Marketplaces · Business Strategy

How to prevent false positives in a marketplace?

Roger Wu co-founder at cooperatize, native advertising platform

July 6th, 2015

A while back, some Uber execs were caught ordering rides on their competitor's platforms and then canceling them.  Uber's own system charges you an amount if you cancel after a certain amount of time.  What can you do if you operate a marketplace business to ensure that the "demand" side (the side paying) is serious about utilizing the supply side's services?  Charge a deposit?  Ratings, reviews?  

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Neil Gordon Board Member, Corporate Finance Advisor and Strategy Consultant

July 6th, 2015

I suspect this has been a brick and mortar problem for 5,000 years. Do you allow for returns (i.e., cancellations), charge a fee, or charge full price? Each situation needs to be evaluated in order to optimize.

Mary Haskett Co-founder & CEO at Tactical Information Systems

July 8th, 2015

To prevent this kind of thing you actually need to track reputation.  With a reasonably strong online identity mechanism, true reputation can be tracked and bad actors can be kept out of a system.  Without reputation, people are effectively anonymous and will behave accordingly. 

To put this in another context, imagine you have a grocery store. One of your competitors sends an employee into your store to knock cans off your shelf.  You kick him out and tell him not to come back.  But he puts on a cap and comes back.  Each day he puts on a different hat and tries to come back.  In this case, it would be easy to keep him out of your store. 

It's not easy online because we don't have strong online identity and without that, you can't have reputation.

Karen Moon Entrepreneur

July 8th, 2015

Hi Roger Wu! Miss you!