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Article written by the Co-founder of YoungPlanet, Jason Ash

A two-sided marketplace is one where the business model doesn’t work unless you have two sets of users getting involved. For example, the platform I helped create, YoungPlanet, needs parents to list children’s items they no longer need and also parents who want to take them off their hands. Without one or the other, the platform just wouldn’t work. Ebay, Airbnb, and countless others businesses all operate two-sided systems.

If a two-sided marketplace is established well, it can see hundreds or thousands of people exchanging items, services or information. However, it’s a notoriously tricky business model to deliver on; you need to simultaneously build awareness and convert two different types of users. Attract one audience group too early and they might not stick around whilst you work on getting the attention of the others. Try to attract everyone at once, and you could end up with muddled messaging and expensive marketing needs.

Having successfully built up a community of tens of thousands, here are my top tips on how to approach it:

Find your niche

 

Knowing your market and ensuring there’s a genuine need for your service is the first vital step in building a two-sided marketplace. Take the time to research what’s out there already to identify gaps and double down on where customers are being underserved – sometimes it makes more sense to start in a niche area and a very specific customer profile and build from there, rather than trying to be all things to all people.

Start small

 

Starting out by engaging within a micro-community can be a smart move. We launched YoungPlanet in one borough of London to begin with, which enabled us to pinpoint our marketing efforts, do lots of on the ground engagement, and capitalise on word of mouth. From there, we expanded to London and then went national. We only moved onto each next phase once we were confident people were engaging with the product on both sides of the market and telling their friends about it.

Overdeliver to early adopters

 

Your first users are your most important. If they like the product and service, they will become repeat customers and help generate word of mouth awareness; critical for growth and building trust. Offer early adopters the best possible customer service and make them feel special. Ask them for feedback and take on board their suggestions. Experiment with loyalty programmes or incentives for additional use of your platform. If you can turn those early customers on both sides of the marketplace into brand ambassadors, your whole community will start to build genuine momentum.

Be patient with progress

 

Building a two-sided marketplace takes time. It’s better to nail those early phases and take the opportunity to iterate your product and offering, before scaling up. Be patient and put enough time into building your foundations. It will reap dividends in the long-run.