplace.

When launching a marketplace, focus on one thing in that one city. You might be thinking, if I offer the “one-stop-shop” model marketplace, I will be able to attract a broader user base and will be able to grow faster in my marketplace. However, a quick expansion will slow down your learning. The bigger you are, the slower it is for you to learn new things and pivot when needed. Additionally, the bigger you are, the faster you are burning through your money, which means less time to learn from your mistakes. Again, you want to validate your idea first, so start in your home town and focus on that “one” thing.

Do – Think about your competitive advantages.

What does your platform do that other businesses cannot provide? Are you providing convenience, community, affordability or service that is unlike the current status quo? Are you providing an opportunity for your sellers to become entrepreneurs like never before?

So there you have it! Now that we have covered the do’s and don’ts when creating a marketplace, it is now time to put it into practice. What business idea will you have for us? The next “Airbnb for X”.

About the Author

Samantha Vlasceanu is the owner of Traveling Munchkin, a peer-to-peer marketplace for baby gear rental in Toronto, Ontario. She spent 10 years working in operations improvement for companies, that one day she decided to pursue her own business. By day, she’s a mom of two and at night she’s building her empire. You can find her on Instagram at @TravelingMunchkin & on Tik Tok @ TravelingMunchkin.