My marketplace predictions for 2016 (and beyond)
This is a follow-up post to our Point Nine Predictions for 2016 and dives deeper into my 3 digital marketplace predictions for 2016:
Prediction #1: Disaggregation
When it comes to digital marketplaces, we at Point Nine are observing a long-term trend that some call the “disaggregation” or “fragmentation” of horizontally structured marketplaces into dedicated, vertically structured platforms. Already back in 2010, Andrew Parker of Spark Capital wrote a great piece titled “The Spawn of craigslist“ about his observations on the “unbundling of craigslist” (a must read!).
History has shown that online marketplaces went through 3 major development steps from being rather passive to becoming more integrated and “active”:
- Regular (online) classifieds- or listing-sites: fixed fee and “passive” such as paper-based classifieds but also craigslist and the like
- Lead generation: performance-based “transaction enabler”
- Transactional: commission-based, fully performance-based, owning the transaction
Our strong belief is that the trend of moving into the transaction and becoming more specialized and thus “vertical” persists and will continue to evolve.
Prediction #2: Uberization
Today, this trend is reinforced by the “uberization” of marketplaces (or better: “…of everything”): Everything shifts online and becomes bookable on-demand meaning the marketplace strives to “own” the transaction with fully dynamic, demand-based prices (e.g. surge pricing) resulting in a higher transparency to its users and, most importantly, higher efficiency. On that topic,
of Index Ventures recently published an interesting piece about his view on the on-demand economy.Prediction #3: SaaS-ification
We also notice that the lines between “SaaS” and “marketplace” become more and more blurry: As a result of the aforementioned “uberization” and disaggregation, marketplaces need to have very strong, specialized product-offerings to both, demand- and supply-side-users (think uber’s different apps for drivers and passengers or, Thumbtack’s different solutions for professionals and end-consumers). Thus, their products become increasingly “SaaS-ified” i.e. features of their product suite could be viable stand-alone-(SaaS-)applications outside of the marketplace. That means users would be willing to pay for it on a subscription-basis because of the value-add or efficiency gains they generate.
In that way, the SaaS-part enhances the entire marketplace experience for both, the supply- and demand-side-users, and eventually increases the lock-in and usability for everyone. As a result, the marketplace could potentially monetize to a higher degree or, it reaches critical mass quicker (due to faster user adoption) and therefore can start to monetize more aggressively earlier in its development.
A business subject to these dynamics can optimize its monetization in the long-term by choosing a transaction-based model, a subscription-based model, a lead generation model or a mix of all/any of them:
At Point Nine, we strongly believe that this development will continue throughout 2016 (and beyond). We have made several investments in this space in 2015 (and before), some of which have yet to be announced, some of which are already disclosed e.g.
- Deskbookers (NL): a marketplace and booking engine for on-demand workspaces
- Eversport (AT): a marketplace and booking engine for on-demand sport venues
- StarOfService (FR): a marketplace and booking engine to book any kind of service professional on-demand
- Docplanner (PL): a marketplace and booking engine for doctor appointments
As a consequence of the specialization resulting from the disaggregation and “uberization”, so many new marketplaces are being created in so many different segments that we’re seeing the rise of a new breed of middlemen services (like e.g. Magic). These help consumers navigate an ever increasing abundance of on-demand-services. We believe that this will even accelerate over the next year.
In 2016, we will continue to look for great teams that are following and refining these trends with the ambition to build global category leaders. Please get in touch if you feel this could be YOU!
