Kick-starting a Two-sided Online Marketplace

Kijiji.ca founder and Real Partner, Janet Bannister, shares three principles for launching a thriving online marketplace

Real partner and Kijiji founder, Janet Bannister

We’re all familiar with massive online marketplaces like eBay, Alibaba and Etsy. But is it still possible for new marketplaces to have comparable success? The short answer from Janet Bannister, founder of Kijiji — Canada’s most popular online classifieds site — is yes: if founders choose the right approach, carve out their niche and follow certain principles, they can build a high-growth, successful marketplace business.

So what do entrepreneurs need to know for success? In this two-part series, we’ll share Janet’s answers to the main questions she gets about marketplaces, first digging into how you can kick-start growth of a new marketplace, and in the second article, how to successfully scale a marketplace once you’ve got the ball rolling.

Solving the chicken-and-egg problem

Having spent four years working with eBay in California, helping to transform it from a collectibles to mainstream marketplace, Bannister moved to Toronto with a mandate to expand eBay’s presence in Canada. She recognized, however, that Canadians aren’t as likely to purchase online as consumers in other countries. So she pitched the idea of an online classifieds site, and was given permission to build one from scratch.

When Kijiji launched in Canada, Craigslist was well established and there were several other local classifieds sites with strong presence. Fast forward two years and Kijiji was Canada’s top online classifieds site and one of the most visited websites in the country. How did her team kick-start rapid growth on Kijiji? Bannister believes it was based on three core principles:

  1. Focus on matching buyers and sellers rather than maximizing total number of visitors;
  2. Select specific markets in which to refine the product and marketing playbook before going broad; and
  3. Double down where you have traction.

Focus on matching buyers and sellers

For a marketplace to be successful, you need sellers offering products that buyers want. (Note that the words “seller” and “buyer” are used to denote to the supply and demand sides of the marketplace and in any given marketplace may take a different form such as an employer/job seeker; renter/lessor; service provider/customer; etc.)

“Too many marketplace owners concentrate on the total number of visitors, or total number of buyers and sellers,” Bannister says, “but these metrics are meaningless if you don’t understand whether supply and demand are being matched.”

That was the core of the approach to kick-starting Kijiji’s business: Bannister looked to match buyers with sellers so that both buyers and sellers would go away happy, return when they needed to buy or sell something else, and tell their friends and family about their experiences.

Buying location-specific keywords on Google, Kijiji quickly matched their first sellers with the buyers they wanted. “We grew from there,” Bannister says, “Always looking at supply and demand in each sub-category, in each city, using proven tactics to drive supply or demand as needed at the micro level to ensure that sellers were selling what they had listed and buyers were finding what they were seeking.”

While many people might think that a vibrant marketplace hinges on the total number of visitors, Bannister believes it’s really about whether the sellers and buyers have intersecting needs. Marketplace owners should look at conversion rate and the percentage of users who take action as better indicators of initial success.

Select specific markets in which to refine the product and marketing playbook

While it might be tempting to launch across a number of markets and hope for the best, it’s important to pick one or two specific markets and focus on them in order to get strong initial traction. The narrower the focus, the easier it is to get initial matching between buyers and sellers.

“With a narrow focus, you can concentrate on getting the core product and marketing right before turning your attention to expanding to new areas,” Bannister says. “You can more readily identify and launch the necessary product features and experiment with different marketing approaches.”

To use eBay as an example, when the marketplace first launched, it focused on collectibles. The company devoted resources to understanding consumer needs and honing product features such as feedback ratings, trust and safety policies and integrated payments. With this solid foundation, eBay then expanded to new categories and saw very rapid growth in non-collectibles categories.

“While expanding into new categories required us to make some changes in marketing tactics and product features, these were adjustments to the proven playbook. We were making well-informed modifications to a verified approach, not starting from scratch.” Bannister says.

Double down where you have traction

Once you have launched, there will be certain categories that take off more quickly than others. Don’t make the mistake of trying to build up weaker categories at this point. You should focus your efforts where you have initial traction, as it’s easier to build on your strengths than trying to kick-start something that’s not working.

When Bannister’s team was tasked with growing the non-collectibles categories at eBay, they started with the categories that had early signs of life on the site and promoted them on the home page. “For instance, when we analyzed the data and saw that most searches in the clothing category were for high-end fashion brands, we started promoting eBay as a great way to buy second-hand designer brands, both on and off eBay, and the growth of those products took off,” says Bannister.

At Kijiji Canada, after their initial launch in Montreal and Quebec City, the company expanded to other cities across Canada based on several factors — an important one being where consumers lived who were already coming to the site.

Based on these three core principles, Kijiji was able to quickly become the top classifieds site in Canada. “Launching and getting initial traction in a two-sided marketplace is tough,” says Bannister. “But if you concentrate your efforts in the right places — focusing on matching buyers and sellers, choosing specific markets in which to refine the product and marketing playbook, and doubling down where you have traction — you will be well positioned for success.”


In the next post in this series, we will share Janet Bannister’s advice on how to grow a two-sided marketplace once you have initial traction. Follow us to receive this post in your inbox!