Ten years ago, hailing a taxi with your phone was unthinkable. Today, this service does not just exist -- it’s thriving. Uber is a go-to for city dwellers, and it’s one of many virtual services redefining stagnant industries.
Virtual marketplaces have changed the way people do business and created new opportunities for startups to overtake larger, well-established companies. Business leaders can’t afford to ignore these opportunities.
Matching supply with demand is no easy task. But this changed in 1995, when eBay revolutionized the market for used goods. Seemingly overnight, people who’d been discarding unwanted items were selling them for serious cash, and various goods’ prices dropped because buyers had a viable alternative.
Likewise, StubHub matched supply with demand for event tickets. A ticket resale market existed, but opaque pricing and bizarre regulations created massive margins for scalpers. StubHub changed the landscape with a single, easy-to-use connection between ticket sellers and buyers.
Here are a few industries that have been reimagined with the advent of virtual marketplaces:
- Talent acquisition. For decades, headhunters and large consulting firms controlled the world’s best brains. America’s largest companies (including GE and Microsoft) are cutting out the middleman and using virtual marketplaces to gain access to talent. TaskRabbit and Handybook have created a market for commodity physical labor, while Behance, Guru and Fiverr host freelancers in creative industries.
- Personal transportation. Uber and Lyft have changed spontaneous personal transportation, and Bridj is generating mass transport routes based on supply and demand.
- Vacation rentals. The hospitality industry will never be completely transparent, but the market for vacation rentals, rooms and hostels has been disrupted by Airbnb, HomeAway and Hostelworld, which allow users to view options side by side, compare prices and read reviews.
While no industry remains untouched, a few have been sluggish to transition to seamless, transparent virtual marketplaces:
- Alcohol distribution. Bevspot is changing how large commercial purchasers of wine and spirits receive their products with its easy-to-use marketplace boasting transparent pricing and a predictable supply.
- High-end strategy consulting. Marketing and design work is outsourced to professionals in virtual marketplaces (think 99designs). There’s no reason firms won’t outsource strategy consulting in the future.
- Office space. With the rising popularity of co-working spaces and remote work, there’s a growing market for flexible office space. WeWork and PivotDesk are carving out this space. Soon, you’ll book a workplace from your smartphone as easily as a hotel room.
- Appointment scheduling. StyleSeat is becoming the OpenTable for booking hair-styling appointments online based on availability, price and recommendations. Appointment marketplaces may spring up in other industries.
How leaders can create disruptive solutions. For a lot of industries, this is uncharted territory. The arrival of easy-to-use, low-cost virtual marketplaces threatens many companies as their fat margins, opaque pricing and sparse supply disappear.
For leaders, the time to assert themselves in the space is now. Here's how to get started:
1. Offer customers something they need. When you create a service, center it on a single pain point your customers experience. What keywords do they search? Use Google AdWords to capture the people already looking for what your marketplace sells.
2. Take offline experiences online. Find a way to take an inconvenient service (such as finding a web developer or dentist) online.
3. Create an easy-to-use platform. A virtual marketplace needs to be convenient, but also easy to understand and user-friendly. That’s why people will return and recommend it to others.
4. Offer choices. It’s not enough to offer one option. Your service must provide several high-quality options that can be filtered by preference.
5. Provide helpful examples. Project ideas and case studies help people understand how your service can work for them.
6. Enlist the help of influencers. Make thought leaders and celebrities your advocates. An influencer’s endorsement can be worth much more than an advertisement.
Ready to brainstorm? Ask what your company offers, then consider how you can make it more convenient and seamless. Convenience is why virtual marketplaces exist and why they’ll grow exponentially in the next few years.
Someday, people will rent physical assets, real estate and people’s time in mere seconds. Businesses will only employ individuals who are mission-critical -- everyone else will sell their skills directly to the end user.
The possibilities provide new opportunities for your company to connect with customers and offer something truly groundbreaking.