INSPIRED & WRITTEN BY Arcadier
The Minimum Viable Product is the minimum feature set of your marketplace that helps you achieve a product/market fit – where there is a big enough market and your MVP satisfies this market. By now, you should have a clear picture of what this target market looks like, how they behave, what their problem is and how to solve them.
In this chapter, we will be focusing on why marketplaces often fail to create a minimum and viable product, how you can avoid these mistakes, and the technical know-hows of building an MVP for your marketplace.
The age-old chicken-and-egg problem all startup marketplaces face often kill them before they can lift off. You need lots of buyers and sellers making transactions in the marketplace in order to maximise network effects. A newly started marketplace would thus be unable to offer a strong initial value proposition when the network is small.
Also, the execution of a marketplace is a lot harder due to the multiple dimensions and competing interests of all participants. You would have to worry about two different sets of interfaces, ensuring that features are fairly arranged for both buyers and sellers. When building the MVP, it is essential to look beyond the benefits that the crowd can bring, and focus instead on the problem/solution fit.
A marketplace ships with a multitude of features: Search, Email, Payments, Webhosting, Mobile-friendly website, etc. As it is impossible (and impractical) to build all these features into the MVP, how do you choose what makes the cut?
The purpose of an MVP is to help you validate a solution to a problem that your audience faces. This is done through an iterative process of constant improvement and building upon user feedback. When building the MVP, it is important not to lose focus on what your solution is, but instead develop and refine this solution through multiple testing.
Within your target audience, narrow it as far as possible for the first iteration of your product. The smaller the market, the easier it is to hit critical mass and become the de facto product leader for that niche audience. With this advantage, you’ll be able to provide specific features for your niche market better than what others can provide, thus giving more value. It can then be used as a springboard to scale and expand to other markets or more features.
Facebook initially focused on building a social network within Harvard University before eventually expanding to other colleges and then conquering the world. (Source)
One useful method of identifying your MVP would be to focus on creating a “single-player mode” of your marketplace, ignoring the “two-sides” aspect of marketplaces. This helps you clearly identify which features people are attracted to and will use, allowing you to validate your idea better.
After identifying the key features that your audience loves, you can then build a tool. Keeping in mind the potential scalability and defensibility that network effects can provide, a tool can be something that people use often and can share with others. This introduces the interaction aspect into your MVP, inching closer to the final iteration of the marketplace.
Once you’ve designed and tested your MVP, it is time to focus more on a marketplace point of view. Platform expert Sangeet Paul Choudary coined the term “minimum viable platform”, stating that a marketplace should provide a single interaction between its two sides. With a clear proposition for both sides, as well as a viable solution for the problem that they face, you can now look to build a more tech-heavy marketplace platform.
Dropbox started off with a simple landing page, using it to test the market’s interest in its MVP.
In chapter 7, we talked about how a landing page can be used to validate your idea. The landing page can also form the basis of interaction between buyers and sellers in your marketplace. Using a tool like Unbounce or Strikingly, you can create a simple web page without any coding. You can list the available sellers on the landing page, allowing buyers to pick and choose from the selection.
Next, add a form tool, either using Typeform or Google Forms, for you to collect the customer’s contact details (e-mail, or some form of contact) as well as the seller/product that they would like to buy. When the purchase email comes in, you can then liaise with both parties, setting up the payment (by internet banking or PayPal) and taking in your earnings.
You could even create a mailing list with a free tool like MailChimp, adding in the email address whenever a purchase comes in, to start an email marketing strategy that promotes new sellers or special offers.
However, this method only works for your first few customers. There are several issues that would affect your marketplace’s scalability:
The communication process, as it is being handled solely by yourself, would not be instantaneous, thus leading to lag time which may result in drop-offs.
When the number of providers increase, you’d be inundated with manually entering data, as well as developing a “filter” for selecting the right provider.
CMS platforms such as WordPress, Shopify or Magento allow you to create an e-commerce site easily. You could download from a variety of plug-ins and themes in order to suit the functionality that your marketplace serves, helping you to automate more processes and improving the overall user experience.
However, this can prove to be tricky for some due to the level of programming skills that are required to tweak and adjust the add-ons that you have layered on top of the base.
Ultimately, it could defeat the purpose of launching and iterating quickly when you have to spend time to learn coding and debug problems on your own.
At Arcadier, our mission is to help anyone build marketplaces, with as much ease and as quickly as possible. You handle the business, we handle the technology.
With Arcadier, you can build your marketplace completely by yourself within minutes. Select your theme, choose your product categories, set your filters and launch it. Watch as users fill up their profiles, stock their shopfronts or showcase their services, make purchases or bookings, and review one another.
The benefits Arcadier’s marketplace platform provides are immense compared to other solutions mentioned. Here’s what you’re getting:
Completely code-free. We take care of all the technology for you so you can focus on building your business idea.
Well-honed user experience developed over our past years of building marketplaces for many clients.
Efficient payment system that is developed in partnership with major e-payment clients, ensuring a clean and efficient process for you and your customers.
Marketplace founders often make the mistake of focusing on the network effects rather the “minimum” idea: the solution for a problem that their users face. Starting off with a solution targeted to a niche group, you can then develop your idea while focusing on a “single-player” mode, before expanding into a shared “tool” that your audience uses.
Without relying on outsourcing your website development or on a technical co-founder, there are many ways you can build a minimum viable platform that will help you validate your idea. You could use a manual approach to develop a landing page or a CMS as a platform linking your buyers and sellers, or use a ready-made tool like Arcadier to build a fully functional marketplace that can help you validate your idea. Finally, don’t forget to use the key performance indicators you developed in the previous chapter.