How to Validate Your Peer-to-Peer Marketplace Idea
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Lately we began covering topics on how to make a successful marketplace. Making any product and bringing it to success is always a challenge, and marketplaces are no exception. However, even before building a marketplace, you must be sure that there is demand for your marketplace. In other words, validate your idea.
It may sound pretty obvious, but if most entrepreneurs would validate their ideas before turning them to life we wouldn't have the 90% failure rate for startups (~40% of which fail particularly because there's no market need for their products/services, according to CB insights' founder questionnaire).
To validate the peer-to-peer marketplace, which is basically another site on the internet, you can use a broad range of web analytics tools and now we're going to show you how to do it.
Is There a Market?
In order to launch any product, you should first figure out if there is a market ready to use it. In case of peer-to-peer marketplaces, offering spaceships can sound as a great idea, and you may even find a few people eager to rent a spaceship, but most probably there will be slight troubles with offers and readiness to pay, so there's no market.
Is There A Problem?
If there's an existing market, it should have a problem that you can address. It can either be a big market with a problem already solved, and you can enter it as a more appealing competitor, or it can be a niche market having unmet needs.
Do People Seek a Solution?
You must check if your potential customers seek a solution. Apple has created its first tablet called MessagePad back in 1993, and it was addressing existing businesspeople needs, but consumers weren't looking for new solutions back then.
For marketplaces it's a great time now, because peer-to-peer exchange is a growing trend nowadays. Not only the creative economic revolution makes the idea of turning people into entrepreneurs is pretty appealing for everyone, but also the technologies now allow shopping and communicating with each other through smartphones on-the-go, which opens new possibilities for peer-to-peer marketplaces.
Are People Ready To Pay?
Finally, you must ensure that your potential clients are ready to pay money or any other asset that has transactional value for your solution.
Having answered all of the above-mentioned questions, you will be ready to validate your peer-to-peer marketplace idea.
Since any peer-to-peer marketplace is basically a website, you can use a broad range of web analytics tools to find and collect the necessary data. Here are some advices that you can take advantage of when validating your peer-to-peer marketplace idea:
- what’s Simply google the keywords that your potential client would type to find your marketplace and see if there are any competitors or similar businesses. That will reveal if there's a market big enough for you to enter and if you can benefit from it.
- what’s Analyze both organic and paid traffic. Paid traffic usually means that your competitors are ready to pay money for search advertising because it generates revenue. And so you can also create a profitable solution.
- what’s Use the Google Trends tool to see how often the products of the market are mentioned in headlines. If this number is constantly increasing, then most probably your market audience will keep growing for a while.
- what’s Use the free Google Keywords Tool to see how many people look for solutions of their problems similar to yours. The Near Me experts suggest that there should be not less than 5,000 searches conducted for a broad market, and at least 3,000 searches for a local market.
- what’s Take advantage of analytics tools like Semrush, WhatRunsWhere, Adbeat, Ahrefs, SimilarWeb to see more info on your competitors. Most of the tools are paid but offer free trial.
- what’s If you're going to create the first marketplace in your niche, you can check the demand for it by creating paid ads about it on Facebook and/or Google. If people click it, then they're interested in the idea. The ad may lead to a Coming Soon page collecting emails (having the subscribers base ready to use your marketplace as soon as it is launched is an invaluable advantage!)
In the end
As soon as you have validated (or pivoted and validated) your peer-to-peer marketplace idea, it’s time to build your marketplace! For that matter, check out our blog posts on Creating a marketplace with ShareTribe and Making it successful.
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