Six Real World Lessons from Prototyping Online Marketplaces

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In the last couple of years I’ve been involved in prototyping and piloting two online marketplace ideas with real customers which were developed from scratch. To use the current vocabulary these were run using lean start-up principles of rapid iteration to answer critical business questions through real world experience.

Here I’ve captured a few of the many things I learned from that process as we iterated towards a working business model. To be clear what I mean by online marketplace – an online platform that sets up transactions between buyers and sellers of services (in this case)

1.     You don’t need some fancy-pants bespoke website

 What we found in prototyping these marketplaces is that you can actually get quite a long way using off the shelf platforms. I’d estimate that we were able to deliver 85% of the functionality we needed building on Shopify and Squarespace.

For the purposes of checking out whether we could convert demand this was enough.

I should say that had we wished to progress to user posted listings (so like Airbnb where property owners create their own listings) this would have been harder. There are some add-ins available that claim to facilitate this on Shopify. However, for prototyping purposes we could replicate this aspect.

2.     It’s a two-way street but always go supply first

 In a system that matches buyers and sellers you need both in the end to succeed. So where to start?

My answer to this, based on what I learned, is that you definitely need to start on the supply side. Whilst it is not true to say that if you build a better mouse trap the world will beat a path to your door, it certainly helps to have a great product or service that is not readily available elsewhere. So it is worth investing the time and effort first on this side of the equation.

3.     You can’t be good at everything

When we started out creating an online experience marketplace we tried to do it all and have it all. Eventually we realised that actually a big part of what we were trying to do was already being done by Airbnb and that their user experience was always going to trump whatever we could develop on a shoe-string hands down.

So we had to find the flexibility to swallow the fact that what we’d been doing to date needed to be parked and we needed to enter into a partnership with Airbnb. Which is what we did.

This taught us about having the humility to recognise when other people can do things better, irrespective of your investment in your own solutions, then you can and should find ways to partner with them.

4.     Seek insight through action

We’d done quite a lot of desk research and conventional research to validate the opportunity in both these cases but what we had not done is tried it in practice.

Once we did the learning started to accumulate rapidly. The real world soon came up and “hit us in the face” to quote Mike Tyson. Initial prototypes not so much failed as did not set the world alight and we found ourselves working quite hard for minimal success.

The tricky question then is do we keep going, or do we call it and move on to try something else. Understanding the “why” behind the performance was not always clear. Failure is easy to call – partial success much harder. 

5.     It’s not all about the technology – there’s humans in there with real needs

A key to unlocking one of the marketplace projects I worked on recently was when we were able to balance up the needs of the people on the supply side of the equation with the people on the demand side. That might sound obvious but in the real world it is tricky to achieve.

There’s a temptation when you are running a start-up style project like this to assume that technology is always the answer. The lower costs and scalability of technology led solutions are seductive.

The aha moment came on one of the recent projects when we discovered that the people on the demand side of the marketplace were quite fearful and actually what they valued more than anything was the chance to talk to a human about the issues they were facing before being put in touch with some helpful solutions.

This had quite big implications in terms of its impact on the operating model and the cost model, but it turned out to be one of the elements that drove the success of the project.

We discovered this because our chewing gum and string minimum viable product initially need quite a lot of manual human input to make it work.

Peter Thiel, one of the Paypal mafia, argues in his book Zero to One that despite the hype the real opportunity for AI is in the complementary deployment to make humans more effective not to replace humans. I tend to agree with this perspective.

What I learned is not to assume that the default solution of going low-cost tech first is always the right approach for the ultimate success of the project.

6.     Imagery is everything

 There’s a temptation to believe in a world where everyone carries a camera round in their pocket that everyone is a photographer. One look at Facebook will tell you that’s not true.

Equally there’s also a temptation with the ubiquity of stock photography to think that the availability of often free imagery means that it is a good idea. It has its place but not everywhere if you want to look authentic.

One of the well-documented success factors in the development of the Airbnb business has been the careful curation of imagery that is used on the site and the steps they’ve taken over the years to raise the standard of photography on their site.

I would echo this with my experience. The investment in a professional photographer to create bespoke authentic imagery is money well spent.

There were lots more lessons I learned from these projects and I’ve captured a few of them here. If you are considering a prototyping project and would like a fresh perspective then please get in touch.