With a background in wholesale I have followed the development of marketplaces on the internet with a keen eye. Marketplaces are instrumental in the emancipation of the individual or small business offering. Where scalability is a crucial theme to understand today’s economic developments, marketplaces are where demand and supply are able to meet. Economies of scale of the marketplace does enable scaling down for both supplier and the demand site of a transaction.
Interesting read: All Markets Are Not Created Equal By Bill Gurley:
A true marketplace needs natural pull on both the consumer and supplier side of the market. Aggregating suppliers is a necessary, but insufficient step on its own. You must also organically aggregate demand. With each step, it should get easier to acquire the incremental consumer AS WELL AS the incremental supplier. Highly liquid marketplaces naturally “tip” towards becoming a clearinghouse where neither the consumer nor the supplier would favor an alternative. That only happens if your momentum is increasing, and both consumers and suppliers are sensing an increasing importance of your place in the world. Much easier said than done.