For years classified marketplaces have survived and grown by
offering simple listings of products and services. Some free, some paid. This
model will not survive very long.
Yes, some marketplaces have very sophisticated methods of
tracking “leads” and directing traffic to their advertisers’ websites, thereby
generating emails and phone calls. Technology, new mobile applications and new
marketplaces will change the landscape. Simple listings and matchmakings based
on product, price and location are now being forced to evolve.
This presents a great threat to traditional marketplaces and
at the same time a huge opportunity for innovative marketplaces to get in the
middle of the transaction and monetize listings on their website.
Here are some ways marketplaces can get involved in the
transaction beyond the listing:
1.
Verification
of users. Trust is a key factor in every transaction. When I was managing
the West Region of Autotrader.com, I confirmed
the fact that people in general would rather lose 30% to 40% of their car’s
value by trading it in to a car dealer than taking the risk of selling it to a
complete stranger.
Marketplaces can now easily verify
the identity, and ecommerce ratings of their users with the use of technology. They
can also allow each member to rate each other. Airbnb and Rntus.com do a good job at verifying users
and keeping track of ratings. Of course, Airbnb is a more mature system in part
because they have been around 8 years longer than Rntus, but mostly because their transactions
involve a higher degree of risk by having the renter entering, sharing and sleeping
in the host’s home.
2.
Offering
and selling ancillary products and services. Expedia.com offers trip cancellation
insurance, eBay offers sellers and buyers protection coverage and Rntus is offering damage waivers and
liability protection in selected products. These are great additional trust
incentives for the users, but most importantly, they are great moneymakers for
the marketplaces.
3.
Acting as
escrow agents. Now, this is a great moneymaker for marketplaces. Imagine
taking a percentage of every transaction that happens in the marketplace. This
can be achieved by implementing technology and a “vault” or escrow system. The
marketplace takes the money for the transaction and releases it to the seller
once the transaction is completed and verified by both parties. The buyer can
use Paypal or a credit card. The marketplace keeps a nice percentage. Rntus has found a way to do this.
4.
Providing
a higher level of matching. The simple database query that matches a
keyword with the item description will not be enough very soon. It does not
matter how many different and sophisticated sorting ways marketplaces offer its
users. At the end of the transaction, two people will meet to exchange money
and goods. Are those two people compatible?
I recently saw a television ad from my old
company Autotrader.com showing the many ways that people can search, sort and
store their queries to find the perfect car. I really liked the ad, and it was
very well done, but could not help noticing that at some point a person will
walk into a car dealership and deal with a salesman who’s personality may or
may not be a match for the buyer. That system will not bring the car dealer compatible
buyers, and buyers will not walk into a car dealer that best fits their
personality. So the cool sorting is just that, sorting after an insufficient
and ineffective database query result.
These are some of the ways that marketplaces can get in the
middle of the transaction. The shift in direction for many marketplaces will
start at the top and in many cases, owners and executives will need to step out
of their comfort zone and make tough decisions. Some decisions may involve
reinforcing their technology development teams with fresh blood. Not acting
fast could end their market dominance or existence.
Successful marketplaces are those that allow their users to
make money. The supply side, especially those people we usually refer to as “P-1”
(the frequent and most active, most loyal) users, are our bread and butter;
they pay the bills. So, the more money our users can make, the more money we
will make, especially if we get in the middle of the transaction.
Article written by Elias Chavando
Comments
Post a Comment