Categories: Business / Mobile Apps

Managed marketplace startups are the hot new trend. Little wonder, since there’s big money involved – done right, they could disrupt the $10 trillion service economy. As a studio that’s worked on a few marketplaces that are taking their industry by storm, we’re 100% on the managed marketplace train.

Let’s take a look at what exactly managed marketplaces are, and why they’re so great.

Phone with icon of Uber, one of the top managed marketplace startups.
Uber is one of the top managed marketplace startups.

What are managed marketplaces?

Managed marketplaces mark an important evolution in the first generation of online marketplaces, which were basically about connecting buyers and sellers. Basically they’re where the marketplace itself becomes more involved in the overall transaction. They’re more “active” than old-school marketplace platforms.

How so? Some features of a managed marketplace include price standardization, quality guarantees, and logistics services. Another common feature is the ability of the marketplace to step in and offer financial incentives that keep the people on either side of the transaction happy. Think minimum payments for Uber drivers.

The goal is to deliver a better experience for the end user.

Why are managed marketplace startups so popular?

Some of the top “unicorn” startups are managed marketplaces. Think AirBnb or Uber. There’s a reason they’re so popular.

First, they help guarantee a certain level of experience for the end user. Someone browsing AirBnb can expect something more than from, a more traditional marketplace. Host credentials, the types of properties available and even a breakdown of billing costs are all part of the experience.

Trust is also a crucial factor. If someone has a bad experience, they can take a complaint to the platform itself rather than trying to deal with an individual. This delivers an all-new level of trust and security for the customer.

Pricing is another benefit of managed marketplaces. Rather than trying to sort through a list of quotes or prices, users can easily find the “going rate” – and know what they’re expected to pay.

Managed marketplace startups also help standardize service offerings. Now you can easily find a plumber or cleaner, know what services they offer, and know what you’ll pay. There are fewer surprises when a managed marketplace is involved. As a bonus, the vendors themselves also get a business boost. It’s much easier to find customers on a centralized platform than with a Google listing.

Finally, managed marketplaces have data on their side. They can monitor supply and demand, ensuring a better experience for both customer and vendor.

Image of an AirBnB listing. AirBnB is a managed marketplace that has disrupted the hospitality industry.
AirBnB is a managed marketplace that has disrupted the hospitality industry.

Beyond the managed marketplace

Having something for sale doesn’t immediately make you a marketplace. Think of the difference between a market and a store. One has multiple vendors under one roof, while the other has just the one. Take the recent surge in property startups. Instead of connecting buyers and sellers, these are starting to take on their own inventory – making them the sole vendor in the equation.

While there’s definitely a huge potential for growth around this kind of business model, it’s not a managed marketplace by definition.

Where can managed marketplace startups shine?

The industries ripe for disruption by managed marketplaces are those that are large, fragmented, have poor customer service and don’t have a major player dominating the field. If you have an idea for a managed marketplace in one of these verticals, you could just be sitting on the next unicorn.

Have a managed marketplace startup idea and need a digital partner to help you build it? We have the expertise and the experience. Get in touch!

Touchtap is a digital agency specializing in mobile-first development.We can build your mobile app for you.

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