All Markets Are Not Created Equal: 10 Factors To Consider Wh...

All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces - Above the Crowd

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Friction of Supplier Sign-Up. Supplier aggregation is the easy part. Aggregating demand early in a company's growth is much more difficult and crucial than supplier aggregation.

Size of the Market Opportunity. The new online marketplace may not be able to cover large portions of certain industries. Some markets are not good candidates. Wit

Bill Gurley • All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces - Above the Crowd

High Fragmentation. High fragmentation of buyers and suppliers is great for an online marketplace. The large airlines have wiped out the economics of online ticketing marketplaces. Neil Bhatnagar says that a highly concentrated supplier base greatly diminishes the chances of a successful online marketplace.

Bill Gurley • All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces - Above the Crowd

Opportunity for Technology to Add Value. Zillow gives homebuyers access to a lot of data that was previously kept in proprietary systems. Using Uber's system, you can use more cars, earn more fares per hour, and get a faster pickup. Facilitating work-flow helps participants do more, and increases switching costs.

Bill Gurley • All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces - Above the Crowd

New Experience vs. the Status Quo. The best marketplaces don't just aggregate markets; they enhance them. OpenTable lets you search reservations across hundreds of restaurants in seconds. GrubHub lets you watch your food as it comes to your house.

Economic Advantages vs. the Status Quo. Some marketplaces give companies a lot of economic advantages.

Bill Gurley • All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces - Above the Crowd

OpenTable, Yelp, Zillow, oDesk, GrubHub, UShip, and Uber are examples of successful online marketplaces. The smartphone has accelerated these opportunities.