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The Chicken & The Egg: A Marketplace Dichotomy

The Chicken & The Egg: A Marketplace Dichotomy inploi Team | 16.09.2016

If Matt and I had a chicken for every time we heard the ‘chicken and egg’ marketplace analogy, we would have pivoted into the mayonnaise industry months ago.

The analogy is used to refer to the biggest challenge faced by marketplaces: establishing liquidity. The internet offers up an array of opinions on how best to overcome this challenge, but given I am a product guy, I will look at this from a product perspective.

Here are a few business case studies of strategies that have been well executed to tackle this dilemma:

Engineer Standalone Value

Hailo had its market debut as a tool for monitoring traffic queues throughout London. This allowed the taxi hailing app to prime the supply of cabs so that when the hailing feature was switched on, users were surrounded by available cabs. Hailo successfully established a marketplace and didn’t piss anyone off in the process, using a product that was engineered with an intrinsic value outside the supply/demand exchange.

Guarantee A Positive First User Experience

Uber’s approach was typically bullish and somewhat less imaginative. Uber paid drivers to stay on the road, so that when a customer opened the app, they were greeted by the familiar site of small black cars snaking around the map. This worked well for Uber, but then again, they can afford it. Read more about Uber’s launch strategy here

Focus on Adding Value to Important User Group

In its early years, the Airbnb founders struggled to build the supply or ‘host’ side of the market. To overcome this, the founders would go to prospective ‘host’ locations and professionally photograph the properties for rent. Hosts could use the photographs on Airbnb and any other rental mediums. A tool was also added to the product that allowed hosts to simultaneously post their spaces on Craigslist.

Laser Focus

In the post-Uber/Airbnb world, most marketplaces frame themselves as industry ‘disruptors’. It is therefore easy for founders to get carried away with notions of changing the way entire markets work from the offset. The reality is very different. Focusing on a specific segment or geography is not only more manageable, it also allows you to get closer to your users so you can better understand your product-market fit. Getting your product to work for the very few is the first step on the long journey towards establishing mass liquidity. inploi is a frictionless jobs marketplace in which a trusted community of job seekers and employers can communicate and transact. Our aim is to bring transparency to an opaque sector of the economy and to reduce unemployment. Remaining focused has been the cornerstone to our launch strategy, we currently operate in London (and a few counties beyond), focusing on one industry – hospitality.  This is the first step on our mission, to change the way staffing works in the service economy, globally.

In the age of Uber of X and Airbnb of Y it is easy to overlook the fact that no single marketplace is the same – each has its own dynamic which is informed by the product/service, industry and its users.

Similarly, there is no correct way to solve the ‘chicken and egg’ dichotomy, it is down to the founders to devise a strategy based on an established understanding of the marketplace requirements.

About the author: Alex Hanson-Smith is co-founder & CPO of inploi.

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