When there is a trend in business, the best and worst of them turn into a bubble. The reason is that more often than not, shoddy business practices and laziness find their way into the market. These practices set a standard that can influence how the general public perceives the greater industry and can spiral into a serious problem.
With marketplace apps becoming more and more commonplace as a source for digitally inclined buyers to find products that they like, it’s more competitive than ever and with industry, growth comes growing pains.
In this brief article, we will dig into a few of the things that hold marketplace apps back so that whoever is reading this won’t repeat the same mistakes.
Let’s dig in.
Don’t Go Too Deep Into Your Niche
Specialization makes sense. With powerhouses like Amazon and Walmart dominating general online buying, it seems like a no brainer to choose a project that is more focused on a smaller market and provides a more specialized experience to their users.
The problem lies in the need for traffic. In the case of bigger niche sites, their challenge is beating out the brands of competitors with more resources, a better team, or a better product for a piece of what should be a large market. Smaller markets have less leeway and in many cases are reliant on a budget to maximize the amount of traffic you get.
Namely, it’s impossible to make money or extremely difficult to if you only have a small handful of people to sell to. While there is a massive market for games, a big market for first-person world war 2 shooter games, there is not a massive market for first-person shooter games that are only for a custom computer build users with very specific parameters.
Profit Margins Are Too Low On The Products Being Sold
For those that are specializing in a marketplace that is meant for under $50 product sales. Unless the volume can compensate or membership fees make it worth it, it simply is not sustainable. Finding a business model that fits for niche marketplace apps for cheaper products is harder because there is less opportunity to monetize based on the sales or listing fees since the profits are so low for the sellers already.
Bigger marketplaces that charge heavily for listings and for handling fulfillment at least have the volume of their traffic to compensate and make it easier for sellers to scale based on smaller profits. Niche marketplace apps don’t have that luxury.
When developing a marketplace app, most people don’t take into account how difficult it is to prevent scammers both on the buyer and seller side. Sellers need protection from chargebacks, credit card fraud, and users trying to blackmail their way to more free products via fraudulent complaints.
Buyers need protection from sellers selling fake or inferior products and offering little to no satisfaction when a genuine issue arises. If you protect buyers too much, then you won’t keep sellers. If you protect sellers too much or over buyers, then buyers won’t trust your app to purchase from. In the case of grassroots apps, it’s hard because budgets, staff, and time are far lower.
Putting it all together, it becomes a problem that really hampers the progress of what teams can do when working with a niche marketplace app.