Airbnb is the biggest accommodation provider in the world, but owns no hotels. Uber is the biggest public transportation company in the world, but owns no taxis. We’ve all seen variations of this thought-provoking meme.
The sharing economy—the business model that connects hosts who have something valuable to share, with customers who want that shareable something—is changing the way people access services all over the globe.
“Simply put, the two-sided marketplace is established when a website or app allows economic exchange between two groups of users,” says Mathieu Halle VP of digital business for Nok Nok CAFE, an innovative Canadian tech start-up that’s bringing the sharing economy to coffee by allowing anyone to create their own coffee bar at home. “The success of a marketplace rests on its ability to generate a powerful network effect.”
According to Halle, understanding these three things is critical for two-sided marketplaces to work.
1. Value (for both sides)
It’s hard to grow a customer base in a traditional business, but it’s even more difficult for marketplace entrepreneurs. Building the two sides means attracting and developing two different kinds of customers at the same time.
Hosts need to have the will and resources to provide the service. Customers need to value the service: it has to fill a need and be convenient and/or cheap (or at least worth the price).
When the value proposition is clear and both sides quickly see how they can benefit by participating in the marketplace, they blend into something special: a thriving economic community.
Trust between users within the community is the golden door. That means clear and real information including pictures and ratings.
3. Consumers to ‘’consum-users’’
Sharing economy enterprises don’t just disrupt well-established sectors and give more power to consumers. In fact, consumers are the service: hosts become customers and customers become hosts.
This democratization is difficult for established businesses in impacted sectors (often huge corporations) to adapt and that gap is an open door for new ideas. But be patient. Airbnb, for example, wasn’t born big. They had to babysit their business model for years before attracting the critical mass of hosts required to make the service what it is today.
To learn more, connect with Halle on LinkedIn: www.linkedin.com/in/mathieuhalle