To say that marketplace platform providers are poised for growth is an understatement. In fact, experts predict revenue will grow from $18.7 billion in 2017 to $40.1 billion by 2022. Amazon and eBay are the best known of these platforms, but with the rise of the sharing economy, dozens more have entered the industry.
The global marketplace expansion is fueled by the way online engagement is skyrocketing worldwide. Canada alone has seen a 54% per-person increase in just the past year. Providers of all kinds understand they need to be online and cater to consumers across borders.
Marketplaces are built on the idea of partner empowerment. The kind of global expansions we’re seeing is empowering for creators because it gives them the freedom to make a living from anywhere in the world.
For these emergent networks, sharing their passions with the world is a top business priority. The increased visibility offered by global expansion means those passions can be available to more people, both consumers, and partners. This benefits the health and growth of the network — and boosts the bottom line.
Vibrant marketplace platforms offer the easiest entry point, and we should expect to see a number of new global brands appear in the upcoming years. Along the way, however, even the winners will face some setbacks.
By scaling operations internationally, marketplaces are able to increase their value to consumers. They now have a wider array of options and services from which to choose, whether it be added tours in a new country or increased global creatives that can now provide content on their behalf.
More to Gain — More to Lose
When brands operate globally, there are clear benefits to bottom-line revenue. Businesses gain both more customers and more expansion opportunities. For example, by casting an international net, SmartShoot — a platform that helps brands connect with photographers, videographers, and filmmakers to create custom content on-demand — gains depth and breadth. By going global, SmartShoot can connect clients with an international community of creative professionals, a value not offered by more localized platforms.
The challenge for online platforms like SmartShoot is that going global increases turnover and makes partnerships tenuous. Platforms constantly recruit new participants to make up for those that leave while simultaneously working to minimize churn. Solidifying relationships often means having a physical presence in multiple countries, which is expensive and runs counter to the philosophy of businesses born online.
Having a local presence is also important for learning how to comply with laws and tax policies. These vary widely across countries, and as platforms scale upward, they need to learn the applicable rules as quickly as possible. Adapting isn’t easy, but neither is paying constant penalties for noncompliance.
Though it brings challenges, going global also brings growth. To garner an international audience, companies need to offer a product or service that appeals to just about everyone— something that can happen symbiotically with international outreach.
The events marketplace Peek is an example of how platforms become more widely known as they grow. Peek offers a way for travelers to find events and attractions across the world and has a suite of automated tools to help the operators of those attractions handle marketing and booking. In this case, Peek serves as the middleman where one didn’t exist before.
There are countless places online to find out about local events, but as Peek has gained in popularity, it has become the go-to platform for many tourists and operators. This growth leads to more growth. And as more people flock to the platform, it becomes more robust and more attractive.
However, global services platforms like Peek also face technical hurdles. Oftentimes, global platforms need to implement a robust payment system for compensating partners. And this system is not something that can be built on the back of PayPal — it needs to be intuitive and transparent; otherwise, partners are more likely to leave. Implementing a system that can handle different currencies and exchange rates is a big undertaking, but much of the appeal of these platforms is that they expedite the process.
The challenges are not insurmountable, and global brands must do whatever it takes to perfect their processes. With the right approach, even the smallest startups can grow to become globally recognized platforms.
Growing From Any Size to Everywhere
Enough international platforms exist at this point to identify some common obstacles and universal best practices. Rely on these strategies to expand as efficiently as possible:
#1. Make Life Easy for Partners
Understandably, marketplace platforms focus their efforts on the customer experience, but the partner experience is just as important. Take Peek, for example: If attraction operators didn’t like using the platform, they would flock to a different one and customers would follow. Ultimately, the success of the platform is driven by the partner experience, which in turn drives the customer experience.
#2. Leverage Economies of Scale
As platforms become bigger, their costs grow, but their per-unit price also drops due to economies of scale. It takes time to reach a point when growth saves money rather than costs money, which is why platforms should prioritize lean operations and high productivity starting day one. Think of the race to go global as a sprint rather than a marathon.
#3. Constantly Improve the Payments Process
Even after implementing their own payments process, platforms shouldn’t assume they’re perfect. Instead, they should always look for ways to improve the user experience by keeping costs in check, accelerating turnaround times, and leveraging automation. Similarly, the platform must be alert about how changes to national and international commerce rules affect them. A frictionless process encourages partner loyalty, which is essential for the longevity of the platform.
The potential for marketplace platform providers is limitless, and opportunities are everywhere for platforms to go global. The ones that will successfully reach that goal are laying the foundation now.