Building 2 Sided Marketplace

Gumroad is a two sided marketplace for digital goods.

Building 2 sided marketplace.

Providers customers and the marketplace entrepreneur. The platform doesn t own the supply chain of value but rather controls the network of third party producers of value and the consumers coming to the platform to consume that value. The service allows creators to set up a digital store and collect payments. Two sided marketplaces are those that bring two user groups together to help them get network benefits from each other and generate economic value.

The platform s business model is to take a percentage of the transacted value for connecting producers and consumers. Recently our team was creating a two sided marketplace platform and we have some insights worth sharing. The purpose of a two sided marketplace platform is to facilitate interaction between providers and customers. It s all about learning experiments and new experiences.

A two sided marketplace lets parties of producers and consumers interact with one another and creates network effects between them through a platform intermediary. The platform also has other features that help sellers such as giving the store a blog and customer analytics. The company has already paid out over 200 million to creators. Trying to target a market opportunity that is too big or take on a competitor head on is a recipe for failure.

Probably the most important overall strategy for building a two sided marketplace is that you must start with a niche. You can build a two sided marketplace regardless of the industry you are in. The two sided marketplace business model double sided markets create value for all parties.