When you want to set up a marketplace you face a chicken-and-egg problem: building a bespoke marketplace is expensive, but enables scalability and customisability; while development that uses a white-label marketplace website platform will deliver a result, but it may be difficult to scale that should your marketplace be a hit.

You can’t build a skyscraper on the foundations of a corner store. That’s the pitfall of DIY solutions. The pitfall of bespoke is that building the foundations for a skyscraper is expensive and there is no way to tell if you’re actually going to need them unless you build a cheap corner store on those grand foundations as a test of market response. What do you do?


Minimum viable product (MVP)

The marketplace development sector is undergoing massive growth. First-mover advantage for new marketplaces is there for the taking. While white-label products are fine for they can do, they are compromised simply because they have to be everything for all start-ups. And every marketplace is necessarily different.

Hunted Hive Operations Manager Roger Chappel often reminds business people keen to test their ideas that designs that have not been well planned or considered can lead to extremely expensive and slow systems that won’t perform as desired.

“Compromises you make at the start will be an ongoing cost in forfeited productivity and sales,” Roger says.

What that means is a two-sided marketplace built using existing white-label solutions can only grow within the bounds of those solutions. If the features your marketplace users need are outside the scope of your white-label marketing platform, you will be forced to create an expensive ad-hoc solution.

“Getting a marketplace right costs a lot, getting it wrong costs more,” he says.


Explain how the thing works

Roger explains that clients are coming to agencies to identify the requirements and needs of their platform concept.

“The problem is that to get those answers, they need a minimum viable product (MVP). The upfront fee to test the viability of a marketplace is a barrier to entry for bespoke marketplaces, but bespoke marketplaces are more viable overall than white-label marketplace platforms."

“Building custom software can be expensive and there can be hidden fees, yet hiring a third-party firm when you have no experience with this sort of application can be even more costly.”

It is a recursive problem where the cause of one is the effect of the other and vice versa, or, in common parlance, a chicken-and-egg problem.

“Until now, you needed to invest to see if there was any point investing. Hunted Hive has found a way out of this problem.”


Proof of marketplace viability solution

The pattern Hunted Hive identified was that people wanting to start a two-sided marketplace were looking for an inexpensive proof-of-concept to validate their idea. Only white label solutions offer that. Yet, at the same time, they didn’t want to be locked into the expense structure of customising a white-label marketplace website platform if the test validation was successful. Enter CNXION.

“CNXION offers both the bespoke feel and capability for the cost of white label,” Roger says.

“To resolve their chicken-and-egg problem, a client can hire us as a turnkey solution and we can build their platform on a low-cost white-label solution that already exists.”

With that in place, the client can then focus on attracting users and validating their platform – even though it is essentially a prototype, it will still give users the finished-product experience. All the rough edges will be invisible on the front end.

“Once the prototype has been tested and proven, the flexibility of CNXION means we can migrate your white-label prototype over to a platform that is fully customisable and scalable,” Roger says.

“In the trial phase of your marketplace’s development you can think of Hunted Hive as turnkey marketplace consultants. In the scale phase, we become your bespoke developers.”


Simpler, but still hard work

The solution is tidy and efficient, but that doesn’t mean the process is going to be easy. First, investors are wary about marketplaces, these heralds of the sharing economy’s shakeup of existing capital flows. Without investors having a good sense of what a solid marketplace prototype looks like, start-up funding is scarce.

“We’re finding that people don’t even know enough about white-label solutions to make informed decisions, let alone about bespoke developments. We have been acting a lot as consultants. People are asking what is the right way to do A, B and C,” Roger says.

One thing Hunted Hive makes sure to tell each person who enquires is that they’ll still need to bring planning, project management, design and customisation to the table.

“People underestimate how long a small DIY marketplace on a template-based platform will take.”

He cites a figure of 100 to 200 hours for the average marketplace start-up to adapt a white-label solution to what is needed. Meanwhile, a from-scratch bespoke solution is likely to be “thousands of hours”.


Build, test, build bigger

Marketplaces built on matching platforms are hot for a reason. They’re revolutionising industries by connecting customer needs with market response at an efficiency that is simply unprecedented.

Uber and Airbnb blazed the way with the two most obviously under-utilised assets: cars and houses. However, there is downtime slack in almost every area of the economy – that downtime is the asset every marketplace seeks to leverage. Find the right demand for the right under-utilised asset and the gains are there.

“Once you have proved your marketplace concept, you scale according to demand. To do that means it’s time to customise and get something tailor-made for your marketplace,” Roger says.

“It’s how you really give users exactly what they want.”

Find out more about white-label marketplace website platforms and how you can escape the chicken-and-egg problem of proving your marketplace without the big upfront investment - talk to a representative at wearecnxion.com