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How To Successfully Grow A Marketplace



Here are some important aspects of building a marketplace.

Key takeaways

  • Track marketplace health metrics
  • Focus on creating trust between buyers and sellers
  • Balance liquidity as you scale
  • Leverage buyers and sellers to scale fast
  • Try to raise standards for even happier customers

Understanding the health of your marketplace

As with any other digital business you should pay careful attention to buyer metrics like cost per acquisition (CPA), lifetime value (LTV), retention and your conversion funnels.

In addition to these, there are a number of marketplace specific metrics that you should pay close attention to.

Liquidity – this is the most important metric for your business. It varies slightly by the type of marketplace but the number should reflect “The percentage of the marketplace that is transacting over a given time period”. For example for AirBnB this might be “proportion of rooms that are booked each night”. Ideally you should be able to break this data down so you can see revenues and transactions for each buyer and seller as a % of the total.

Gross merchandise volume (GMV) – All marketplaces track this value as a lot of marketplace valuations are based on this number. This is the total value of goods or services sold over the platform in a given time period. I usually report this on a monthly basis.

Take % – Although this won’t change very often it is important for a number of reasons. A higher percentage take (especially on the first transaction) means you can scale faster being able to spend more to acquire customers. Be careful though not to make this too high as increasing your take may incentivise buyers and sellers to transact outside of the platform. We have typically seen take % between 10-30% for companies we have backed.

Building trust

Trust is crucial to any marketplace and it is best to develop this through a number of different initiatives.

Great design. Make sure your site is well designed, has a strong consistent brand and is easy to use. This should be obvious, but I still see too many companies not giving enough attention to design.

Appear Here's great design and brand helped build trust quicklyReviews. Most marketplaces incorporate reviews and ratings for a good reason. They allow buyers (and sometimes sellers) to make choices on who to trust based on previous experiences whilst also encouraging good behaviour. Make sure to allow sellers to respond to bad reviews and don’t allow historically bad reviews to negatively affect a seller if their behaviour has improved.

For example, Lexoo’s review system provides its lawyers a few weeks to respond to reviews before they get published. Lawyers are also reviewed across different dimensions to really help customers understand the lawyer’s expertise for their own context.

Help sellers look professional.

The more professional the seller comes across, the more likely the buyer will purchase from them. You might want to consider creating “how to guides”  to help sellers present themselves well. Well known marketplaces like Airbnb provide professional photographers and Appear Here and Onefinestay takes this one step further by writing product descriptions themselves to ensure even greater quality.

Controlled communication. Consider providing tools that let customers talk to each other over the platform. This builds up trust with the parties while keeping them within the platform. However, you may want to block personal details being shared to stop transactions happening outside of the platform.

Balancing buyers and sellers as you scale

Growing a marketplace startup means you have to scale while you keeping your buyers and sellers happy. This makes it harder than other types of startups and can often be a dampener to early growth. For example you might have a scaleable way to acquire buyers but if you can’t scale sellers at the same time the marketplace will not take off. While you are still focussing on your initial pocket of liquidity you should run lots of experiments in order to identify the right liquidity tactics for your business. Once you have a good understanding of how you build liquidity you can start thinking about expanding outside of your initial niche.

In our experience, you will often find that buyers or sellers are already operating in an adjacent location or sector and are requesting you to expand. This makes it easier to seed the expansion as you already have built in trust, demand and supply. If you don’t have this then think about expanding into an area where you can envisage getting some efficiencies with the initial niche. This will provide you more insight and let you build a more robust model for the business at scale.

Some marketplaces grow faster than others

Some types of marketplaces can grow a lot quicker through leveraging their buyers and sellers. You should always be thinking about how you can use your customers to help you grow faster.

For example, Kickstarter is a marketplace that leverages their user’s networks really effectively. Firstly, every campaigner on Kickstarter will promote their campaign to their social network to find backers for their campaign. Backers are also incentivised to do the same so that the campaign reaches it goals. This acquires a huge number of new people to Kickstarter without paid acquisition. In addition, companies like Kickstarter, Airbnb and eBay are all examples of marketplaces where buyers can become sellers and therefore exhibit better unit economics.

Another way to leverage your sellers is to allow them create content on your platform to help promote themselves. This content is then indexed by search engines and drives new buyers to the platform with no additional cost.

Avoiding disintermediation

Disintermediation is a big risk in a marketplace business and you need to make sure you reduce this to a minimum otherwise it can really affect long term success.

To put it simply, buyers and sellers are less likely to disintermediate if they believe the value they get from staying on the platform is greater than going outside. So the only way to stop this happening is to either take a smaller amount from each transaction or to provide more value. I would advise you to focus on adding value in the first instance.

Below are some examples of ways to avoid disintermediation:

Take the payment. Important for many reasons and disintermediation is just one of them. Lots of people find it awkward handing over money by hand and prefer paying online. By taking the payment through your platform you can remove this area of friction and also guarantee that you will get paid immediately and helping with cash flow.

Help when things go wrong. Buyer and sellers are transacting without knowing each other. As a marketplace you can provide lots of value in giving security to the transactions. This might be through offering an insurance policy for when things go wrong and delivering amazing customer service.

Reward good behaviour. As long as sellers are making money on the platform then they will stick around. You might want to consider reinforcing this behaviour by rewarding sellers with better promotion.

Increase their productivity. You can add immense value to sellers by providing them tools that help them run their business more productively. For example, Appear Here handle payments, provide legal documents, facilitate communication, offer concierge services and have landlord dashboards as value add services to keep landlords transacting through them.

Raising standards

A good marketplace works hard to ensure that buyers get a good consistent service from the sellers. Depending on the marketplace, this might be deliveries arriving on time or goods delivered as they were described. Marketplaces like Uber have had to build this in from day one. Other marketplaces might want to introduce this once they have enough scale so that they can start to encourage good behaviour in return for greater revenue potential.

Airbnb does this nicely with their Superhost programme. Those hosts that respond quickly and keep getting great reviews will be treated favourably by the company.

A final thought

Remember, that each marketplace is unique and a tactic that worked for one company may not be the right one for yours, so try to work from first principles of really understanding your customers and getting your business fundamentals right.


About the Author

This article was written by Dharmesh Raithata of the Path Forward. The Path Forward was developed by Forward Partners, a VC platform that invests in the best ideas and brilliant people. Forward Partners devised The Path Forward to help their founders validate their ideas, build a product, achieve traction, hire a team and raise follow on funding all in the space of 12 months. The Path Forward is a fantastic startup framework for you to utilise as an early stage founder or operator. The framework clearly defines startup creation as being comprised of three steps. The first step of this framework involves understanding customer’s needs. Dharmesh is Product Partner at Forward Partners and helps founders the’ve backed go from ideas to a great products and businesses. He has a passion for User Research, Lean UX and using data to inform decision making. Dharmesh has a background in artificial intelligence and has been doing product for over 12 years in his own or other high profile startups. see more.


Women on Top in Tech – Dawn Dickson, Founder and CEO of PopCom, Inc. and Founder of Flat Out of Heels



(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Dawn Dickson is the Founder and CEO of PopCom, Inc. (formerly Solutions Vending, Inc.), the company behind PopCom Kiosks and the PopCom API, which provides a software solution to make vending machines more intelligent. She created the company after her own struggles to find vending machines that could sell her roll-up flat products, Flat Out of Heels, at high-traffic areas like airports.  She was awarded First place in the PowerMoves NOLA Big Break pitch Competition and second place in the 2016 SBA Innovate Her Challenge.

What makes you do what you do? 
I love solving big problems and working with amazing people to get it done.

How did you rise in the industry you are in?
After working in the vending industry for three years selling Flat Out of Heels in vending machines in airports and nightclubs, I was frustrated with the lack of data I was able to collect from my hardware. I also wanted more engaging and interactive experiences for my customers and after speaking with several retailers they felt the same way. That is when I decided to focus on PopCom and developing a software solution to solve the data problem in self-service retail.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)? 
The fact that I am not the usual, leadership demographic is the main reason why I was up for the challenge. The industry is in need of a change and I believe someone with a unique and different perspective and experience is needed. I look forward to collaborating with the industry leaders and veterans to build a product that everyone loves and finds value in.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
I am involved in several different industries and sectors – retail, self-service retail, hardware, software…so I have to learn a lot of information quickly.  There are several people that I look up to, follow their career, and seek advice from. I was fortunate to be able to participate in some of the country’s top accelerator and entrepreneurship development programs, including Techstars, Canopy Boulder, and the BIxel Exchange – the mentorship and network I gained from these programs has been invaluable and very instrumental in our progress.

Now as a leader how do you spot, develop, keep, grow and support your talent? 
I have learned that spotting talent takes time, it takes patience, and building relationships with people and networks to meet new people, most of my connections come from introductions. I focus on finding the right fit for the company culture, there is a lot of great talent out there, but the culture is different, I want us to be on the same wavelength. I am fortunate to have met some great people through the programs I was in that came on as mentors, advisors, and eventually full time team members. I take time to get to know my team individually and understand what their personal goals and ambitions are, ask them what their dream job looks like, understand their needs so they can be happy at work and be fulfilled. I believe in self-care and making mental health a priority, if a person is good within themselves they radiate positivity and are more productive.

Do you consciously or unconsciously support diversity and why?
I am a black woman so I am diversity. Naturally, we attract people we can relate to and have things in common, so I found that my team was heavily female and my diversity initiative was finding more men…when I thought about it I found it funny. Now I have a balanced team of men and women from diverse backgrounds, experiences, and perspectives which is exciting.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb? 
To be a great leader you have to be a team player, my rule is I never ask someone to do something that I would not do myself. I also have a rule to give the team the freedom and flexibility to work when and how they are most productive. That means some of us working different hours and being in the office different days, but happy team builds the dream!

Advice for others?
My advice is never give up if you believe in it. I started my company selling shoes in vending machines in 2011, it took me 7 years, a few failed hardware attempts, and many people telling me it would not work because the market was not ready. I was patient and what I believed would happen is happening. In May PopCom is bringing the PopShop to market, a next gen smart vending machine to sell and sample products. Our API will be ready in July and for the first time vending machine and kiosk owners can understand their conversion rates and have the level of data and analytics available that eCommerce stores have, but better. It has been a long journey and I feel it is just getting started, but I am only here because I never gave up.

If you’d like to get in touch with Dawn Dickson, please feel free to reach out to her on LinkedIn:

To learn more about PopCom, please click here.

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Callum Connects

Elaine Zhou, Co-Founder of China Women Equipping Center



Elaine went on a journey of self discovery and once she knew her true self she could be successful in her own business.

What’s your story?
I am very proud of where I came from and I am grateful for where I am living and working today. Singapore is my adopted home and it is my aim to always contribute to and serve this country and its people.
Twelve years ago, I moved to Singapore for an internship opportunity. I was twenty one years old and I didn’t have any friends, I didn’t speak English, I didn’t understand the culture or the customs. Everything was new and strange to me. Everything was difficult, but my parents had tremendous faith in me.
My parents have worked diligently on the family farm to raise us and send us to college. My parents had a huge influence on me. The important things I learnt from them are to love, to never give up, to be a hard worker and to have a can-do attitude. These are the qualities that I embrace in my daily life.

What excites you most about your industry?
We offer more than just training. Our business is a resource to be leveraged for transformation, improved teamwork, leadership behaviours, communication skills, relationship skills, coaching skills and increased job satisfaction and productivity.
Our passion and purpose is to help people grow as leaders and to create tremendous results by serving others well. We take people to daring destinations, beyond their imagination.
My greatest joy is to see people grow, change and transform and live a purposeful life; this is what motivates me to do more and do it well.

What’s your connection to Asia?
I was born in China and I have spent all my adult and professional life in Singapore.

Favourite city in Asia for business and why?
Singapore and China.
Singapore is a very sophisticated and systematic country. It is a structured and highly efficient business environment and people are generally nice and honest. Also, the convenience and diverse culture is a great advantage for people who want to settle down there, no matter if they are from the East or West. You always feel at home in Singapore.
I also like China because of its fast growth. The population and the market is here. However, it takes time to settle in because of the language barrier and the very different traditional culture. But you will also find it is very interesting and you’ll want to learn more about China. The people are nice if you know them well. It is always about relationship first and business second, and when you are in a business meeting, you really have to master the skill of “reading the air.” It is a skill to let people know and understand you; your values, your background, why you think in that way or why you do or do not do certain things. Doing business in China is like swimming in the ocean; it is an abundant ocean and it is full of risks. Always know your values and stay true to yourself and make decisions close to your heart. It will help you see things more clearly and get things done in a way that doesn’t violate your values.

What’s the best piece of advice you ever received?
“Be yourself, Elaine.” That is the best advice I have ever received. It was a big ‘aha’ moment for me. It was also the moment I truly and honestly looked within myself. I realized that when I am being my true self, and not trying to be someone else, I am able to connect with people instantly in a genuine and authentic way. It is a great feeling.

Who inspires you?
There are so many people who encourage me, lift me up and challenge me everyday. My mentor, John Maxwell who helped me discover my purpose in life; Michael Griffin, for his passion for Christ which is contagious and Wayne Dyer, my spiritual mentor who passed away in 2016. Also, people who are living with a purpose and striving everyday for their dream, they really inspire me. My clients, mentees and students. When I see that joy and peace in them, that inspires me to do more and do well. My team inspire me, especially when they said, “Elaine, I joined the business because of you.” They inspire me to make it work for the team and the business because it is beyond my own self interest. I am grateful for having so many people in my life who inspire me.

What have you just learnt recently that blew you away?
China is a big country, we all know that, and it is also an internet giant. Recently on a team meeting, one of the directors who manages a successful beauty business, shared with us, that everybody is on the internet, especially on WeChat. People are obsessed with online communities – for ordering food, getting taxis, forging relationships, connections and friends. Almost anything and everything can get done online. But right now, there is a new trend; more and more people want the “offline” experience. It usually takes one to two hours from one place to another in Beijing, but people want to make the effort to have a real connection with other people, to attend networks, seminars, workshops and business meetings.

If you had your time again, what would you do differently?
I started my first business when I was 24 years old, it failed. One year later, I started my second business and after a year and a half, I closed down the operation. After several painful experiences and two failed businesses, I started to look within myself, and seriously and intentionally invested in my personal growth at the age of 28. If I could turn back time, I wish I could have grown a lot earlier. I strongly believe that the level of our success is determined by the level of our self growth and we are always learning, everyday. But I also understand it is not the only way to live. I also consciously and intentionally try to live in the now. It is a beautiful and great way to live. In fact, I am grateful for what I have gone through; the pains, setbacks and challenges in my earlier life.

How do you unwind?
I like to stay connected with nature. For example, taking a walk barefoot on the grass and smelling the roses on the street. Having a beer or coffee along the riverside with friends; reading a good book; hunting for nice restaurants; swimming or running.

Favourite Asian destination for relaxation? Why?
Thailand – nice beaches, food and people.
Bali – fantastic beaches and food, great people.
Malaysia – Nice food and people, particularly Langkawi, Penang and KK.
Of course Singapore, it is always a place dear to my heart. It’s my home.
There are a lot of other interesting places in China which I am still exploring.

Everyone in business should read this book:
The Law of Success by Napoleon Hill
The Science of Getting Rich by Wallace Wattles
The Power of Now by Eckhart Tolle
Tao Te Ching: Change Your Thoughts, Change Your Life by Wayne Dyer
Developing the Leaders Within You by John C.Maxwell
Start with Why by Simon Sinek
These are some of the books that truly transformed my thinking and shaped my values.
I used to read a lot of different types of books, from sales, marketing, branding and management to different business models. I found it is really hard to master all of it and I was not optimizing my own strengths.
Entrepreneurship is a skill to be learnt. But it is really important to recognize what we are good at and what we are not so good at. We can not be everything.
Entrepreneurship is a journey of self-discovery and soul searching. It is all about learning and striving. We should try and always remember why we started our business in the first place.

Shameless plug for your business:
The China Women Equipping Center, is something both my team are I are very proud. We have put our hearts and souls into it, to help women in China grow and transform. As a developing country and with the rise of China, people are not lacking in money, everywhere is full of opportunity, but the challenge is the civilizations, values and faith. In fact the Chinese government puts a lot of effort into improving and shaping the international image to ensure it is making progress. But people are still facing a lot of pressure, especially women.
One of our business partners who is runs traditional Chinese medicine retail stores, shared that 80% of his patients are female, and the reason they are coming to see him are anxiety and depression.
Our China Women Equipping Center creates a safe and comfortable environment for women to help build their values and characters. My local team and I are very passionate about our mission and purpose. Beijing is our headquarters in China. We are planning to take three to six months to establish our business in Beijing and grow and expand to other major cities in China after that.

How can people connect with you?

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
Download free copies of his books here:

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