Evaluate digital marketplaces with these 10 factors

I work with startup marketplaces.

Markets thrive on innovation because all marketplaces are not created equal.

A successful digital marketplace requires a natural pull from both consumers and suppliers and should facilitate easier connections.

A marketplace should:

1. Enhance user experience significantly over existing options

2. Offer clear economic benefits to both consumers and suppliers

3. Leverage technology to enrich user interactions and streamline processes

4. Take advantage of fragmented markets with many small suppliers and customers

5. Welcome suppliers to join and integrate for rapid scalability and growth

6. Ensure a sizable potential audience

7. Expand by introducing new features and enhancements

8. Encourage frequent use by consumers to sustain engagement

9. Retain a share of the economic benefits and be an integral part of the transaction flow

10. Provide strong network effects that become more valuable as they grow

The right combination of these elements can turn potential into profit.

Credits to Bill Gurley for his valuable insights.