The service sector is huge – it is worth nearly US$10 trillion and that is just in the US. If you take the rest of the world, the figure will significantly increase. Online marketplaces have a massive advantage in this industry and can cater to different clients without worrying about inventory or logistics.
Service marketplaces have become popular as they allow prospective customers to find different services providers on a single platform and that, in turn, lets them select the best provider. Thanks to service marketplaces, customers no longer have to rifle through YellowPages. All information that they need to make an informed choice is available at a click of a button.
Marketplaces also do not require a lot of resources and if you choose the right business model, you will be able to generate regular revenue. However, before you rush to launch your service marketplace, here are a few things that you should consider.
Understanding the Challenges
While a service marketplace software allows you to launch a minimally viable product in a quick time, you will still have to work through a few challenges.
One of the biggest problems that these marketplaces face is maintaining a steady stream of revenue. It is prudent to remember that services provided by vendors are intangible and this can make it tricky to come up with a revenue model. The solution lies in studying other successful marketplaces that provide similar services. Check the revenue models of these marketplaces. Remember, the model will vary based on the industry, and hence, spend studying the different kinds of revenue models before choosing one that is right for your marketplace.
As a service marketplace, you will allow suppliers to directly connect with customers and that can lead to them taking their communication and transaction off the platform. Should that happen, you will lose money as the party that needs to pay commission will be motivated to conduct business outside the marketplace.
As stated earlier, the service marketplace is intangible. Hence, getting reviews and feedback about the platform can be tough. Remember, your platform just connects service providers with customers and there is no interaction between the marketplace and the customers. As a result, you will not get any feedback about how the marketplace is functioning and what features you can add or subtract to improve the overall performance of the marketplace.
Things to Remember Before Launching Your Service Marketplace
You will have to do a lot of research before you launch your service marketplace. One small mistake or decision can have a disastrous effect on your business. Some the things that you should keep in mind are as follows:
Research Your Target Market:
Most marketplaces fail because they do not study and understand their target market. It is prudent to remember that what is right for one industry may not be right for the other. For instance, a service marketplace for construction industry will be very different from what the healthcare industry requires.
To get your market research right, look for existing marketplaces and figure out the services they are providing. It will enable you to see whether the marketplace you have in mind will be the right choice. If not, you should look to tweak it so that you have the right business model in place.
Identify Your Users:
The success of your marketplace depends on the right balance between supply and demand. Hence, make sure that there is sufficient demand for the services your marketplace intends to offer. Otherwise, suppliers will disappear in a blink of an eye.
Look at the pain points in the industry and figure out a way to offer solutions. If you can find out the needs of your target audience, your business will grow by leaps and bounds, and there will be no stopping its success.
Focus on User Engagement:
Many marketplaces neglect user engagement as they believe it is of no use. However, that is wrong. Considering that your target audience has access to a large number of marketplaces, they will opt for one that enables them to feel connected. So, it is important that you begin user engagement even before the first transaction.
Listen to what your users are saying and try to incorporate their feedback into your marketplace. This will make them realize that you are listening to them, and that, in turn, will allow you to form a connection with them. As a new marketplace, the best way to get feedback is from users, who are making use of your services.
Select the Right Business Model:
Service marketplaces have a variety of business models. It is imperative to choose a model that is right for your marketplace. For example, the business model for a service marketplace for travel agencies may not be the right one for a real estate-focused marketplace.
Your business model will be responsible for bringing in revenue. The right model will make your marketplace profitable while the wrong one will cause you to shut down your business venture. So, study each model with care. Remember, sometimes, you may have to use multiple models to generate the kind of revenue you want. If necessary, speak to experts in this field so that you get the right guidance.
Assemble the Right Team:
While you may not have inventory or logistics to manage, you still need a good team to back your business. Make sure you partner with the right service providers. Look for providers, who share the same value as you. That will ensure that they worry about customer service as much as you do.
Also, get the right professionals to handle the backend. You should be clear whether you want to handle customer support or you want individual vendors to handle their customers. It is best to centralize customer support so that you know the issues the customers are facing and the steps you need to take to resolve them. Otherwise, let vendors connect directly with customers to handle other service-related queries.
In Conclusion
These are some of the things that you should take note of before you launch your service marketplace. If you can get a grip on these elements, your marketplace will thrive from the word go.