“Services” Marketplace Metrics
In an internet marketplace, there is a “buy side” & a “sell side.” The following are some important metrics to monitor for a “services” marketplace (note that if this were another type of marketplace, there would be other metrics such as # of listings etc.)…
- What is the Total # of Sellers
- What is the Seller Growth Rate (%), both M-o-M & Y-o-Y?
- What % of Sellers are still active after 1 Month? After 1 Year?
- What are the common characteristics of the most successful Sellers?
- What is the Average Revenue Generated per Seller?
- What % of Revenue is generated by the Top 20% of Sellers?
- What is the Total # of Buyers?
- What is the Buyer Growth Rate (%), both M-o-M & Y-o-Y?
- What is the Average # of Orders per Buyer?
- What is the Average Amount purchased per Buyer?
- What % of Buyers have purchased more than once?
- What is the time between 1st & 2nd purchase?
- What % of Buyers whose purchase is in a different category?
Use cohort analysis to monitor both financial & engagement metrics over time.
And crucially, since marketplaces take more time to build than other types of internet businesses (due to building “liquidity”), you need to monitor the “magic #” — which is the requisite # of Sellers needed in a given geographical area (“liquidity”) to “open up” the marketplace to the “buy side.”
Ultimately, as stated in the last post on marketplaces, the 2 most critical metrics in a marketplace (especially at scale) are the GMV & take rate (the revenue line on your income statement).
And most importantly, the #1 reason to use metrics is to utilize them to optimize the business throughout its lifeline, in order to create a sustainable marketplace that provides real value for both sides of it.