Adam Broadway, a co-founder of Desks Near Me and CEO of Near Me, shares his experience both in building a marketplace and founding a company that offers white-label solutions for marketplaces.
Before starting these two companies, Adam Broadway used to run Business Catalyst, an all-in-one content solution for building and managing business websites, and then moved to the US to work for the Adobe company.
Having worked for Business Catalyst, Adam realized that the market was heading towards the marketplace economy. That’s when his idea to enter the marketplace industry was born.
Pavel Obod, CEO of Sloboda Studio and marketplace-driven entrepreneur, met Adam in the roadshow in California and interviewed him during The Marketplace Conference.
Here are the 3 main takeaways from Adam:
1) Enterprises are embracing a marketplace model to be a part of the conversation.
The reason for this is that big brands have lost their communities because of the rise of big online marketplaces, and now they are eager to get their communities back.
Adam also emphasizes that brands are definitely realizing that they need to get involved in direct conversation with customers and not rely on Google, Facebook, LinkedIn, and other big monopolies to send traffic to them.
2) Having a niche approach to building your marketplace and being very laser-focused on this niche provides the best chance for success.
Building a niche-focused marketplace, your online platform would consist of practitioners whose day-to-day life relies on their skills. And the most important thing for them would be to develop these skills or deliver their skills within that niche. Thus, your niche marketplace will have a very dedicated community that will be hard to stagger.
On the other hand, an open-ended marketplace like eBay is a place for hobbyists, where they can earn some extra cash without the need to go all in. Basically, with an open-ended marketplace, anybody can jump in and out.
Adam points out that, with an open-ended marketplace, there is only a very small percentage of entrepreneurs that will actually use it as a successful ongoing money generator.
Niche marketplaces will be supported by users who will be loyal to the community and to the idea that this community represents, whereas big corporate marketplaces will cater to users who are driven by the need of getting something regardless of the price.
Check out our last interview on marketplace development:
The interview with Adam covers:
- Definition of the marketplace and marketplace model
- Types of marketplaces
- Which marketplaces are more likely to become successful
- Why enterprises are embracing a marketplace model
- Future of marketplaces
Pavel: What made you shift to marketplaces?
Adam: Lots of eCommerce platforms like CommerceCloud, Shopify, Bigcommerce, Magento, Volusion were architectured as one too many, meaning one shop owner but lots of customers.
But as everybody has seen with the marketplaces like eBay, Airbnb, TaskRabbit, Upwork, Freelancer, OkCupid, Etsy, Amazon, Facebook, and LinkedIn, the big distinction is that all of these platforms are fundamentally architectured as many to many: lots of providers, lots of customers, a thriving community and a marketplace owner.
That was sort of the shift we saw as I moved from the Adobe approach with Business Catalyst to more of the marketplace economy approach. This shift can be seen in social media community-based sites like Facebook or very niche-specific industry-focused marketplaces, like marketplaces that we’ve built for UiPath, Hallmark, Intel and Spark.
These are all enterprise-grade marketplaces that we’ve developed, right down to startups like the Volte, a dress rental marketplace out of Perth, Australia and also Desk Near Me as well.
Pavel: But why would enterprises need their marketplaces?
Adam: Great question! Well, what we’re seeing with the likes of Facebook, LinkedIn, and others is that a lot of people have gravitated to those communities because there haven’t been other great alternatives.
Bullet boards, forums – those sorts of places, which a lot of enterprise companies have sort of thrown up, have languished and died, whereas Facebook provided this thriving community platform where people could share and connect. Plus, Facebook groups really took off.
And that’s where we see brands moving, as they want to be involved in the conversation and not educate that or hand it over to big social media conglomerates like Facebook and LinkedIn.
These big social media community marketplaces are great for communities of interest or hobbyists, but ultimately they’re terrible for brands. The brands are losing big time. They have to pay for access to the people that they originally used to have in their CRM system.
Pavel: And what about UI/UX? If an entrepreneur wants to build a marketplace, how can they compete with big social media companies like Facebook that spent millions of dollars on UI/UX?
Adam: Well, we all know that the goal of these big social media companies is to make money. And that’s fair enough because they’ve got to pay their investors back and their shareholders demand dividend returns.
However, what we see with other brands that create their own marketplaces is that they are actually more altruistic when it comes to nurturing their communities than companies whose bottom line is getting a click to an ad. And companies like UiPath, Hallmark, and Intel are actually spending significant money on providing a great UX.
The user experience or the overall customer experience isn’t being left behind these days, but it’s more about the value that the platform gives to customers.
Pavel: How do you actually define the term marketplace?
Adam: That’s a great question. So what is a marketplace? I think it’s anything that stands for the exchange of ideas, products, services, and conversation. A marketplace does not need to necessarily have a monetary transaction through a credit card to be a marketplace.
Pavel: Could I also call a Facebook group or maybe a forum built at the beginning of 2000 a marketplace?
Adam: I think people have definitely used forums and old bullet board systems as marketplaces. A great example is Craigslist. You have different topics, you click on one of them, and you see a bunch of ads. There are also additional search filters, but it is very much a thread of consciousness related to that topic, which is what a forum is. So, yeah, forums can definitely be marketplaces.
Pavel: What category do marketplaces fall into, or is it a totally separate niche?
Adam: It’s all those things, you know. I guess in its original sense a marketplace was something like eBay, Craigslist, or Airbnb. It’s a place where we come: like going to the market on the weekend. You would physically walk down to the farmers market or the local store and people would be able to stroll around some stalls that we set up, and that was the marketplace.
And it was open to people to bring their fruit and vegetables, and then their craft, and that’s where we would exchange money for things. Now we have marketplaces that do the same thing, except there’s not a lot of loyalty. Because, on the one side, you have service providers, and a lot of them, the vast majority, are trying to get away from the need for the marketplace.
If you’re only worried about the transactional model and monetization, you may actually lose sight of the bigger picture in the long term.
Well, that may not even be the right model, what about the subscription?
Subscription becomes very lucrative and opportunistic, especially if everybody’s paying a little bit and you’re not taking a chunk of somebody’s profit. Thus, a marketplace opportunity arises for some communities, especially a community of practice where a customer wouldn’t mind paying a little bit to be a member because it’s exclusive.
Pavel: So I was really surprised to find out that corporations are willing to promote their business by partnering with marketplaces without earning much profit.
A great example is a collaboration between two companies: a rental marketplace like Car2Go or DriveNow and BMW. While using a car people fall in love with it and then just go out and buy it. So it’s really interesting!
Adam: That’s right! And, look, these companies may end up becoming leasing or rental companies, or very large taxi companies, eventually even without drivers.
And so, the brands with their production and assembly lines, with their AI-driven cars, of course, want brand awareness in the longer term.
Now these marketplace companies that are popping up along the way – they’re all just temporarily there. They’re probably proving a model that a larger company will come along and require them.
So the startups building these marketplaces are invested in by venture capitalists who are part of a particular circle of companies. And eventually, a particular circle of companies will consume that technology up, as we’ve seen with Facebook, LinkedIn and Uber. Some marketplaces will stick to their values and they will be very niche, and people will be loyal to those marketplaces and brands because they don’t want to feel like they’re participating in a large corporate marketplace.
And others will go with the convenience, for which they are prepared to pay. So they will want providers of the service and they won’t be loyal to them, because they will be driven by their needs.
Note from Sloboda Studio: Developing online platforms for over 6 years, we have witnessed a number of changes in this industry. While 6 years ago marketplaces were generally associated with startups, nowadays enterprises stay relevant to customers and are embracing a marketplace model.
Besides, a trend for niche marketplaces is indeed growing, and we can see that from the success of customers such as TikkTalk-marketplace for online interpretation and a Scandinavian marketplace for home cleaning.