How to Grow an Online Marketplace in 10 Time-Tested Ways

If you’re considering tapping into the booming marketplace business, start with a few questions to clarify your plans. One is, “How do you grow an online marketplace?”
Marketplace growth comes with several challenges. First, it takes longer than other e-commerce businesses. You’ll have to work hard for three years just to see your marketplace take off. Second, some marketplace-specific issues can impede growth, such as leakage.
At DigitalSuits, we’re not just an e-commerce web development company – we also help startups grow into successful marketplaces. Today, we’d like to share our experience with you. Read on to find ten time-tested online marketplace growth tactics.
Before you can start testing the growth tactics listed below, you should have the following defined for your business:
You can read more about the preparation to make before planning out the market growth in our blog post on startups’ stages of development.
Curating products and services on your marketplace can come in many forms:
Curation will help you establish a quality baseline your customers will expect from your platform. This, in turn, will foster trust and engagement. Be mindful, however: curation will mean friction for providers, so keep the process as smooth as possible.
The marketing strategy is the cornerstone of your growing online marketplace. It should be comprehensive while catering to your target audience’s specific preferences and needs.
Here are the three marketing tools your marketing strategy should include.
This is how you get traffic from search engines. To optimize your marketplace for search intent, you should:
Put it simply, create the content your target audience is likely to search for and share. It typically involves creating blog posts, but it’s not the only type of content you can leverage. You can also create tutorials and engaging videos, launch a newsletter, or develop social media channels to tap into your target audience.
Repeat customers are the backbone of any business, and marketplaces are no exception. A loyalty program is one way to increase the rate of repeat customers on your platform. 83% of consumers say participating in one impacts their decision to buy again from a brand.
There are four types of loyalty programs you can consider setting up:
Your marketplace will look empty without the supply – a red flag for potential customers. So, to ensure the growth of your platform, onboard your providers and work hard to retain them.
Here’s what it means in practice to prove you have buyer potential:
You can also use the following tactics to keep your providers from using any other marketplaces:
Your brand is the way your existing and prospective customers perceive your marketplace. It’s defined by many faucets: visual design, the functionality of your website, your slogan, tone of voice, the quality of listings, etc.
If you haven’t given your brand much thought yet, here are five steps toward creating a powerful one for a marketplace:
Your whole operation should reflect your brand positioning statement. That includes the look of your website, your copy, your marketing campaigns, your customer funnel, and even your policies as a company.
This is where tracking key marketplace metrics comes in. Use this data to pinpoint the “hot zones” or, in other words, what works great on your platform. It can be a promotional tactic, a particular outreach message, or certain features. Then, double down on it in your growing online marketplace.
Here are ten key metrics you should track:
These metrics represent quantitative indicators – figures you can collect or calculate using existing data. However, don’t overlook qualitative data, either. For instance, your users' feedback through support tickets, feedback forms, or even social media posts.
Each of your existing customers has its network – a network you can access indirectly. Here are three ways you can do it:
If your users feel like a part of a community when engaging on your platform, you’ve secured a powerful competitive advantage. (Both Airbnb and Etsy leveraged this tactic to grow their marketplaces.)
The community experience drives up engagement, which drives up the repeat purchase ratio.
Here are eight steps toward building a community around your platform:
The growth of online marketplaces is often determined by their success at positioning themselves as trusted, safe platforms. If you don’t succeed at this, you’re risking losing existing customers – and having a hard time gaining new ones.
Here are three ways to foster the said trust and engagement in a marketplace setting:
In the world of online marketplaces, leakage refers to customers and sellers finding each other on your marketplace – but settling the transaction off the platform. In this case, you lose out on revenue since you don’t get a commission fee from the transaction.
To prevent leakage, you should provide value for the on-platform transaction. It can be:
If you want to capitalize on the growth of online marketplaces and their effect on retailers, developing and launching a multi-vendor platform is only the beginning of your way. You’re in for a marathon, not a sprint.
Keep in mind: which growth tactics will be the most efficient for your marketplace depends on its specifics. Those include product types, locations, customer segments, and so on.
Let’s sum up the key takeaways on how to grow an online marketplace:
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While the overall online marketplace industry growth rate is high, unlike most e-commerce startups, online marketplaces take years to break even. So, be patient and don’t expect to see your bottom line turn black before two to four years pass.
However, you should consistently see growth in at least some metrics (the number of users, gross merchandise volume, or the number of listings). You should reconsider your approach to growing your marketplace if you don't.
Before you settle on your strategic approach to marketing your platform, you should perform a few steps. First, do your research on your direct and indirect competitors to better understand your ideal customers and have one or several personas created. Second, formulate your unique value proposition and create a customer journey map and a sales funnel. Finally, pinpoint which tools and tactics will work best for your target audience and your business and: Reach out to prospective users wherever they already spend time online. Always work several communication channels. Approach your marketing as a continuous process that requires A/B testing.
Make the most out of these marketing tools like search engine optimization (SEO), content marketing, affiliate and referral programs, and special offers for new customers. To engage prospective customers, also make sure to invest your resources in creating a strong, trusted brand and providing a community experience.
Content Marketing Specialist at DigitalSuits
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