I hate to be so boringly predictable, but after seeing this prompt, I had to write about eBay, the company at which I\u2019ve spent the majority of my career. On a personal level, I\u2019m intellectually fascinated with marketplaces and platforms and to me, eBay is the standard-bearer of how marketplaces can be built and scaled, and also, how they can lose relevance in an ever-changing economy.<\/p>\n
eBay successfully created one of the largest platforms in the world, and I\u2019ve been able to see firsthand the challenges that the company has faced as it matured.<\/p>\n
How to scale up a platform business <\/strong><\/p>\n The biggest issue with a marketplace business is the chicken-egg conundrum of gaining liquidity \u2013 do you start with the demand or the supply side, and how do you attract the other side after that?<\/p>\n eBay has always considered its primary customer to be the supply side \u2013 i.e., the sellers; eBay.com shoppers are seen as are the customers of the customers. eBay\u2019s decision, however, was simpler than it seems \u2013 the initial listings on eBay were, organically, in the antiques \/ collectibles space. The sellers were usually collectors themselves and after joining the platform, often became customers as well. So launching on the seller-side unintentionally created a buyer-side as well.<\/p>\n I currently consult with an early-stage B2B marketplace and they\u2019ve taken a slightly different approach. Though they also have focused on the supply-side first, they\u2019ve spent a lot of resources on demand-gen as well \u2013 a secondary priority but still being run in parallel to supply-side tactics. Suppliers must have a reason to join the platform and an incentive to bring their current customers onto the site as well. Without the opportunity to sell to new customers, there\u2019s little reason for suppliers to join in the first place.<\/p>\n How to prevent disintermediation<\/strong><\/p>\n Perhaps the next biggest challenge with creating and sustaining a marketplace \/ platform is entrenching its value proposition \u2013 i.e., preventing disintermediation. The entire point of a marketplace is to profit at the point at which supply meets demand and if the two can rendezvous somewhere else, the platform loses significance.<\/p>\n I participate in disintermediation as a consumer constantly \u2013 I always try to poach the supply off of any marketplace \/ platform I use in order to get a better deal for myself \/ test the robustness of the business (admittedly I\u2019m a weird person). I\u2019m surprised with how many rejections I get though \u2013 these companies are doing something right to keep their suppliers loyal to the platform.<\/p>\n eBay has historically avoided disintermediation through the following:<\/p>\n How to stay relevant<\/strong><\/p>\n eBay, though still solidly a Fortune 500 company with billions in Gross Merchandise Value (GMV), has seen significant growth stagnation in recent years. I\u2019ve agonized over the reasons for this over the course of my career at eBay and it\u2019s difficult to pinpoint all the market forces at work.<\/p>\n There are, however, generalizable rules for marketplace \/ platform relevance:<\/p>\n Whatever you think may be the reason eBay has seen slowing growth, there\u2019s something to be said about the unique set of responsibilities when managing a platform. In the meantime, I\u2019d encourage you to go treat yourself and buy something cool on eBay.com J<\/p>\n","protected":false},"excerpt":{"rendered":" What it takes to create and sustain in a platform market <\/p>\n","protected":false},"author":2784,"featured_media":4205,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-4187","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/growing-businesses-in-the-age-of-platforms\/","yoast_head":"\n\n
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