What you need to know about growing your marketplace

If you’re a new startup, or contemplating starting out, odds are you are thinking of creating something as a “two-sided platform.” That is, a platform-based business where you connect service givers to customers — think Practo or Redbus.

Now, if you’re starting out, you’re probably thinking, but how do I overcome our daily challenges to get there?

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The question gets all the more relevant in India now, as 2016 is going to see some major cold feet from investors. That means no more easy money, and no more “if I’m a startup, someone will fund me” assurances. Only those with solid operations in place will survive.

Read more: Domestly is SA’s new online marketplace for requesting domestic workers

To help some of their mentee companies, investors Sharad Sharma and Manav Garg put together a workshop where founders from six startups in various stages of evolution — Wishberry, Superprofs, Koove, Amigobulls, Letsventure, and Instavans — got together to solve their own and each other’s problems. Here are their key takeaways.

Key metrics you should focus on to help you grow:

1. Identify your value unit. What is the core proposition you are offering? Build your entire business around that value unit.
2. For a peer-to-peer business, category leadership is key. Within your play area, find out what your niche is. Figure out what your strength is, kill that category and then move on to others.
3. Set a target for an increase in average size of your transactions.
4. Track your wallet share. How much do people transact on your site, versus a competitor’s?
5. Track your active users and their engagement patterns. What do your loyal users like? How much time do they spend on your site?

Key drivers that will help you hit those metrics:

1. You are going after trust, so curate, curate, curate. Don’t let everyone and anyone list on your site just to claim big numbers. Closed platforms have better success rates than open platforms.
2. Increase your efficiency. Minimise the time you waste on back-end logistics. Investing in tech could be a good idea, but in India, tech will need hard on-ground support.
3. Be prompt with your payments. Remember, both producers and consumers are your customers. If you are a taxi aggregator, pay your drivers on time. If you’re a marketplace for selling clothes, pay your sellers on time. Angry partners are disloyal partners.
4. Get users to share their stories. You’re a platform-based business, you have to make first-time users comfortable using your site.
5. Peer-to-peer platforms have an age-old chicken-and-egg problem. Demand first, or supply? Measure this carefully. To start off, it might be better to keep supply slightly short of demand.

Key takeaways from the workshop:

1. Create very high entry barriers for yourself. Unfortunately in India, many peer-to-peer startups already have bigger global rivals. You might be the first mover in the sector today, but what happens when the Amazon to your Flipkart sets up shop tomorrow? Work your metrics in a way that accounts for that challenge.
2. Be true to your company culture. Good people make good companies. If you imbue the right people with the right spirit, things will fall in place.
3. Don’t lose sight of the broad picture. It is very easy to be distracted by daily firefighting when you are building a business, but it helps to take a step back and take another look at what you originally set out to do.
4. The customer is your focus. Your culture, your product, your business — it’s all geared towards making a customer happy.
5. Lean on your peers to exchange ideas. There’s an ecosystem out there, where other people are going through the same challenges as you are. Don’t be afraid to ask — learning from your peers is the best!

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This article by Nivedita Bhattacharjee 2015 originally appeared on Tech in Asia, a Burn Media publishing partner.