Important note about this kind of product
- In this kind of business, demand beats supply. You can always buy supply, but can’t buy demand
- A marketplace without inventory ( listings- eBay, cars -Uber, rooms- Airbnb,…) is useless. In the early stage, it’s necessary to find an artificial way to populate both sides. I.e, Uber bought cars themselves to join taxi drivers, job searches page collected and posted recruitment posts manually.
- Fraud and trust are crucial. Ratings, guarants are useful.
- Keep the transaction within the network. Leakeage is problematic
Important metrics
Buyer- seller growth: the rate you add buyers — sellers
Inventory growth: new listings added
Search effectiveness : what people are looking for and if it matches your inventory
Conversion funnels: depend a lot on your business.
Ratings and signs of fraud:
Study case: a old game console marketplace, where people with a console come to sell and those wanting a console come to buy.
- Buyer side
Below metrics are popular but quite vanity
- Unique visitors
- Returning visitors
- Registered visitors (aka users)
- Visitor/seller ratio
Actionable metrics with a “line in the sand”
- Buyer : who made at least 1 purchase -> you know what to do next to increase buyer.
- Engaged buyer : who searched sth in the last 1 month -> you know what you should do to get buyers more engaged
- Engaged buyer/active seller ratio:
- Engaged buyer/active listing ratio:
2. Seller side
Basic metrics
- Sellers
- Listings
- Average listings/seller
Actionable metrics with a “line in the sand”
- Active seller: those who post a new listing in last 30 days
- % active sellers: active seller/ seller ratio
- Active listings: those get 5 views in last week
- % active listings:
3. Conversation funnel metrics
Search -> Click -through -> Purchase -> Revenue
- Total searches, searches with >1 match
- Number of click through to listings
- Remaining inventory
- Satisfied transaction — percent satisfied transactions
- Total revenue
- Average transaction size
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