Strategies and tactics for stimulating marketplaces by balancing supply and demand. Covers 19 proven tactics from getting the harder side first to creating urgency through constraints.
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Strategies and tactics for stimulating marketplaces by balancing supply and demand. Covers 19 proven tactics from getting the harder side first to creating urgency through constraints.
Get the harder side first. When the harder side (supply or demand) reaches its critical activity point, network effects kick in and value is created organically for the easier side. Discovering this through the sales and onboarding process, typically the harder side is the most valuable — once you have enough of them, the other side is 2-3 times easier to bring aboard.
Strongly attract to a niche and repeat. Find the small groups in your community that care most about your market ("white-hot center") and go after them. Usually, this is discovered by going broad enough to collect data that shows the most activity.
Subsidize the most valuable side of the market. Pay in cash to the most valuable side of the market — or to the most valuable niche within the most valuable side — to join the marketplace.
Building Initial Supply
Make supply look bigger with automation. Start the supply side by aggregating as much web data as possible to create a "perceived aura of activity".
Build one side as an email list. An easy and cheap way to start a market, especially if many buyers are also sellers and vice versa.
Hold meetups and gatherings. In the beginning, they can be effective for generating community, demonstrating activity, and getting direct customer feedback.
Create a SaaS tool for one side of the market. When you give or sell a SaaS tool to one side of the market, it helps keep them in the market, giving time to attract the other side.
Provide software to third parties who can bring one side of the market.
Find a giant user for initial supply or demand.
Make only one side change their behavior.
Creating Momentum
Make something free suddenly. Transforming something that used to cost money into something free will attract users.
Create a product first and then open a market.
Connect the two sides manually.
Prefer markets where buyers are also sellers. Avoid building a single-sided market altogether.
Leveraging Constraints
Create exclusive access. Restrict access and create fear of missing supply or demand can generate strong word of mouth and rush of participation when the idea goes viral. However, this almost never works.
Define a geographic constraint. It's easier to generate a lot of activity when limiting the operating area at launch.
Define a time constraint. One can program enthusiasm into the market with time constraints.
Define a demand constraint.
Pay users with tokens. If you create a token for the market, you can pay people to join, even when there's no activity.
