How Amazon, Airbnb, Etsy, Uber and other successful marketplaces resolved chicken and egg issue?

Etsy is one of the most inspiring online marketplace success. 

Their platform gives a chance to all indie, home-grown artists to connect with the art lovers who believe in independent arts and want to buy such products. More we read about Etsy, we feel good, connected and give it a try. 

But, was it easy for them? 

Well, no. 

To be successful, Etsy has to draw both the art manufacturers, suppliers, home-grown artists (service providers) and the art connoisseurs (buyers) to their platforms. 

Here comes a very old marketplace challenge. To lure one stakeholder to their platform, they need another stakeholder thriving there. Etsy founders knew this riddle and they took a smart approach. 

They scoured craft fairs across the country to identify the best independent artists.  They pitched them on opening up an online store on their site. Once Etsy had the first-tier artisans on the site, the next tier naturally followed them. 


Marketplace chicken and egg



This is how Etsy resolved the perennial marketplace problem, famously or infamously known as the “Chicken and Egg Problem”.

Every marketplace has stumbled upon this puzzle. The successful ones have carved out a plan to resolve the issue. Today, we will look into their solutions, their strategies. 

Will they help you? 

Maybe they will not give you a ready answer. We are hoping they will give you a lot of insight, helping you to understand your situation and definitely inspire you to find the best solution for your chicken and egg problem.

What’s this marketplace Chicken and Egg problem? 

What comes first? The Chicken or the egg? 

This old proverb has a beautiful yet perplexing correlation with building an online marketplace business. 

Every marketplace has two sets of players. The suppliers or the service providers and the buyers or the consumers. 

In a marketplace, the chicken and Egg problem occurs occur whenever the value proposition of these two separate groups is dependent on penetration in the other.

marketplace chicken and egg problem

In simple plain English, if there are no service providers on the platform, the buyers will not come.  And service providers will never be interested in selling their stuff in a platform where there are no buyers. 

So, where will you keep your focus? The customers or the service providers? 

Pretty irritating riddle. Right? 

Good news is that there are a lot of strategies, hacks available in the market practiced by the successful marketplaces. 

Let’s dive deep into them

Acquire service providers like Airbnb 

Soon they started, Airbnb founders realised that if they don’t have the supply of houses and apartments, people are not going to visit their platform. 

So, they had to figure out if there were no Airbnb, where people who need accommodation will look for rooms? The answer was Craiglist. But the Craiglist was not visually appealing and had other flaws.

Airbnb sniffed upon a chance to leverage. 

The founders figured they could do a better job of making apartments appealing than the online classified sites, but first they had to siphon away its customers from the Craiglist.  

They made software to hack Craigslist to extract the contact info of property owners, then sent them a pitch to list on Airbnb as well.

The strategy worked. With nothing to lose, property owners doubled their chances of finding a potential renter, agreed to list their details on a much better website and voila! Airbnb had a ready supply of homes with which it could attract customers.


There are opportunities, places to reach out to the service providers and draw them to your platforms. All you need is a little creativity and commitment to help them. 

Airbnb found a ready supply side at Craiglist. Where is yours?

Ensure excellent service providers like Uber: 

Uber had three cool strategies to resolve the chicken and egg problem…. 

  1. They focused on the supply side, the cab drivers. 
  2. They focused on providing quality supply side. 
  3. They tempted the passengers with the free rides. 

In their initial days, they cold-called professional taxi drivers and offered to pay them an hourly rate who tried out their new platform. This is how, Uber got their first lot of service providers who were professional, capable of providing great service better than random, rookie cab drivers.

marketplace chicken and egg issue

Also, to incentivize passengers, they offered free rides at local events in the tech-savvy San Francisco community and worked hard to make each experience the best ever can experience for them.  

The relentless focus on providing quality services has been Uber’s tipping point en route to massive success. 


Don’t just get the supply side first but make it the best suppliers. Good services keep customers happy who will willingly do the marketing for you drawing more and more customers to you.

Build a community to get 15,000 first users like Tinder: 

Dating app Tinder is another inspiration to bring two stakeholders in one place.

marketplace chicken and egg problem

They had a unique problem. To make it successful, they need both men and women interested and active on their platform. 

Interesting? More interesting how their founders resolved it. 

  • Whitney Wolfe, Co-Founder of Tinder, visited women’s communities, motivating them to register in the app, explaining how it’s cool and useful.

  • She did not stop there and gave presentations to male communities, showing the app that is full of those local girls, who already registered.

  • When Whitney returned from a trip, 15,000 first users have already used the application.

She would make sure her attendees are installing the app after her solid presentations. Rest is as they say history.


Tinder resolved the chicken and egg marketplace puzzle by reaching out to both the stakeholders, men and, women. They put all the efforts to make sure they install the app, give it a try to resolve the supply-demand puzzle.

Find an enterprise client: 

Want to kick off your marketplace journey with a bang? Find an enterprise client. The big-name, the massive brand value will work wonders for you. 

Instead of creating a large supply side with a bagful of small vendors, you can make twice an effect if you can rope in a big client. 

Gigs marketplace Upwork has made it possible

Enterprise clients often have lots of money to spend on the demand side. single contract can get you off the ground and running and focusing all your efforts on building the supply side and more product. 

Quora did walk on the same path too. 

When Adam D’Angelo & co. started, they invited the top brass to ask and answer on Quora. 

In the beginning, it was an invite-only site and hence only a chosen few got the opportunity to check out this website. These few were some pretty successful people in silicon valley (mainly the friends and friends of friends of founders). Their popularity and their exclusive voices rendered on Quora made this Q & A platform successful, mostly through word of mouth. 


Enterprise client is bliss for any marketplace. They take away the pain of generating multiple service providers for a marketplace platform. Their strong connection, great reputation will bring you into the limelight without much effort. Question is will you be able to fish one for your marketplace?

Be the single-player like Amazon 

Amazon has played this card with such elan that it has become a popular model among new marketplaces.

Amazon was a successful book retailer before a marketplace for everything. Jeff started with reselling books buying them from other bookstores and retailers. This allowed Jeff to create value for buyers without having any sellers participate in the marketplace directly. 

Once Jeff had a strong consumer base, he allowed other sellers to participate in the marketplace directly by listing their products and setting prices themselves.

marketplace chicken and egg



Indian marketplace giant Flipkart has treaded on a familiar path and earned success. 

OpenTable also kicked off with the Single Player strategy and acquired restaurants (supply) before it had dinner requests (demand).


This is a proven solution. You can capture the market in your initial days, be a single point of sale for your customers, create a strong buyer base and lure other vendors later to join your platform.

Promise to find buyers for your suppliers: 

This is a pious marketplace strategy executed supremely by Groupon. 

Groupon approached merchants and asked if they would be willing to sell a gift card at a discount as a way to attract new customers. The service was free and Groupon only took a cut of the sales, which limited the risk to the supplier. 

Now, when Groupon started showcasing tantalizing deals, customers flock to their website giving thumbs up to their strategy.

Early Groupon employee Shawn Bercuson is saying :

Many of the merchants expected that we were trying to get them to pay for something upfront, so when we said we only took a percentage of what we were able to sell and they’d never have to pay us out of pocket, they were pleasantly surprised. 


Like Groupon, you too can focus on existing vendors, pitch and show them the extra advantages. More exciting your perks are for them, the better are chances for you to resolve the chicken and egg problem for your marketplace.

Create a super niche and leverage that like Quora 

Let’s go back to Quora example again. 

By now, you must have known that when Quora kicked off, they invited all the big names of the tech field to participate in the platform. 

Even Mark Zuckerberg joined the site and asked a few questions. 

Since all these amazing people were asking questions and writing answers here, Quora got publicized through word of mouth and more intelligent people joined in.

Quora caught the fancy of a lot of youngsters, especially in the field of computer science, startups, entrepreneurship because they could get their questions answered by the specialists, that too for free.

No wonder, Quora quickly attained all the fame it was looking for and now the questions and answers are beyond just technology or startup. 


If you are struggling to break the chicken and egg puzzle, focus on creating a community or catering to a specific audience. Successful example- Dribble, Github.


Marketplace business is not easy. But some creative forces, the band of entrepreneurs, marketplace heroes have proved things can work if the first hurdle is crossed with success. 

As we can see, people have gone the length to find a solution. They have tried offline approach, built a community, given freebies, some even poached their supply side.

We are wondering about you? What about you? Are you finding the stories we have shared here inspiring and useful? We would love to know your strategy to resolve the chicken and egg issue. 

Will you share?


This article will never be possible without the below notes, articles. Thanks to all of them. 



marketplace chicken and egg

How to prepare yourself before launching a marketplace? Part-2

In our last blog, we shared many tips and some secrets on building a marketplace. We told you how to come up with a marketplace idea, validate it and fund your business. We also talked about choosing the best of technology to build your marketplace. Today, we will share how to market your marketplace. Sounds exciting? Let’s go. 

So, what is marketing? 

Well, there is a gamut of definitions, concepts, and misconceptions of marketing. You google a little and you will come across digital marketing, networking, community building, branding, Search Engine Optimisation, Influencer Marketing and what not.

We will not chart that course. Here in this blog, you will receive specific marketing solutions for your marketplace starting with 4 easy steps borrowed from marketing guru Seth Godin. Here they are- 


  1. Build an exceptional product:  The first step is to invent a thing worth making, a story worth telling, a contribution worth talking about.
  2. Make it a user-friendly solution:  The second step is to design and build it in a way that people will actually benefit from and care about.
  3. Prepare your story and spread the word:  The third one is the one everyone gets all excited about. This is the step where you tell the story to the right people in the right way.
  4. Be consistent with your efforts:  The last step is so often overlooked: The part where you show up, regularly, consistently and generously, for years and years, to organize and lead and build confidence in the change you seek to make.

Enough of theory. Let’s understand the nuances of each factor from its’ core. 

**Your product is your biggest marketing hack** 

Whenever we come across any successful product, we go gaga over their marketing efforts. 

  • Nike has spent xxxx on their advertisement.
  • Amazon has again pulled off another marketing success.

     And so on and on…

Seldom we try to look back and find out where all this has started. Their damn good product. Take any successful marketplace examples today. All they started with a unique, exceptional, useful solution. 

They invented a product, they offered a service worth trying, worth sharing, worth talking about. 

People use them, they get benefited, they resolve their biggest problem, they feel happy and they share with their friends. A community gets developed and the product/service reaches out to more people. 

Of course, they have put money in branding, worked out with many marketing strategies but they started by building a good product.

In the world of internet, today marketing is not just the copy, content or the social media hacks. Everything is marketing.

how to launch marketplace


Now, your product is one of the greatest marketing hacks. 

And when we are saying, your product is marketing. We are not just talking about building a damn good product but also treating customers wisely, help them with your best interest, support and might. Of course, every marketplace has to get new customers. At the same time, you have to focus your energy and resources on helping current vendors and customers get more out of your marketplace they have trusted.

Do you know the hidden hack here? 

“If you take care of your product and the existing customers, they will take care of your new customers.”

Bottom line, start your marketplace marketing with your product. Build it with all the efforts, make it exceptional, resolve your target-audience pain and let your product do the major share of marketing.

**Is your marketplace solution user-friendly? **

You can have an exceptional marketplace idea. But, if you don’t make it easy to use for your vendors and customers, then you will have a tough time. 

Take Uber for example. Their idea was fantastic and simple. But, product execution is also top-notch.

One who wants to book a ride

launch marketplace


Launch marketplace


One who will drive the cab



launch marketplace

Building a user-friendly solution, giving your users the confidence and the ease to resolve their specific solution is one of the challenges of the online marketplace. 

As you are building an online marketplace, here how you are enabling the solution is very much important. 

  • Your marketplace has to provide an easy solution to both the vendors and the customers. An easy solution to get their work done at your marketplace.
  • Vendors must be able to sell their products/services without much trouble. Your marketplace must provide all the solutions to them to create the best online shops inside your marketplace.
  • Customers too should be rewarded with all the best features to shop without much hassle.  

The design may vary based on what you are selling and to whom are you selling. That’s okay. But, your marketplace must be easy to find out the products, service details.

The purchase route should not be cumbersome which means if someone has decided to buy some stuff, they should be given the features to make it happen.

Here is a list of features you must be aware of and make sure your marketplace is covering… 

  • Page layouts
  • Comfortable and quick check-out pages 
  • Product/Service description pages
  • Coupons and discounts
  • Promotional elements like banners and popups
  • Shipping and payment information

Mobile-friendly content


E-commerce shoppers are so fickle, so opinionated and full of options, they can quickly abandon the cart. 

Here is a study that shows why people abandon cart other than because they aren’t ready to buy.

  • 35%: Didn’t want to create an account
  • 27%: The checkout process was too long or complicated
  • 24%: Couldn’t see or calculate total order cost up-front
  • 22%: Reported the website had errors or crashed.
  • 8%: Didn’t see their preferred method of payment
  • .5%: Their credit card was declined

You can get the full list here 

The above are just the tip of the iceberg. More your marketplace is mature, the more you need to create a user-friendly solution.

**Prepare your story and spread the word**

Now we will get into traditional marketing or let’s say widely popular marketing activities. 

Building an exceptional product and making it user-friendly is a half baked task if your target audience does not know about this. Here, you have to prepare your story or the messages that will take your online marketplace to them. 

To who? Here comes the puzzle. You are a middle man, have built a platform that will help vendors and customers to meet, do business or help each other to get certain things done. 

You have to create your message smartly that resonates with both of them and they decide to come to your place. At the same time, your story has to resonate with the listener—tell them something they are waiting to hear and are open to believing.

Something like Airbnb. They have started with “Forget Hotels” in 2007 and quickly changed to

“Book rooms with locals, rather than hotels. Travel Like a Human”

They have kept on changing their messages and until they promise the big words 

“Scaling human connection.” 

You gotta say, this does sound awesome and triggers many thoughts. 

The best thing is that they have supported their well defined and well-crafted message with their marketing content and social media campaigns. 

Let’s start with the website which says…

“Book unique places to stay and things to do.” 

The message is simple and has a direction. With Airbnb, you can rent a place, stay there. But that’s the half of the story. While staying there, you can also go to places and do things. Now, this is the trigger! 

Airbnb has gone further and created social media campaigns to support their  “Scaling human connection.” statement. 

Let’s have a look.

Launch marketplace

A beautiful story of one of their hosts, Pat Coldir on the American Independence Day. 

launch marketplace

Another welcoming post by Airbnb sharing the story of Marko, an Airbnb host and his amazing love for the local community and the guests

launch marketplace

A great post reminding the heart-melting message of Airbnb. The message thanks to their hosts and the traveling spirit of the guests also paying tribute to the “Human Connection”.

Hope, by now you have realised what do we mean by “ Prepare your story and spread the word”. Once you prepare your message, you have to keep sharing them. 

Often, we get tangled into marketing jargons and gimmicks too much. We start concentrating on SEO, Social Media, Content Marketing, Influencer Marketing, Network Building etc. Maybe you need them, maybe you don’t need all of them together. Maybe just one or two pieces of them can do the magic of them. Maybe you can kick start a new marketing strategy. 

But the secret sauce is your story. What are you saying to your audience and how are you saying! 

The way Airbnb is doing. They have nailed their marketing messages so well. Now, they have the comfort and the flexibility to play around any social media they prefer. 

 **Be consistent with your efforts**

This one is easy to explain but tough to execute. Coming with a great product, retaining customers, making them happy, reaching out to the new customers are great, great start. 

But, what if sales are a little disappointing and you start to feel the pressure. Will you be able to continue your marketing efforts? Will you be able to show up, regularly, consistently and generously, for years and years and sharing your message and convert attention into sales? 

All big players are doing it correctly. Their marketing is a true effort and not some gimmick. They want to build their audience and serve them for long. Do you have the same intention? 

If yes, here is a list of some handful strategies after a quick course marketing fundamentals. 

**Solving the Chicken and Egg problem of marketplaces** 

Most of your marketplace marketing exercise will be applied to resolve this puzzle. 

Chicken and Egg problem is the age-old marketplace problem, just like it’s context. 

It’s the conventional supply and demand issue. Look, your marketplace needs both the vendors and buyers. Now when you are marketing your marketplace or say, trying to gather more people there, who will you target first? Vendors will not be interested in your marketplace if there are no buyers and also the alternative options

Let’s see how the successful marketplaces have resolved this issue.

Build community — If you can establish a healthy and vibrant community on either side of the equation, you’ll end up with the potential for a great marketplace. A great example here is the Stack Overflow

It’s a question and answer site for professional and enthusiast programmers. The platform has been embraced by both the parties, the ace programmers and the aspirational ones who are struggling with programming. 

Offer Tools — If you can get a lot of people (Vendors)  to use your free tools, then you’ll have a highly engaged user-base on one side of the equation. Amazon is known for its vendor friendliness. Their Seller University is a stellar hit among the vendors. Have a look –

launch marketplace


Find physical aggregators: There are various aggregators in the real world. You have to be smart enough to find the opportunity to cash them in.  College campuses work great for this. Word spreads lightning-fast and student labor is crazy cheap. Do you know dating app Tinder got their first set of users from college and high school circles?  They acquired more than 10,000 new users by getting sorority girls and fraternity boys to sign up for the app.

The corporate community is also a great place to start with. Find large office buildings and convince the HR manager that your service is so cool that they should email the entire company about the offering. Now you have a trusted recommendation to try a service and you get free distribution to all employees. You may get onto the field and directly approach them or you can play with Facebook and LinkedIn ads.

Find an enterprise client: It’s an effective shortcut but has to be dedicated effort. Enterprise clients often have lots of money to spend on the demand side. Sweet. A single contract can get you off the ground and running and focusing all your efforts on building the supply side and more product.

Scrape listings:  For example, scrape a whole bunch of real estate listings from Craigslist. Then put up a modified version of that listing on your website with a better UX. The problem is you can’t actually connect the supply and demand since you don’t own the supply yet.  But you’ll get damn good conversion rates if you say, “Hey supplier, good news. I have a customer for you, you just need to sign up for free here.”

Do you know who has actually done it? Airbnb. They made great use of the Craigslist database and jump-started their marketplace journey with a bang. It’s a famous story. If interested, read here 

Focus on geography:  This is kind of obvious. See every local marketplace ever. Ola, Alibaba and maybe you are the next. 

There are tons of marketplace success stories on cracking the Chicken and Egg puzzle. We have shared some of the basic rules here. They are inspiring and will guide to make a move and found your hack.

**Pleasing the Google** 

Google is such a big tempt for all marketers and any marketing rulebook. While we are writing this blog, already 4,859,469,467 searches have been made. Data says Google receives over 63,000 searches per second on any given day. Out of them, 15% of all searches have never been searched before on Google.

And  88% of consumers research products online. This is a massive opportunity to reach out to the audience and convert them. The art of conversion is a big subject and we are leaving that for another day. Today, let’s just focus on some quick SEO tips. 

Building an SEO friendly marketplace:

SEO is an abbreviation of Search Engine Optimisation. If you are new to this term, here is a no-nonsense explanation. 

Today we search on the internet for different purposes. We need information or we want to buy something. 

Now whenever we search on the internet, we come across results aka websites. If you have observed your search actions, you don’t go beyond page 1 or page 2. So, the websites which rank on the first page of Google or any other search engines have great advantages to reach out to their target customers and convert them. 

The art of talking up your website/ digital storefront against your business-related search queries is called SEO or optimizing search engine for certain dividends. 

Without an SEO friendly website, you can’t win the competitive SEO race. Here is a quick look-

Now, the question is what kind of searches are made on Google? If you are banking on Google and ready to practice some Search Engine Hacks or SEO, the searches must be aligned to your business. 

We dig some data and found out that 35% of product searches start on Google.

  • Must be mobile-friendly. According to official Google statements, more than 81% of smartphone users access the Internet on their mobile devices
  • Your website should load quickly across all devices and browsers. 
  • It has Unique titles and Descriptions for all pages
  • Well formatted URLs – URLs
  • It has unique content. Duplicate content is a curse for your marketplace 
  • Includes images that are optimized for search engines
  • Pages have a meaningful structure 
  • No keyword stuffing but smart keyword spraying

So, while choosing your online marketplace builder, you have to pick one who can help you to lay the foundation for best of SEO practices

For example, a lot of your SEO success will depend on the product/service title and descriptions. Like, “polo t-shirts” or “running shoes”. Now if you don’t provide spaces and support to your vendors to add those descriptions, it will be tough for you to go further in the SEO game. 

Once, your marketplace website is live and you are helping your vendors to make their product descriptions SEO optimized for better results, you can go for bigger success.

Here is a quick framework 

  • Determine what customers are searching for in Google, as related to a problem that you are solving. An example: Cheap hotels for salesmen who are always in travel mode. Maybe your hotels have cost convenient laundry room, free meeting room to host their client, complimentary takeaway breakfast or brunch or anything that helps them.  The more ideas you have about your customers, the better your chances of success. 
  • Now some content marketing exercise. Publish an article on how you are solving a particular problem while demonstrating your product as the ideal solution. Maybe you/ your vendors are offering some attractive packages for the salesmen of big companies who are always on the fly. 

Promote that article until it begins ranking on Google for the topic. You have to select the keywords that your target audience searches with. If we continue with the given example, it would be “Hotels near Airport” or “Hotel at ……….. (some specific place), “Hotels with takeaway breakfast for your salesmen”.

The more you are targeted, the better the chances of results. While promoting, carefully select the channels. If it’s social media, the go-to platform would be LinkedIn and Instagram. But, don’t assume and choose after thorough research whether your audience is there or not.

  • Receive a perpetual stream of visitors from Google; all of whom may, potentially, become customers after reading about our product. If you can make that happen, enjoy word-of-mouth publicity, as your “educated” customers tell others how your product solved their problems.
  • Later, rinse and repeat the tactics and keep treating your audience with targeted, well-researched content.

**Afterword and further reading** 

So far we have discussed the power of marketing doing in right away, not spamming your audience and building a community. The network effect is massive in the marketplace. If you have started marketing for your marketplace, you should start focusing on building your community rather than just running wild around conversion. 

And when your marketplace has really started giving you good results, you would like to apply some growth hacks. Here is a list to start off- 

launch marketplace



All the best!




launch marketplace

How to prepare yourself before launching a marketplace?

The online marketplace is a lucrative business model now. We shop from Amazon, commute through Uber, hire resources at Upwork, Fiverr, stay at Airbnb. The adaptation of the marketplace model across the verticals and their huge popularity tell about the meteoric rise of the marketplace model.


how to build a marketplace

Most popular online marketplaces worldwide in 2018, based on gross merchandise value (in billion U.S. dollars)


Truth is, money is really floating around the online marketplace. Revenues for marketplace platform providers across the globe are predicted to more than double from $18.7 billion in 2017 to $40.1 billion in 2022, driven by the sharing economy. Source

In a nutshell, an online marketplace can give you a world of opportunities to set up a sustainable business if done right. 

So, what are the factors you should consider before launching an online marketplace? 

We have dived deep into this question to identify them. In our series of blogs, we will cover them in the most comprehensive way. 

Hope it helps you to prepare you for your marketplace.

How good is your marketplace idea?

how to build a marketplace

Marketplace industry is highly competitive. See how Uber has to compete with the OLA and Lyft. Almost all the sectors have some popular marketplaces and their copycats or similar ventures with few tweaks. 

Amazon, eBay, Walmart are the retail juggernauts. Airbnb has revolutionized the lodging industry. Uber and its’ competitors have a strong grip on the cab booking marketplace. Upwork is the leader of the Freelance marketplace. And so and so… 

It does not mean that there is no opportunity for new ideas.

Take Folksy as an example. 

Though Etsy has been really popular among the handmade goods and craft supplies,  British marketplace Folksy has 250,000 sellers to the site every month, making it a worthwhile option for sellers of handmade goods and craft supplies.

Flubit is another great example of a successful and gutsy marketplace. Dubbed as the British alternative to Amazon, it’s gaining popularity among the retailers.

As the people are leaning towards digital media more and more, any viable marketplace idea has a great possibility.

Here comes the question, how to vet your marketplace idea? 

The best option is to try out the MVP or Minimum Viable Product model. Here are the steps- 

Build quick and rough products with bare minimum features. Here your marketplace idea will have all the functions and features albeit the polished look. But, that’s enough. Now your job is to connect with your target audience with the MVP model of your marketplace and collect their feedback.


Are both the vendors and the buyers liking your new idea? Are the vendors comfortable while uploading their products or do they have the right payment features? Is your marketplace a comfortable shopping place for your buyers? Do you have all the features that you need as an admin?


Study how people are interacting with your product? More you dive deep and collect the minute of feedback, better for you to vet your marketplace idea.

Once you collect the idea, you review and iterate your marketplace. Make it stronger with the addition of a specific feature if there is a demand for it. And once all this is done, just launch your marketplace.


Search for the investors:

how to build a marketplace


Once your idea is validated, your online marketplace is ready with decent traffic and you have a handful of vendors and customers who have started showing interest in your offering, you must feel the hunch of polishing your marketplace, add more features and grow it.

But, do you have enough money to check all the boxes? 

You might have started with your own savings and now that’s not enough. So, you need more bucks. How will you manage? The most viable option is to start looking out for investment options. 

Good news! 

Online marketplaces have always acquired large-some funding from investors.  Even if we keep aside Amazon, Flipkart, Uber, Airbnb, the emerging marketplaces are receiving a great amount of investment.

1stdibs, the high-end online marketplace, just nabbed $76 million in Series D funding.

Online manufacturing marketplace Zetwerk raises $9M from Accel, Sequoia.

And here is a quick look at the big players.


Uber Is Said to Aim for I.P.O. Valuation of Up to $100 Billion 

Airbnb has sold some common stock at a $35 billion valuation.

Now not every marketplace can attain the stage of Uber or Airbnb but the investors are interested in marketplace startups which have the potential to offer value and generate revenue in the long term.

Here lies the opportunity for you where you can pitch the investors.

Now investors come in many shapes and diverse budget. A quick guide here-

Accelerator, Incubator or Mentoring program:

They are not the typical investors but a blend of mentors and investors where they will guide you, help you to make your product better with limited financial support. 


Crowdfunding works if done right. It’s simple. You release your product before the world and ask them to contribute. You collect all whatever amount you are getting and keep growing. It’s not a sudden stash of cash and you need to be very calculative and strategic to let the cash flow in your favor. A lot of marketing goes here of course. But, you can leverage some dedicated platforms like Kickstarter, Indiegogo and GoFundMe. Some of these allow companies to raise funding in exchange for equity.

Angel Investors

One of the most popular investment models is the angel investment. This investment is done by your family. It’s a safe investment compared to the others. But often angel investment comes as a small to medium amount with more freedom to your projects.

Venture Capital

Do you have a disruptive marketplace idea and you need a large capital, approach venture capital? Venture capitalists look out for those companies that have significant differentiation from its competitors. So, make sure your marketplace idea is “Disruptive” enough, changing the way businesses operate.

Getting venture capital funding is a long road that requires a lot of hard work. In the case of venture capital funding you do not pay any interest for the amount received but rather a stake in the company is offered to the investors.

3. How will you pitch your idea to the investors?

Among all the options, venture capital seems most lucrative. But, we have already told you it’s pretty tough to extract money from the venture capital. You have to visit them, pitch them and get things done.

How will you prepare for the tough competition? 

So, we have studied a lot of marketplace pitch decks. Here is a quick, easy and effective formula that really works-


  • Talk about the challenges that you are going to resolve
  • Declare the changes that your solutions are offering 
  • Provide evidence of the market validation 
  • Talk about your competitors or the existing solutions available in the market 
  • Talk and your USP or competitive advantage
  • Show your business model 
  • Give some stats of your present performance if you have already launched the marketplacehow to build a marketplace

Airbnb Pitch Deck starts with a simple yet powerful promise

how to build a marketplace
And then quickly talks about the problem they are addressing

how to build a marketplace


Without wasting any time, they talk about the solution, they are bringing on the table

how to build a marketplace
They prove how powerful their solution with market opportunities

how to build a marketplace

They knew data is the king and they used them with perfection


how to build a marketplace

Then they smartly give glimpses of their actual screens

how to build a marketplace

They talk little about their business model as well and promise to earn revenue by a definite timeline

how to build a marketplace


With a quick snapshot, Airbnb presents its competitors

how to build a marketplace

They were confident enough to talk about their edge as well


You can have a complete look at the Airbnb Pitch Deck here. We are not saying this is the perfect pitch deck but definitely a template worth trying. 


Pro tip 001: While making any template, always remember, to make it simple, direct and powerful enough to highlight the changes you are bringing.

Pro tip 002: Make sure you are giving enough stat and evidence to back your marketplace success. Investors will not flow cash behind you if they don’t foresee their profit. Look, how Airbnb talked about the revenue to earn within a specific timeline. Make sure you are also projecting serious data like that.

4) How much investment you should take?


Tough call and a lot of mathematics go here. There are a lot of variables. 

The simple answer is the absolute minimum amount you need to make your plan work. But, that’s a vague answer.  Some entrepreneurs try to start with a huge number, hoping they can negotiate and close on a smaller one, while others understate their requirements, in hopes of getting their foot in the door with an investor.

Neither of these strategies is a good one, as both are likely to damage your credibility with potential investors, even before they look hard at your plan. Here are the parameters you should use in sizing your request—and be able to explain in justifying your request to investors:

Here is a list of models you can consider- 

Implied ownership cost:  If your company is at an early stage and has a valuation under $1M, don’t ask for a $5M investment. Rather you can validly ask for $200K to $300K, and workout a stake dilution which is comfortable to both of you.

Type of investor:  Angel investment groups usually won’t consider a request over $1M, while venture capitalists won’t look at anything under $2M. So, know your priority, what needs to be done at this stage and have a solid understanding. Then you go for the investment to the right investment group.


Company stage:  If your company is still in the idea stage, you have no valuation, so size your investment request on the basis of goodwill that you have with your network, and your past business track record if you ever had any. Angels might be interested during your early stage if you have a prototype, but VCs won’t bite until you have a product, customers, and revenue.

With a mere idea, it is challenging to get handsome funding. So, plan well and have a clear idea of how much funding you require here.

Keep a buffer time: Calculate what you need, and add a buffer. The safe bet would be to do your financial model first with the volume, cost, and pricing parameters you have in mind. 

See where your cashflow bottoms out. If it bottoms out at minus $400K, add a 25% buffer, and ask for $500K funding. The request size must tie into your financials to be credible.

There is no perfect model in deciding how much investment you should take. So, always understand how much do you need and have a clear idea of your burn-out cost. Now mix and match and there you will have a clear idea on how much you should take as an investment.

5) What an investor would expect from you?



Tricky question but most of the investors would not track your daily or monthly business performances. They expect the smart utilization of funds. They can go for the equity or a return of investment. 

It’s better to arrive at a mutual timeline which will help both of you to do their job without any complications.


6) Building a marketplace

how to build a marketplace


Now comes the real question. 

So, you want to build a marketplace. That means you want to pull off a lot of features, roles, and responsibilities for you as the admin, vendors and the buyers. You need a robust, flexible and adaptable foundation. 

For example, you have to provide diverse payment gateway options to the sellers. And at the same time, admins need flexible yet effective systems to work out their revenue model. 

This is just the tip of the iceberg. A successful online marketplace is built of myriad features equally distributed across admin, sellers and even customers.

WC Marketplace provides all the features and more.  

To start with it’s built on WordPress which means it can turn any WordPress website into an online marketplace. 

As it’s on WordPress, you have already got a strong foundation at the very core of your marketplace. WordPress is flexible, easy to use and loaded with features which are getting better and better with every new release.

And also, 34% of the web uses WordPress, from hobby blogs to the biggest news sites online. And also marketplaces. Many of them use WC Marketplace what we have made, a major contribution to the massive WordPress community. 

Now, let’s talk about how you can build a marketplace on WordPress. 

Enter WC Marketplace. Here is a quick look at the feature-set 

Making an online marketplace with the WC Marketplace is so easy. If you already have a WordPress website, you can install our plugin and get started. 

We are continuously upgrading our feature-set to improve the marketplace management experience of the admin. Our product team is constantly working on new features to give you the best in the marketplace solution. 

Recently, we have introduced WCMp MANGOPAY Gateway. It makes payments easy for your users by allowing them to pay in multiple currencies and with various payment methods.

You can know more about the WCMp Mangopay here 

We know how the marketplace of the marketplace solutions is changing considering the new evolution of the marketplace industry. New ideas are coming along with the new players forcing even the bigger players to come up with the new service offerings. 

Uber Has Launched a Rideshare Submarine, and Yes, It’s Called scUber where Aussies can see the Great Barrier Reef up close.

how to build a marketplace

Now every new marketplace feature comes up with a new or revamped set of facilities for the admin, vendor, and the buyers. People look at the jazzy features marketplaces are bringing but nobody looks at the technology behind it. 

Here technology has to play a big role here. We understand the pressure that the marketplace owners are under and this is why we have developed WCMp v3.4 with a bagful of advantages for the vendors, and the admins. 

You can sneak a peek here 

This is just the tip of the iceberg of the technology that the marketplace requires. It’s always evolving and you should start with something robust, flexible and incredible at your hand.

Now we have got a pretty good idea on how to prepare your marketplace. We have discussed having a solid idea, how to validate it, the massive need for funding and how to strike a good deal. Here you have also come to know one of the most convenient technologies of building a marketplace. 

We are hoping if you are new in the marketplace business, you will have a solid idea from this blog. Of course, this is not well. We have not discussed the aspect of marketing and the successful application of many tricks to promote your marketplace. In our next series of blogs, we will talk about them at length. Keep an eye on this space for more.


how to prepare for your marketplace