Blog #5: Two-Sided Marketplaces aka the Chicken & the Egg

There’s a growing segment across industries with a common denominator: the two sided market. This could be B2B, B2C or C2C, but by definition a two sided marketplace is just how it sounds–a place where a buyer and a seller come together to transact. Your most classic example is Uber. They employ drivers and cater to riders, without owning a single car. They’re simply the deal broker taking a fee for every transaction.

At INTURN, we’re doing the same thing. We are connecting people with excess inventory (sellers) to people who want excess inventory (buyers). We will never own a single piece of inventory, but thousands of dollars of clothes get sold on our platform. As a result, there are no variable costs. As we grow, our costs will remain this same. This is a super profitable business model, but as you can imagine there’s a catch. It’s a hard business to enter.

Because what comes first the sellers or the buyers? The chicken or the egg? How do you start a marketplace? Sellers won’t go there if there is no one to buy, and buyers won’t go if their isn’t anyone selling. So how do we incentivize them to join? With our value proposition and our pricing model.

The bigger problem we are solving is for the sellers, so we put the transaction fee on them. If they want to use our platform to sell their goods, we’ll take a cut of everything you sell. The buyers don’t pay a dime–yet. Which is how we get our chickens to come before we have any eggs. Once sellers see opportunity to sell their goods to other buyers, they now have incentive to come.

As hard as it may seem, the good news is its a race. Why will Lyft never beat Uber? Because Uber is top of mind for consumers. They won the race to the marketplace and now the world knows if you need a ride the first thing you do is go to your Uber app. Why? Because drivers are thinking the same thing. If they are looking for people to drive they go to their Uber app as well. They won the race.

We are trying to win the race. “Where do companies go to buy and sell excess inventory?” “Oh, INTURN, duh!” If we can change business’s perceptions, we will win the race and ultimately dominate the excess inventory space.

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