“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.)…

SELL SIDE:

  • 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?

BUY SIDE:

  • 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.

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