Where does the creation of a marketplace begin. Part two

Hello. In his last article, “How to create a marketplace. Part one ” I wrote about the general issues of creating a marketplace. One of the items was the Business Model. It is on this today that I want to dwell in more detail. I’ll tell you about three business cases that our team from Syndicode went through. For all business cases, the development for the backend was conducted on Ruby (Ruby on Rails) and React for the frontend. But I’ll tell you more about technologies and the development process in subsequent articles. Today, I will share the successes and failures of business models that I have encountered.



So here we go. All three business cases belong to the same customer from Berlin. The essence of the business of this entrepreneur lies in the fact that he comes up with / looks at the idea, studies it from all sides, for example, the demand for the market; competitiveness; the possibility of maximum automation, etc. Then he tries to create a marketplace, get an investment for a ready-made project, and then sell it to a large company that is a competitor in the market for decent money. Here is such an interesting business model, for the implementation of which you need to think through other business models :)



Honestly, I don’t know if the customer already had any projects before contacting us, and what he had there in the past, so I’ll only talk about what our company had to face.



The first business case is the creation of a marketplace for cleaning services. The idea, of course, is not new. Nevertheless, it is still very relevant. The customer made a study of the German market and came to the conclusion that cleaning services are very popular and the demand for them is only increasing every year. And he decided to try this topic. Everything rested on how to competently implement this idea.



The first difficulty he encountered was complete ignorance and misunderstanding of how the cleaning services market works. The scarce information that he found on the Internet on this issue could not allow building a complex system, since there were a lot of gaps in the process, from creating an order, to cleaning the premises and to the final payment for services. And he decided to get himself into one of the cleaning services companies.



I don’t remember exactly how much time he spent studying this type of business from the inside, but as a result he had all the answers to his questions, as well as a full understanding of how he would build the future marketplace.



As a result, our colleagues from another company developed an MVP marketplace for cleaning services for him. After the first release, it became clear that some ideas weren’t working, but on the contrary something was missing. Thus, through trial and error, the first release was brought to the fifth, and users of the service began to leave positive feedback.



The next stage was the search for an investor for an already ready platform. Marketplace has not yet brought profit, but has already paid for itself. Our customer began looking for investors, having a working solution on hand, which undoubtedly was a huge plus. After some time, he was able to find an investor. He didn’t tell us how much he was allocated, but judging by the fact that he immediately ordered us to create a full-fledged marketplace with many new features, I think that a lot.

Our team spent about 9 months developing a full-fledged marketplace for cleaning services, as the customer decided to implement all his ideas and ideas.



At that time, I was surprised by the fact that the customer did not hire staff for managing its market place. For example, managers, marketers, support department, etc. Why so, I realized a little later.



After the marketplace already had excellent functionality and began to make a profit, the customer sold it to the largest German cleaning company. The deal amounted to millions of euros. It was then that I learned about the business model of the customer, which I mentioned at the beginning of the article.



For me, such a business idea is very interesting. And in the realities of developed European business incubators, it is very efficient.



The second business case is the creation of a project for the delivery of goods from offline stores. The bottom line was that the user, when buying goods in an offline store, through the order form on the website or through the mobile application, could order home delivery if he did not want to carry it all in his hands. This order was received by the taxi service, and the driver should already have taken the goods from the store and delivered to the user. Logistics costs fell on the shoulders of stores, for the user it cost nothing. This is certainly not a marketplace, but also an interesting business model.



Our customer borrowed this idea from a successful French startup. He researched the German market, obtained positive results and took the initial investment from a German business incubator to create an MVP. Our team was able to meet two and a half months of very hard work. We created MVP with sufficient functionality for work and minimalistic, but nice design. Due to the compressed deadlines, everyone worked without taking their heads off the keyboard.



The total budget of MVP was $ 25 thousand. It included design, backend and frontend development, as well as deployment and support.



After the application was ready and the first orders began to arrive, our customer began to look for an investor. After a short search, an investor was found. But he did not want to immediately invest in the project and put forward the conditions that the project should reach a certain turnover per month.



But unfortunately, this did not work out. And the project died. Despite the fact that such a startup showed excellent results in France, it was not possible to repeat the same success in Germany.



The third business case is the creation of a marketplace for nurses and carers. Everything was much simpler here. This type of business as well as cleaning services is very popular and in demand. And since a competent marketplace engine for cleaners has already been created, they took it as a basis, remaking it a bit for nurses and carers with a new design. With this project, everything happened as well as with the first. Marketplace was promoted and sold to another large company. But without the creation of MVP. In fact, the customer, even before the start of the project, found a company interested in such a marketplace with the same business model (nurses and nurses), only offline.



What conclusions can be drawn from these examples? Firstly, the project has good chances to shoot, if you clearly and deeply understand the business model. And secondly, a not always good business idea that worked in a neighboring country may also work in another.



All successful projects and the realization of their potential. In the next part I will talk about the technical component of marketplaces.



To be continued…