Customers · Growth

What is the best approach or method in acquiring a two side user model for a new startup platform?

Danny Ristevski Startup Entrepreneur - looking for a co-founder/team to disrupt the print media industry

September 11th, 2017

I'm interested to get peoples views on the best (not necessarily the fastest) approach to acquiring users on a new startup platform. Using a classic marketplace platform example like ebay that requires both sellers and buyers, its hard to get one without the other in large numbers. For instance, no one is interested in selling goods on a new site with few buyers, and vice versa, no one is interested in buying on a new site with few goods on sale.


What's the best approach to grow a two-sided customer acquisition model?

Nikhil Gupta Product Head | Intrapreneur | Tech Innovator | Product n Growth Expert |

Last updated on September 15th, 2017

Market places yes are two side markets or multi side it follows the principle of network effects or what we call the flying wheel effect.




Yes it's a chicken and egg problem. But here's some guide lines, post your need gap analysis that made you feel the need to create a market place:




1. Elasticity: Who is more inelastic or in need, if supplier is more in elastic , that means he does not have many platforms like you who offer say for market connect or payment terms , commission , etc then build the supply side first. If buyer is more inelastic build buyer side.



If both buyer and supplier are elastic you need to figure out the degree on whose more. Aggregate the in-elastic side first.




2. Iterative: But, You must constantly tease elastic side say with the aggregated other side, don't wait to boil the ocean. if buyers are elastic and have choices to move on don't worry you still don't want to aggregate a lot of suppliers first to show it to the market.




3. Deeper hooks: Create hooks on both sides initially so they stay beyond transaction. Some times more than choice it's the depth of offering n expertise than breadth.


Even if say suppliers find less buyers or buyers find less choice but hand full of unique , selected n differentiated offerings might work based on your need gap analysis.


Say for supplier a automated m backward integrated supplier onboarding which seamlessly ties with their sku -erp, billing n even crm system to do target campaigns can help to make suppliers stick for deeper value which the platform offers in their day to day operations beyond sale.



Similarly on buyer side see what's deeper than just buying , is it added warranty, after sales, increased credit, personalization of product buying n matching etc etc.




The point is identify hooks on both sides so they stick to you even if initially sales in less. Bcoz they get backward integrated value or forward integrated value beyond just sale.


4. You don't have to boil the ocean , phase it let it be light. Yes it takes time . So be it.


5. Co-create: Build n design experiential products n services along with your suppliers and customers . Make them part of product development stage. Create idea sourcing , product advisory council n customer advisory boards it helps when stake holders are co creators they evangelize the Eco system n are ready to be part of it.



,Market places yes are two side markets or multi side it follows the principle of network effects or what we call the flying wheel effect.




Yes it's a chicken and egg problem. But here's some guide lines, post your need gap analysis that made you feel the need to create a market place:




1. Who is more inelastic or in need, if supplier is more in elastic , that means he does not have many platforms like you who offer say for market connect or payment terms , commission , etc then build the supply side first. If buyer is more inelastic build buyer side.



If both buyer and supplier are elastic you need to figure out the degree on whose more. Aggregate the in-elastic side first.




2. But, You must constantly tease elastic side say with the aggregated other side, don't wait to boil the ocean. if buyers are elastic and have choices to move on don't worry you still don't want to aggregate a lot of suppliers first to show it to the market.




3. Create hooks on both sides initially so they stay beyond transaction. Some times more than choice it's the depth of offering n expertise than breadth.


Even if say suppliers find less buyers or buyers find less choice but hand full of unique , selected n differentiated offerings might work based on your need gap analysis.


Say for supplier a automated m backward integrated supplier onboarding which seamlessly ties with their sku -erp, billing n even crm system to do target campaigns can help to make suppliers stick for deeper value which the platform offers in their day to day operations beyond sale.



Similarly on buyer side see what's deeper than just buying , is it added warranty, after sales, increased credit, personalization of product buying n matching etc etc.




The point is identify hooks on both sides so they stick to you even if initially sales in less. Bcoz they get backward integrated value or forward integrated value beyond just sale.


4. You don't have to boil the ocean , phase it let it be light. Yes it takes time . So be it.


5. Build products along with your suppliers and customers . Make them part of product development stage. Create idea sourcing , product advisory council n customer advisory boards it helps when stake holders are co creators they evangelize the Eco system n are ready to be part of it.



Market places yes are two side markets or multi side it follows the principle of network effects or what we call the flying wheel effect.




Yes it's a chicken and egg problem. But here's some guide lines, post your need gap analysis that made you feel the need to create a market place:




1. Who is more inelastic or in need, if supplier is more in elastic , that means he does not have many platforms like you who offer say for market connect or payment terms , commission , etc then build the supply side first. If buyer is more inelastic build buyer side.



If both buyer and supplier are elastic you need to figure out the degree on whose more. Aggregate the in-elastic side first.




2. But, You must constantly tease elastic side say with the aggregated other side, don't wait to boil the ocean. if buyers are elastic and have choices to move on don't worry you still don't want to aggregate a lot of suppliers first to show it to the market.




3. Create hooks on both sides initially so they stay beyond transaction. Some times more than choice it's the depth of offering n expertise than breadth.


Even if say suppliers find less buyers or buyers find less choice but hand full of unique , selected n differentiated offerings might work based on your need gap analysis.


Say for supplier a automated m backward integrated supplier onboarding which seamlessly ties with their sku -erp, billing n even crm system to do target campaigns can help to make suppliers stick for deeper value which the platform offers in their day to day operations beyond sale.



Similarly on buyer side see what's deeper than just buying , is it added warranty, after sales, increased credit, personalization of product buying n matching etc etc.




The point is identify hooks on both sides so they stick to you even if initially sales in less. Bcoz they get backward integrated value or forward integrated value beyond just sale.


4. You don't have to boil the ocean , phase it let it be light. Yes it takes time . So be it.


5. Build products along with your suppliers and customers . Make them part of product development stage. Create idea sourcing , product advisory council n customer advisory boards it helps when stake holders are co creators they evangelize the Eco system n are ready to be part of it.



Market places yes are two side markets or multi side it follows the principle of network effects or what we call the flying wheel effect.



Yes it's a chicken and egg problem. But here's some guide lines, post your need gap analysis that made you feel the need to create a market place:



1. Who is more inelastic or in need, if supplier is more in elastic , that means he does not have many platforms like you who offer say for market connect or payment terms , commission , etc then build the supply side first. If buyer is more inelastic build buyer side.


If both buyer and supplier are elastic you need to figure out the degree on whose more. Aggregate the in-elastic side first.



2. But, You must constantly tease elastic side say with the aggregated other side, don't wait to boil the ocean. if buyers are elastic and have choices to move on don't worry you still don't want to aggregate a lot of suppliers first to show it to the market.



3. Create hooks on both sides initially so they stay beyond transaction. Even if they find less buyers or buyers find less choice but selected n differentiated it works. Say for supplier a backward integrate supplier onboarding with their sku -erp, billing n crm system.



Similarly on buyer side see what's deeper than just buying , is it added warranty, after sales, etc etc.



The point is identify hooks on both sides so they stick to you even if initially sales in less. Bcoz they get backward integrated value or forward integrated value beyond just sale.



4. You don't have to boil the ocean , phase it let it be light. Yes it takes time . So be it.



Shahzad Atta Director Development, Techliance (@ShahzadAtta). I provide technology resources for business sector.

September 11th, 2017

Danny,


I would start with targeting a limited geographical area. Get sellers on board first by negotiating with them (Offer free listing or incentives for posting on website). Do staged release (beta, available in selected area). If the model is successful in that limited area, you can start expanding. Social media and Press shall be used to create a hype.. A sense of losing out on a great deal drives people to take action. So limited time deals and offers are a good way to attract buyers.

Guy Brockless Head of Growth Marketing @ Creatella Venture Builder - We launch startups

September 13th, 2017

A very competitive market but I'd focus on a few things:


1. Niche down

You can't target everyone at once. Limit your marketing efforts to a segment of the market. This may be geographical, socio-economic or interest based. Try to identify segments who are under-served or require niche specific functions, features or services - eg. offering niche specific product filtering or searching


2. Prioritise the side that has the most to gain and leverage them

This will most likely be the selling or service providing side. Target existing sellers with cold email or paid marketing and offer them your platform as a new sales channel, focusing on potential for increased revenue. Make the onboarding as simple as possible and offer them features or benefits they aren't getting elsewhere. eg. advanced reporting and analytics dashboards, shipping service integration and label printing etc


3. Incentivise

Offer discounts, free shipping, affiliate programs and referral bonuses. Anything you can to make users and sellers choose your platform over other existing ones. However, be aware that this will only work to acquire users, this will not keep them coming back. Ultimately it's the quality of the product, the user experience and the size of the community that brings people back. Make sure you:


4. Focus on retention & LTV

Avoid fixation on vanity metrics such as traffic and new user acquisition. Measure lifetime value and perform regular cohort analysis segmenting by marketing channel if possible and look for increases or decreases in key actions. These could be purchases, referrals or simply logging into the platform. Measure them for each cohort 1 day, 1 week and 1 month after onboarding, and further if necessary - adjust based on business model.


NB. At Creatella we’ve worked with 20+ startups to craft their ideas into MVPs, bring them to market and achieve traction. We build and launch our own products and have extensive experience in entrepreneurship, tech development and growth hacking.

Arpit Gupta Start Up , looking for like mind android/iOS developer to work as a partner !!!

September 12th, 2017

This is a typical Chicken & egg problem with no definitive solution to it . You have to be balanced in your approach . Study the market conditions where you operate to get the best traction . The best which I can think of is start your marketing at the grass root level first rather than starting from top(this approach may vary depending upon the target audience). Hope this will help !!

Mark FCSI Former CEO at Gulf International Bank UK

September 13th, 2017

Suppliers first, limited geography.

Why?

1. Look at history and imagine a village marketplace. If there were a bunch of demanders in a town square it would take a while for suppliers to realise and start to show up. Or worse still, if one person shows up and there are no stalls there is no market. If suppliers are there with stalls and no demanders show up, the suppliers are incentivised to be evangelical about the market and tell their friends to spread the word. How evangelical depends on the nature of the beast and whether there is an incentive to do it.

2. In the early days you should take a hands on approach and actively handhold your suppliers. Doing that locally is easier. Use that limited impact space to prove your process, refine your tech and work out what scales. Then you branch out.

I am doing it this way myself - so far so good!

Hope that helps.

Aji Abraham

September 12th, 2017

In most two sided marketplaces you need suppliers first. In many cases number of suppliers would be fewer than buyers. So you can find getting few suppliers through personal channels before getting buyers.


We just launched a two sided marketplace for home cooked meals. We launched it in a small college town initially. Through flyers, meetups, facebook etc.. recruited 25 potential suppliers. Talked to each of them in person and told them this is the first market and we are launching. Internally we decided we would not let buyers into the app until we have at least 10 active suppliers. Once we have 10 suppliers, we start hunting for buyers for these suppliers. Once thats done, replicate the process in 2-3 smaller cities. Then large cities.


Borna Almasi

September 15th, 2017

I've started a couple marketplaces myself and I can tell you that this is the best thing I read in that time.


Top 3 tips:


#1 Focus on as small a category as possible

I didn't listen to this advice originally, but IT IS ABSOLUTELY CRUCIAL to your success. If your network has different categories, you better double down on a single category at a time. If your startup is also location based, start with one city. The reason for this is that each category/location will have its own unique marketing channel/message.


#2 Your suppliers are your biggest asset

You need suppliers (sellers) on your platform because typically they stick around longer than your buyers. There are multiple tactics for getting suppliers but it all comes down to this:


Are you providing enough value for your suppliers to join your network?


Why on earth would a supplier join your network? You must give them something. Whether that's a free tool to help them with their business, or a customer. One hack I did was advertise to get the customers, then do an email outreach to suppliers to get them to respond to that customer (if they acted fast). You'd be surprised how well that works.


#3 Try many marketing channels as you can and fail fast

Read the book Traction to learn all about different ways of getting customers. It's important to run many short experiments to determine what works. You want to figure out what works as fast as possible and don't waste your money on things that "Kinda work". Your company should not be a half-living-half-dead Zombie.