Issue#16: Building $1K-$10K MRR Marketplaces - various domains and niches
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No fluffy content. If your goal is to build a $100m ARR business, this is not the right post. Here I am are NOT going to talk about building the next Facebook or Twitter. If your goal is to make a $1K to $10K MRR, continue reading.
This post will cover one SAAS area and talk about multiple niches in this space. This post also explains more on how to do tech implementation, do market analysis, how the current players are doing, and also ends with a cost analysis to understand the overall cost for 100 users.
Online marketplaces existed for a long time in the form of Fiverr & Upwork for freelancers. There are a lot of marketplaces for selling/buying digital assets as well. But this concept can be extended to pretty much every niche.
MentorCruise : Work with leading tech mentors and gain access to personalized guidance to reach your potential. Ongoing sessions and expert advice, on your terms, all for a flat monthly price. This is a true MRR model where the buyer side is paying a monthly fee. Making $6K MRR. Launched in September, 2017.
MicroAqcuire: Startup acquisition marketplace. Free. Private. No middlemen. Start the right acquisition conversations at your own pace. Get free and instant access to 30,000+ trusted buyers with total anonymity. Making $20K MRR, Launched in Feb, 2020
IndieMaker: Buy & Sell Side-Projects, SaaS, Domains and Social Media Accounts IndieMaker is a community marketplace with 14,224+ members where makers sell their side-projects, unused domains and online businesses.
Flexiple: Hire Pre-Screened Freelance Developers & Designers Flexiple is a network of top freelance developers and designers with hourly rates ranging from $30 to $100. Making $1 million/year in revenue.
GrowthMentor: Have 1-on-1 conversations about growth, marketing, and everything in between with the world's top 3% of startup and marketing mentors. Making $5K as of March 2020. Launched in August 2017.
MoonlightWork: Match with experienced developers to get work done quickly. Hire vetted developers to work with as contractors and employees. Making $80K/month and acquired.
BuySellAds: Diversify your advertising strategy using one platform. Reach technical audiences, explore unique ad placements, and run multi-channel campaigns all in one place. Making $5 million in revenue/year.
CarbonAds: Reach developers and designers effortlessly. Carbon is the best way to reach designers and developers at scale. Founded in 2010, highly profitable.
UnicornFactory: Hire New Zealand's best freelancers. UnicornFactory helps connect you to Kiwi freelancers who are really really good at what they do to help you take the next step in reaching your business goals.
Toptal: Toptal is an exclusive network of the top freelance software developers, designers, finance experts, product managers, and project managers in the world. Top companies hire Toptal freelancers for their most important projects. Making $100 million/year. Founded in 2010.
PurpleAds: With PurpleAds, get better results and reach different audiences through an exclusive network of websites with simple and effective native placements that don’t distract users.
FreeUp: Hire pre-vetted freelancers. Get more done faster.
ByeByeDomain: Marketplace for buying and selling domains before they expire.
Stackraft: StackRaft is not a typical hiring platform — that’s a talent community.
GumAffiliates: Gumaffiliates makes it easy for Gumroad creators and affiliates to find each other.
GetCredo:Top companies meet the best pre-vetted digital marketing providers through Credo in under 48 hours.
SponsorGap: SponsorGap is where newsletter and website creators find their next sponsor, post their open ad slots and brands publish their open sponsorships.
TaskRabbit: With TaskRabbit get help from thousands of trusted Taskers for everything from errands to contactless deliveries.
BlenderMarket: The indie market for Blender creators. Making $60K/month.
Negative Nancy says - Marketplaces are tough to build and often take time to be profitable.
Me - Yes. That is correct but once it picks up and gains enough traction, it grows exponentially.
Negative Nancy says - It needs a lot of tech expertise to build a marketplace
Me - Disagree. Building a marketplace needs zero tech knowledge. You can just start with a simple Google sheets/Airtable sheet to start with. On top of that, once the product establishes and needs a full-blown site, there are a lot of ways to build marketplaces without investing heavily in tech. See the rest of the sections for a more detailed explanation.
Negative Nancy says - Marketplace comes with the inherent “chicken and egg” problem
Me - Yes. But that can be solved in most cases by picking one side or going in parallel. It's not going to easy but it is not impossible either. See the rest of the sections for a more detailed explanation.
Ever heard of something as below?
Uber - The world’s largest taxi company owns no vehicles.
Airbnb - The largest accommodation providers own no real estate.
Alibaba - The most valuable retailer has no inventory/manufacturing units.
What is common from the above? All of these are curated lists of something and are often called ‘Marketplaces’. That is the advantage that the marketplace brings in. You are only connecting both parties (supply-side and demand-side) without actually maintaining any inventory and thereby keeping the actual costs low.
Another advantage of the marketplace is that you don’t need a lot of tech knowledge to build a marketplace. There is a lot of software for creating simple marketplaces. The core success of a marketplace lies in building the actual supply-side.
Still wondering if you should consider building a marketplace. See the latest update about Linked in reportedly building a freelance marketplace to beat Upwork and Fiverr.
All marketplaces typically have the “chicken and egg problem”. It is often tough to decide whether you should onboard the sellers/vendors or buyers. Which side should you concentrate on? We refer to sellers/vendors/service providers as “supply-side” and buyers/consumers as “demand-side”.
Typically for most cases, you should concentrate on the seller/vendors side by setting up a good expectation that it may take time to generate revenue. Once you have enough people on the ‘supply side’ (sellers/vendors) and confident that the ‘supply side’ got the momentum, start talking to the people on the demand side’ or both the activities can go in parallel as well. For example, if you are building a Freelance marketplace, it doesn’t make sense to reach out to companies when you have no freelancers (supply side) with you. So, in this case, ideally, you should be talking to at least 50-100 freelancers and onboard them on the marketplace. Pick and drill down a niche as much as you can.
One time vs Recurring revenue model - There are multiple models typically in a marketplace model. Some models, let buyers pay per use of seller service - as a one-time charge. But some marketplace chargers buy a flat monthly fee to access the seller services and keep certain limits. Another model is where buyers are charged an “access-fee” to access the ‘seller side’ and then pay an extra fee for the actual service. This access-fee could be a monthly or quarterly recurring fee as well.
Some niches (This section includes profitable niches from existing players and a few new niches as well)
Marketplace for Freelancers/Vetted Freelancers: Normal freelancer marketplaces like Fiverr and Upwork are meant for general freelancers and caters to a much bigger market. A vetted freelance marketplace is meant for vetted freelancers. There is a lot of demand for freelance and vetted marketplace. A vetted marketplace is a premium version of a normal freelance market. This can be extended and drilled down to specific niches as well. While there a lot of marketplace products for freelancers in general, you could start A must-read story from Moonlight Developers if you want to build something around this space. See the story of Flexiple and how they just operate with Google sheets and still making one million dollars in revenue with now complex tools. Niche down your marketplace as narrow as you can. Start with any specific niche - for example - a vetted marketplace only for designers or only for react developers or only for frontend developers. You can drill down to a location as well. For example, UnicornFactory is meant for freelancers from New Zealand.
Marketplace for Mentors/Mentees: Everyone needs a mentor at some point. This could be for mentoring related to job improvement, interview coaching, or technical coaching specific to “Engineering”, “Product Management” etc. This could be extended to life coaches, CEO coaches. Build an entire marketplace around the mentor/mentee model. A few startups are working in this niche but still, there is a huge market for something like this as people are spending more on quality content/guidance. But note that - unlike other models - a mentor/mentee model needs a lot of trust from both parties. So, this would relatively take more time to establish. For example, MentorCrusie took a couple of years before making profitable revenues. The same is the case with GrowthMentor that took its own sweet time before the platform is opened for everyone. On top of that, this model involves a lot of payment to mentors and the profit margin could be thin. But it works at scale.
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