How to Build an Online Business

Chapter 12Marketplaces: Disrupting legacy industries

An online marketplace, such as eBay, Catch of the Day or Freelancer, is a platform that facilitates exchanges between buyers and sellers. They are hugely disruptive models and are both helping and hindering small businesses like never before. They’re being used by startups and corporates to replace traditional ways of doing things. For example, corporations are increasingly recognising that marketplaces are the new models for finding a workforce. Some, like IKEA, are even partnering with recruitment marketplaces to reduce costs, increase services and harness the thousands of people working in the gig economy.

In short, marketplaces put pressure on traditional service providers to remain relevant, cut their prices and be more pliable.

For example, what does it mean for a carpenter if the building supervisor says, ‘Cut your rate or I’ll get a team from hipages [a trades marketplace] to do your work instead?’ What’s a graphic designer to do if the boss says, ‘Work on a Saturday or I’ll just get a freelancer from Upwork to finish the job instead.’

Here’s how a few corporations have turned to marketplaces:

• IKEA Australia encourages customers to use hipages for installation services.
• GE’s partnership and investment in Quirky, a community-led invention platform, means they don’t have to invest so heavily in R and D and innovation anymore. They can turn to Quirky’s community of inventors who are ready and willing to share their invention ...