Notice a common theme among the top five most visited retail websites worldwide?
They are all online marketplaces.
Yet, for every successful marketplace, dozens more close their doors, in many instances because they struggled to drive the right users to their platform. Regardless of the type of marketplace you’re building, you need a steady stream of buyers that generate sufficient demand for a wide-enough selection of sellers that offer an enticing range of goods or services.
Dropping large sums on marketing campaigns may seem like a panacea, but getting it right is not that easy. Studying the strategies and tactics employed by both successful and unsuccessful marketplaces can therefore be a useful first step in developing an effective marketing strategy of your own.
Common marketing challenges for marketplaces
Before you start designing marketing strategies for your marketplace, you will need to consider which aspect or stage of your business model you are trying to address.
Growing brand awareness
How do you get your target audience to know about your brand-new marketplace? For more established marketplaces, how can you sustainably scale your marketing effort without overspending?
Cracking the chicken and egg conundrum
Almost every marketplace struggles with this question in the beginning. Should you attract sellers or get more buyers first? For example, Amazon solved the chicken and egg problem by first focusing on reselling books from publishers and bookstores to attract more buyers. Taking another approach, Etsy went directly to craft fairs every weekend to support artists in the handicraft industry and attract more sellers.
Retaining customers
Once users have started transacting on your new marketplace, how do you get them to come back for more? On the one hand you’ll need to encourage sellers to keep selling on your platform, and on the other, you’ll need to entice buyers to continue browsing your marketplace.
Adapting your marketing approach as your marketplace matures
Marketing strategies should not be static. Your marketing approach should be adjusted as your marketplace evolves. A typical marketplace goes through the following phases:
In the initial discovery phase, you want to test whether there’s a real problem that needs solving, aka problem-solution fit. Early marketing activities usually rely on iterative messaging and a low-fidelity MVP to discover what ails your audience and which solution resonates with them.
After validating your idea, your next step should be to establish product-market fit. That is, are there enough users willing to pay for your solution? To test this, you will need to drive the right users to your high-fidelity MVP platform, so that you can learn more about their preferences. Audience segmentation for targeted marketing campaigns can play a vital role in this regard. Once you have attracted sufficient numbers of qualified users you can start answering behavioural questions: How do they find and engage with your marketplace? How do they respond to your value proposition and revenue model?
With a viable revenue model in place, it’s time to fully launch your polished marketplace to a wider audience. As we explain in our go-to market-strategy guide this entails whether to use direct market activation channels, such as paid advertising or content marketing, or indirect channels, such as partnerships or piggybacking.
Once your go-to-market strategies start to bear fruit (i.e. consistent revenue), it’s time to focus on scalable marketing activities that can support your growth strategies. Afterall, exponential growth is what makes the marketplace model so powerful. By now you should have sufficient user behaviour data to leverage data-driven marketing. Start with a data pipeline that tracks the right growth-stage metrics and use those insights to design automated marketing campaigns.
Marketing case studies of three successful marketplaces
With the above challenges in mind, let’s take a closer look at how three well-known online marketplaces approached them.
Etsy
Key facts:
- Geographical region: Global, primarily the United States and the UK
- Year founded: 2005
- Business model: C2C/P2P craft goods
- Revenue model: Product listing fees, transaction fees, commissions, seller advertising and promotional fees
- Key marketing strategies: Content marketing and community building
With 7 million active sellers from 234 countries that served more than 92 million buyers in 2023, Etsy focuses on niche, handcrafted products or vintage goods. According to user surveys, Etsy has built a sound reputation for offering high-quality, personalised items and supporting small businesses.
These results have been driven in great part by a combination of quality content, seller events and user participation. Let’s see how they did it.
Content marketing
Organic traffic is a significant part of Etsy’s marketing approach. A SimilarWeb analysis shows that organic search accounts for nearly 30% of its total web traffic, compared to 9% for paid search.
Etsy facilitates organic growth for buyers and sellers through helpful content to attract new users and keep them engaged. Some examples include:
- Seller Handbook is a blog and resource hub to help Etsy sellers start and grow their own Etsy shop.
- Etsy Journal is a resource hub for Etsy buyers. It has a dedicated section for shopping guides and gift ideas – perfect for curating relevant products from Etsy sellers. This gift guide, for instance, links to specific products on Etsy for buyers to browse.
- Detailed SEO guides educate sellers on how SEO works internally on its platform. Sellers can leverage SEO features to get their products listed more clearly on both Etsy and Google, which drives organic demand.
User-generated content (UGC)
Etsy’s branded social media campaigns are used to promote user-generated content.
Usually focused on specific social media hashtags, these campaigns allow sellers to promote their shops using a branded hashtag in their social media posts. For example, Etsy’s #DifferenceMakesUs global campaign in 2016 drew over 200,000 posts on Instagram alone.
User-generated content thus massively scales Etsy’s brand campaigns at minimal cost, while helping to boost sellers’ sales.
Event Marketing
Event marketing has been a significant growth lever for Etsy from its early days. Nickey Skarstad, former product director at Etsy, discusses the vital role of offline events in growing Etsy’s user communities:
“One of the most effective early levers for supply growth was building the Etsy community, offline. After spending years going to craft fairs every weekend promoting the brand we launched a program called Etsy street teams that organised passionate community members around the country (eventually the world) and had them be on-the-ground brand evangelisers. We provided tools and money for these leaders to start their own “teams” (or chapters made up of other sellers) that went to craft/vintage fairs and promoted the Etsy brand to buyers.”
Etsy also organises regular online events for its sellers. Events cover several topics relevant to sellers, including marketing and branding strategies and business management.
Besides events hosted by Etsy staff, some events also involve other sellers and experts from the community. For instance, the below virtual event is hosted by an Etsy seller with experience in making video content that drives product engagement.
By leveraging different types of user-focused content, Etsy has fostered a thriving community of buyers and sellers, growing transaction volume from a modest $200,000 in 2005 to $5 billion by 2019.
Zalando
- Geographical region: Europe, UK
- Year founded: 2008
- Marketplace model: B2C fashion retail
- Revenue model: Subscriptions (Zalando Plus), commission, advertising revenue
- Key marketing strategies: Influencer marketing, customer loyalty program
Founded in Germany in 2008, Zalando started as a shoe retailer and has since evolved into a fashion and lifestyle marketplace active in 20+ markets across Europe. As of 2023, this e-commerce marketplace accumulated over 50 million active customers and €10.14 billion in revenue — up 9% compared to 2020.
Two marketing strategies were instrumental to Zalando’s success: influencer marketing and a robust customer loyalty program.
Influencer marketing
Data-driven influencer marketing campaigns are offered as a service to sellers to help them increase their visibility on Zalando through its in-house influencer marketing platform Collabary.
When asked how Zalando approaches its influencer marketing strategy, Natalie Wills, former global director of marketing for Zalando, says:
“Our influencer marketing strategy is essentially driven by our company vision, which is to be the starting point for fashion. And within that, I’d like to point out two things that we’re focusing on right now. The first of which is providing fashion inspiration for our customers. And second of all, being locally relevant across 23 markets. So it’s two very important points, but we don’t just want to be the starting point for fashion shopping, but also fashion inspiration. And that really starts with helping our customers to see themselves in our brand offering.”
To market Zalando itself, the company worked with creative agency Smarts to develop targeted creative campaigns and an always-on influencer marketing strategy. This strategy involves collaborating with 350+ influencers, 1,500+ pieces of content and posting an average of twice a day on Zalando’s TikTok and Instagram accounts.
Some of the incredible results that came out of these influencer-led initiatives include:
- 250,000 new TikTok followers
- 41% engagement rate
- 96 million organic impressions
- Doubling Instagram follows year-on-year
Besides an always-on creator strategy, Zalando also leverages influencers for specific campaigns. Zalando’s Walk a Mile campaign, for example, launched a size-inclusive shoe collection featuring four individuals who had issues with finding larger shoe sizes.
Customer loyalty program
In 2017, Zalando launched its premium membership program, Zalando Plus, to make the shopping experience more convenient for customers. Benefits like exclusive deals, expedited delivery, and more convenient returns provide a more personalised customer experience that drive repeat business.
Investing in customer experience paid off for Zalando. The membership program passed the 1 million member milestone and grew its active customers by 6% to over 51 million in 2022.
Shopee
Key facts:
- Geographical region: Southeast Asia and Latin America
- Year founded: 2015
- Business model: B2C marketplace with multiple product lines, including clothing, household items, and beauty products.
- Revenue model: Commission, paid advertising, fulfillment services, payment service fees
- Key marketing strategies: Mobile-first marketing strategy, paid advertising, localised marketing
Owned by tech conglomerate Sea Limited, Singapore-headquartered Shopee is the largest e-commerce platform in Southeast Asia. It holds a formidable 45% market share in Southeast Asia with $78.5 billion in gross merchandise volume (GMV) and 295 million users in 2023.
Rapid growth has been driven by huge paid marketing spend. Between 2019 and 2021 Shopee dedicated 3 – 4% of its GMV to sales and marketing.
Shopee’s marketing strategy revolves around two key pillars: mobile-first marketing and localised marketing initiatives. Let’s explore each pillar in detail.
Mobile-first marketing
Nine in 10 Internet users in Southeast Asia use smartphones to access the Internet. Shopee understands this, and from the beginning, it launched as a mobile-centric, social-first marketplace. Marketing efforts have been focused on driving traffic to its mobile app instead of its website and keeping users engaged on the app.
To engage shoppers (and encourage seller participation), Shopee organises regular shopping events like Shopee’s annual 9:9 Super Shopping Day. These campaigns see sellers clinch eight times more orders compared to an average day. Gamification features like time-limited events, exclusive deals and livestreams encourage users to spend time engaging with in-app content.
Key takeaway: Shopee invested time and effort into understanding the consumption patterns of its target market and then promoted the right channel to support their preferences.
Data-driven local marketing
Shopee also saw great marketing success with a hyper-local approach to internationalisation. As Tiger Wang, former head of marketing of Shopee Singapore shared, Southeast Asia’s diverse ecommerce landscape requires a deft touch to engage each country’s audience. He says:
“We have seven different apps live across our markets, and each market differs significantly in terms of culture, user behaviour and shopping preferences. When building a marketing strategy, it is important to understand the local consumers’ needs, expectations and nuances to ensure that it is customised for that particular market.”
Shopee puts this into practice by recruiting local market experts. They also work with local celebrities in each market to either star in advertising campaigns or present products on Shopee’s livestream channel.
Data plays a significant role in personalisation of local marketing campaigns. Here’s Tiger Wang again:
Our data science team works closely with the local marketing teams to build shopper models based on various behavioural and demographic data that are available to us. Some examples include gender, age, brand preferences and preferred shopping features. We then leverage data-driven insights using our strong data capabilities and Artificial Intelligence (AI) to predict user preferences based on their past purchases. By identifying relationships and patterns in users’ shopping and browsing behaviour, we can curate a more personalised shopping journey for them.
Lessons from failed marketplace marketing strategies
It hurts to watch a business that you’ve poured a lot of time and energy into fail. But for every unicorn success story like Airbnb and Uber, hundreds of startups end in failure. According to Dealroom data, roughly 70% of startups fail, and many only succeed after their third or fourth try.
You can bet your bottom dollar that a lack of the right traffic played a huge role in many of those failures. So let’s examine where the marketing strategies of two failed marketplace startups went wrong.
Tutorspree: Over-reliance on SEO
Founded in 2010, Y Combinator alumni tutoring marketplace Tutorspree attracted over 7,000 tutors to its ‘Airbnb for tutors’ platform by 2013. They also raised $1.8 million in funding from top VC firms like Sequoia Capital.
However, they closed down a few months later. So what went wrong?
The business relied heavily on Google’s SEO for user acquisition, to the point that it influenced every business decision, from tutor acquisition to evaluating other marketing channels.
SEO initially worked well for Tutorspree. That is, until Google’s Panda algorithm update reduced organic traffic to Tutorspree by 80% overnight. Despite their best efforts, they were unable to fully recover from the losses.
In a 2014 post-mortem on his blog, Aaron Harris reflects:
“SEO cannot be the only channel a company has, nor can any other single channel serve that purpose. There is a chance that a single channel can grow a company very quickly to a very large size, but the risks involved in that single channel are large and grow in tandem with the company.”
Takeway: Whether planning a go-to-market strategy or scaling an online marketplace, don’t put all your eggs in one basket when choosing your marketing channels. Keep on testing and refining your marketing strategy across multiple channels to reduce dependency on a single channel.
Javaya: Focussing on the wrong audience
Unlike Tutorspree, craft coffee marketplace Javaya had a diverse marketing strategy, which included:
- Google and Facebook paid ads
- SEO
- Social media marketing on Instagram and Pinterest
- Offline events
- B2B sales calls
Their repeat customer rate was also 40%, well above average. Yet, Javaya ran out of money and shut down within two years.
As founder Nick Selman reflects, they focused too much on short-term marketing gains at the expense of long-term strategy. For example, they ran promotions without considering the impact on brand perception or customer lifetime value. This drove untargeted traffic to their site when they should have focused on their core customers.
Adding to Javaya’s woes, the company also had trouble scaling growth and defending its competitive advantage. Over time, this led to higher customer acquisition costs and lower conversion rates, which ultimately led to the marketplace’s closure.
It’s easy to get sucked into vanity marketing metrics like traffic growth. But are they the right metrics to focus on? To avoid such situations from happening, ask yourself:
- Are your marketing tactics aligned with your overall marketing strategy?
- Are your marketing tactics aligned with your overall marketing strategy?
- Are your marketing tactics aligned with your overall marketing strategy?
Achieving Product-Market Fit Through Non-Scalable Marketing
Product-market fit is the holy grail for any marketplace startup. It means:
- Your solution meets your target market’s needs and expectations.
- The business model is viable and scalable.
- Avoiding the dangers of premature scaling. When startups spend a lot of money on marketing, they can artificially inflate growth to mask problems with their core business model.
At this early stage, your marketplace probably has limited brand awareness and a small marketing budget. Which means you need to get comfortable doing things that don’t scale.
What is non-scalable marketing?
We’ve referred to automation and scaling previously. But you need a substantial user base to enjoy the benefits of automation and network effects. Here’s where non-scalable marketing comes in to get the ball rolling. In short, it’s applying intentional effort that may not be sustainable in the long run to get your first few customers, which may reveal signs of product-market fit.
Examples of non-scalable marketing tactics
- Direct outreach: This method involves rolling up your sleeves and working with your users directly. Airbnb’s founders saw hosts had poor-quality photos of their listings, which hurt their booking rate. As part of a pilot project, they hired a professional photographer to go door-to-door and take higher-quality pictures of listings in New York City. This direct approach helped to double its revenue in 2010.
- Community engagement: Go where your target audience hangs out to build relationships and pitch your marketplace. In its early years, Etsy’s community teams travelled to craft fairs across the United States and Canada every weekend to recruit its first sellers. They would support potential sellers with craft show kits and handmade promos and even buy them lunch to encourage them to set up shop on Etsy.
- Partnerships: Partner with an authority to reach a new audience and build brand recognition among your potential customers. Paris-based B2B marketplace Ankorstore celebrated its first anniversary in the UK by partnering with UK retail expert Mary Portas on a series of marketing campaigns featuring events, webinars, and research reports to celebrate independent retailers in the UK.
Measuring product-market fit
You can measure product-market fit in a variety of ways as long as the metric contributes to the viability of your marketplace:
- Customer satisfaction data such as net promoter scores.
- Business metrics such as conversion rates and market share.
- Market ‘pull’ signals: growing user base (signups, repeat traffic), increased transactions taking place on platform, increased user engagement (e.g. product search, signups, wish-lists, review & ratings).
- Qualitative metrics like media coverage, customer feedback, word-of-mouth mentions, and investor interest may also be useful when measuring product-market fit.
Scalable marketing for marketplace growth
Once you’ve proven product-market fit and have a viable business model it’s time to turn your attention to scaling your marketing efforts. Your priority at this stage is to identify suitable strategies that will help your business grow while remaining financially sustainable.
Use the AARRR framework to identify appropriate growth-related metrics related to customer acquisition, retention and revenue. Customer acquisition cost (CAC) and customer lifetime value (CLTV) are particularly important, as they will indicate if your marketing strategy is cost effective.
Scalable marketing strategies that worked
Invest in SEO initiatives:
Events marketplace FanPass allows ticket sellers to add new events via a custom admin portal. Event details, such as title, category, and image, are then used by WordPress to add the new event listing to pre-created search-optimised information pages (e.g. a page about Arsenal Football Club). These landing pages have risen to the top of Google search results, driving tens of thousands of visitors to the FanPass website every month.
3rd-party integrations:
FanPass integrated their marketplace with Ticket-Compare, a price comparison site for event tickets, and CJ Affiliate, an affiliate marketing network, to generate more buyers. It helped them to generate millions of euros in additional traffic.
Internationalisation:
MobyPark added a Google Translate button so that users can translate listings into their preferred language. It helped them expand their parking space app across Western Europe.
Local area marketing and user generated content:
MobyPark gave car park owners the ability to share useful information about activities, facilities and places of interest in the area with drivers. This drove increased volumes of organic traffic to their platform.
Data-driven push marketing campaigns:
MobyPark used search variables such as language, user location, and traveling destination to serve retargeting (banner) ads on Google, Facebook and other sites. This resulted in an immediate increase in revenue of 37%.
There’s no sure way to marketing success
Blindly following any of the above examples won’t guarantee results. But you can improve your chances of success when you adapt successful marketing strategies to your marketplace’s use case and growth stage.
And don’t forget to leverage data and technology to make informed marketing decisions as part of the build, measure, learn loop. Regularly tracking and reviewing the right user metrics will give you the data you need to optimise your marketing strategy for continued success.