Online marketplaces are great. As a co-founder of a live yoga classes marketplace, I enjoy not incurring any production cost, storage cost, or delivery cost. Our revenue comes from taking a % on sales and from subscriptions. Most of our costs are technical costs and marketing costs.
But marketplaces also have challenges. A complex thing to achieve with a marketplace is a match in between the supply and demand. Too much offer and a weak demand will deter your makers from staying on the platform, and too little offer will deter clients from buying your products or services. Growth must be managed carefully.
Another drawback about marketplaces is that you don’t “own” any product or services. You’ll need to buy products from your makers if you want to give away free products for marketing purpose. It’s limiting opportunities for PR and for partnerships with other brands. It also reduces the type of promotion you can run, as you need the maker’s agreement for discounts and special offers.
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