Experiencing Remarkable Growth with Marketplaces: A Product Manager’s Perspective

On average, businesses experience 42% year-over-year growth after launching a marketplace. As we watch high ROI continue to build business cases for marketplaces, their allure as a revenue generator is undeniable. Yet their rollout presents both opportunities and obstacles for product managers whose success hinges on a nuanced understanding of the challenges ahead.

By examining the latest research from Forrester, our Spryker product managers Sean Drummy, Senior Director of Product Management, and Mikhail Ostapenko, Lead Product Manager, confront the realities of launching a marketplace in today’s world—while exposing the rewarding possibilities that lie within.

Their analysis reveals three insights that can help companies achieve remarkable results with the marketplace approach:

1. Marketplaces are powerful but require expertise and poise to roll out successfully.
2. Align early and often, especially internally.
3. When marketplaces achieve the flywheel effect, they are a beauty to behold.

Read on to discover how companies can leverage these insights through the eyes of product managers, adjusting their approaches to get the most out of marketplaces.

It’s important to note that the approaches to B2B and B2C marketplaces require specific touches. B2B marketplaces typically involve larger transaction volumes, longer sales cycles, and focus on meeting the needs of businesses, while B2C marketplaces cater to individual consumers with shorter sales cycles and smaller transaction volumes. These insights can be applied to both business models, but we’ll focus expressly on B2B. 

Insight 1: Marketplaces are powerful but require expertise and poise to roll out successfully.

81% of marketplace operators found that it took longer to launch their marketplace than initially anticipated.

One of the most underestimated hurdles when embarking on the journey of creating a marketplace is the technical and business complexity that can be involved. It is crucial that your MVP is well-scoped and your commerce platform is built around capturing rapid ROI. Many successful marketplace operators focus on an initial small milestone to capture a quick win and then iteratively build from there. Especially in marketplace projects, trying to boil the ocean often leads to delays in launching and stretched timelines. 

While launching a marketplace can be a true revenue multiplier for many businesses, there are intricacies involved in this business model that need to be well thought through, such as merchant onboarding, including verification and product creation, and complexities of billing and commission setup and order fulfillment processes.

If you’d like to walk through the complexities of this business model, follow along with our expert guide to B2B marketplaces.

Insight 2: Align early and often, especially internally.

61% of businesses agree that resolving internal skills and knowledge gaps was one of the most challenging aspects of launching a marketplace.

Another significant challenge is achieving alignment among stakeholders. This may surprise some, but resolving internal skills and knowledge gaps is one of the most formidable tasks when launching a marketplace. It often involves addressing the need for in-house expertise for building and managing marketplaces and gaining a clear commitment from management to transition the entire organization towards a marketplace-oriented goal. This underscores the need for a unified effort across all departments. 

While start-ups with a brilliant idea and some marketplace knowledge can be susceptible to this, larger organizations looking to open up new revenue streams must also ensure alignment to break old habits. There are essential differences between marketplaces and other more traditional business models, and socializing those differences can empower teams to make the right decisions as your marketplace project progresses. 

One way to insure against painful misalignments is to work with a platform, like Spryker’s Marketplace Capability, with a rich partner ecosystem with marketplace experts. Even organizations with significant technical resources can significantly benefit from working with experts who have shepherded others through similar initiatives. 

Insight 3: When marketplaces achieve the flywheel effect, they are a beauty to behold.

Businesses that launched a marketplace experienced remarkable growth, including a 44% increase in customers, a 42% boost in revenue, and a 36% rise in average order value (AOV).

It doesn’t get much more gratifying (or lucrative) to witness the transformation of marketplaces into burgeoning hubs of commerce. The turning point towards marketplace sustainability is marked by the development of a self-reinforcing cycle—a flywheel effect. This occurs when there is a consistent increase in the number of merchants and customers, accompanied by a rise in transaction volumes. 

A clear indicator of this sustainability is when organic growth becomes prominent, and the marketplace starts generating value without the need for excessive customer acquisition costs or significant marketing expenditures. When a flywheel effect of merchants and customers begins to spin up, we’ve seen what that unmistakable feeling of “market pull” can do for companies.

Experiencing Remarkable Growth with Marketplaces 

The data speaks volumes: marketplaces are not just a trend but a proven avenue for remarkable growth. As businesses continue to experience substantial year-over-year increases post-launch, many companies are eager to bring this strategy into their digital commerce roadmap—and with good reason. 

But, as we’ve learned, the challenges of marketplaces require expertise and proper procedures to avoid costly mistakes. Luckily, with the advice and support of industry experts, more companies can tap into the promise of marketplaces to experience this remarkable growth for themselves.

If you’d like to connect with others on topics such as marketplace, our interactive community, CommerceQuest, is the perfect launchpad for making genuine touch points with others interested in commerce topics. This online space promotes collaboration, idea-sharing, problem-solving, and networking within digital commerce, and we use it as a tool to help us work together more effectively and drive innovation.

All statistics from Forrester: From Marketplace To Market Share – October 2023