When starting a peer to peer marketplace, there is always a common dilemma any entrepreneur comes across is in bringing the initial customers.
It is confusing for the marketplace owners whether to chase the sellers or customers. This is what is termed as a chicken-egg problem, whether to run after chickens(sellers) or wait for the eggs(buyers).
Numerous businesses in the past have faced similar situations and still won the game by adopting effective strategies.
This blog talks about various strategies and examines with a case study to solve the chicken egg problem.
Start small
“A big business starts small.” – Richard Branson
When you start a marketplace, target a small audience initially. By targeting a small group, you will learn the do’s and don’ts of the business. Achieve the initial goals of the marketplace and begin scaling to a place where supply and demand not met. In this way, it is easy to get the first 100 customers to your marketplace and solve the chicken egg problem.
For instance, Craigslist started in San Francisco by Craig Newmark by mailing local events and shows. When he began to find online people, the community started growing, and individuals began to contribute to it by sharing their updates. Soon a need for the website came to post about jobs, local events, sales and shows. Now the Craigslist website is visited by millions of people.
Utilize the online community
Do you know the story of how Etsy started?
When Etsy co-founders graduated from college, they started doing freelancing website building projects. At that time, they got hiked with the project about building community forums for crafters. When they went through the conversations of people, they understood how they were dissatisfied with eBay. So, they saw this as an opportunity and built a website exclusively to see handmade and crafted items.
From this case, you can realise they build a website for the existing community and helped them by giving a better user experience website. They tapped into the existing unknown network, a clever way to solve chicken egg problem.
Find a community who are already present but dissatisfied with the current system. Discover the loophole and fix it by designing a better system than the present.
Act as a seller/owner

Monetary subsidies
To bring sellers on board, offering a monetary wage until people start using it is a reasonable approach. It has also a possible risk of losing investments when the plan doesn’t work out.
When Uber first started in Seattle, they paid drivers even though customers were unsure about this service. After gaining initial traction of users, other drivers considered a profitable opportunity.
Bringing high-value owners
When a prominent seller enters the marketplace, the customers of the sellers will engage the platform as well. In this way, the clients of the seller can convert into the customer of the platform.
For instance, when a big brand like Nike, Calvin Klein or Adidas market their clothing in an e-commerce store, customers shop in the e-commerce store to buy the brands, a smart way to solve chicken egg problem.
Encouraging owners to bring in the audience
When the seller/owner also take the initiative to bring in the users, it is less pressure for the marketplace owners to bring in the customer. In this case, both the marketplace owners and sellers work together to bring in the audience.
If a seller of the marketplace already has a few loyal customers, they would follow and keep an update of the seller.
In a nutshell
We illustrated with a real-time example of the top tech companies in the market on how they launched and solved the supply and demand of their marketplace. Not every strategy would suit to your marketplace.Examine each option, weigh the pros and cons or tweak any approach suiting to your marketplace and solve it.
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