Thursday, 12 February 2015

Building Digital Marketplaces

Jerusalem Marketplace by Simon Tanner 
Research shows that “more than 90% of the conversations about products, services and brands that take place every day” happen offline or face-to-face [1]. Thus billions of product, services and recommendations conversations happen in this offline space and only a small percentage are currently happening in online spaces, whether driven by social media or commercial spaces.

Even a small percentage of billions is a significant number, of course, but there remains considerable scope for growth in digital modes of community based discussion, sharing and recommendation. Especially in specialist areas where there is not currently a strong digital space for such conversations then promoting the building and delivery of communities that can share experience, knowledge and most importantly requirements, needs and recommendations could be an important innovation.

A vision for such a digital marketplace may be to develop a place where communities of practice can come together to immerse themselves in services and resources aimed at fostering a better understanding of the choices available in the market for these communities. To do this means creating an open space that encourages the expression of needs. Through such needs identification the levels and types of demand can be enumerated and defined as a means of guiding suppliers who are seeking to address the markets desires.

The concept of a digital marketplace in this context engages with traditional definitions of a marketplace as a physical space that provides for a regular gathering of people for the purchase and sale of provisions, stock, and other goods. In other words, it is a place of trade, where buying and selling occurs in all its forms (including monetary, barter and other trade exchanges).

The digital marketplace is a destination space to gather and share knowledge and needs and then to trade - most likely with commercial suppliers of products, goods and services.

Virtual marketplaces have changed the way people do business and created new opportunities for smaller businesses and startups as well enabling larger, well-established companies to reach out to new customer bases. eBay started this trend way back in 1995 as it revolutionised the market for used goods, more recently Uber is changing the way people book and use taxis.

One of the hardest tasks in this digital ecosystem is matching supply with demand especially when trying to reach a specialist community with relatively niche interests.

My suggested approach to build such a marketplace is to consider the following key attributes that are seen in virtual marketplaces:

  • Offer something the community needs. Building resources that will bring members to the marketplace to share knowledge and experience. Allow for user generated content and give the opportunity for members to express their needs - these are essential elements to building the understanding underpinning a marketplace.
  • Take offline experiences online. Work hard to get close to your communities of practice to analyse how to bring those offline conversations into the online space.
  • Create personas. Create a series of consumer personas to explore how the offline conversations observed in your community could be transferred into a marketplace setting. A persona models types of behaviour and considers the different needs of the different parts of the community.
  • Build a platform that works for suppliers and is easy for consumers. The marketplace must seek to provide suppliers with a platform to connect their products and services with the expressed desires of the consumers.
  • Offer choices. A marketplace has to offer genuine choices to consumers that matches their needs with the supply base available.
  • Enable filters and promote influencers. Breadth and depth of choice has to be augmented with the ability to get straight to the content and services most needed by consumers. Offer expert influencers the means to bring consumers to the resource and guide their use. The resource also should ideally provide a number of filters to enable users to be selective and only see those aspects of the marketplace that suit their needs.
  • A place to trade. The marketplace should ideally provide the capacity (whether through brokerage or e-commerce) for actual trades to take place between suppliers and consumers.
  • Sustainably meeting stakeholders needs. The marketplace must respond to the needs of its stakeholders in a sustainable fashion that will outlast any given project or single market activity. This can lead to tensions between the wish for a fully open and free to access marketplace desired by one contingent and issues of sustainability and feasibility of delivery faced by other participants or managers.

    Consumers and the active participants may wish to access the content, services and brokerage within a market without cost to them. However, no marketplace operates without a business model in which both the consumer and the supplier are sustaining the costs of the marketplace’s existence.

    There are many modes of achieving this where the balance falls more on one party than the other - but someone is always bearing the costs. Even in apparently open systems, the reality is that the consumer is themselves usually contributing more than suppliers through the exploitation of their personal data (Facebook), their time/resources (Wikipedia) or an indirect charging model such as advertising or the freemium model (Google). 

[1] Keller,E and Fay, B. (2012 )The Face-to-Face Book: Why Real Relationships Rule in a Digital Marketplace, Free Press

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