What is a Two-Sided Marketplace?
Meddling to Make Profits
Digital infrastructure has created the sharing economy — where value is in simple connection.
The two-sided marketplace joins buyers and sellers on a platform to facilitate direct transactions. By bringing people together, these platforms bring value to both consumers and service providers.
The recent growth of the sharing economy is staggering. Over the last ten years, two-sided marketplaces disrupted nearly every U.S. industry, including transportation, retail, and tourism. These platforms show no sign of slowing down — the sharing economy is set to generate $335 billion in global revenue by 2025.
What’s responsible for this rapid growth?
Scalability
Two-sided platforms are the middlemen, not the suppliers. These companies connect consumers and service providers, creating markets and money without production costs holding them back.
No company knows infinite scalability better than Uber. In only a decade, the two-sided platform has grown into the global leader of the rideshare industry. Operating at a groundbreaking scale, Uber drivers provide 16 million trips every day.
The opportunities for growth are seemingly endless. One of Uber’s subsidiary companies, Uber Eats, has successfully disrupted the food delivery industry. As a three-sided marketplace, Uber Eats connects restaurant owners with couriers and customers on a single platform.
Ease of Use
Successful companies in the sharing economy make transactions effortless for consumers and service providers.
Taskrabbit is an online marketplace that matches freelance labor with local consumers in need of assistance with daily tasks. The platform offers hundreds of services and is simple to use — benefitting both sides of the market.
Taskers in the U.S. earn $36/hour, approximately five times the federal minimum wage, with ease and flexible hours. Meanwhile, consumers can compare prices of different offers and interact with Taskers directly on the platform, ensuring that buyers and sellers negotiate the best possible terms of their deal.
Technology
The Internet has allowed the sharing economy to flourish. As technology continues to advance, two-sided marketplaces can expand and improve their platforms and services at record speed.
With a platform like Airbnb, anyone with access to a phone or computer can list their home or book a stay — anywhere in the world. With 14,000 new hosts joining every month, Airbnb has leveraged technology to become a global disruptor in the tourism industry.
What’s the Future?
While there are many advantages of two-sided marketplaces, there’s a number of challenges. Platforms in the sharing economy struggle with dedicating attention to service providers and consumers equally. With profits as their top priority, these companies may favor buyers, leading to low gig worker engagement.
The well-being of workers has a powerful impact on a company’s bottom line. For two-sided marketplaces to survive, it’s critical that they start dedicating resources to service providers.
At CoDo, we’re in the business of solving problems. If low employee engagement is affecting your two-sided marketplace, let’s find a better way together. Harnessing the power of behavioral science, our training software platform helps the modern workforce perform. With CoDo, turn onboarding into a customized, engaging journey to help you hook new hires.