If your online marketplace platform is working well and showing enough user growth then it doesn’t imply it’s doing great. If your primary objective is to create a financially viable marketplace then your marketplace requires liquidity along with user growth. Yes, that’s true!
Let’s go through this guide to understand all about marketplace liquidity. Happy Reading!
What Is Marketplace Liquidity?
Marketplace liquidity is the vital metric that defines your business’s success. In other words, we can say it’s all about the satisfaction that vendors and customers get by using the marketplace. So, for making the marketplace a successful one, make sure buyers and sellers both are completely satisfied with the platform and can search for things easily.
Liquidity is expressed in a different way depending on the marketplace type. It doesn’t matter in what way liquidity is stated on numerous platforms, it’s simply a metric that one must track since it shows:
- The marketplace you have is fulfilling your client’s needs and whether they are getting any type of benefit from utilizing your platform
- The satisfaction level of your marketplace users
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Ways to Measure Liquidity
In order to measure the marketplace liquidity, ensure that you track numerous metrics. Let’s have a look at a few of them:
- Buyer to Supplier Ratio: It shows the number of buyers sellers can serve throughout a particular period.
- Customer Acquisition Cost: It’s the price that you pay in order to convert the potential client into a buyer.
- Time to Fill: It’s a vital metric for measuring the satisfaction of the customer.
- Average Order Value: This metric is important to identify the monthly revenue amount.
By tracking the above-given metrics, you will be able to better understand your marketplace’s functioning.
Why does Every Marketplace Owner Care About Marketplace Liquidity?
Whenever metrics about marketplace success are discussed, one thing that everyone cares about is marketplace liquidity. Let’s understand the concept with the help of an example! Assume an Agritech marketplace that simply connects farmers with the owners of restaurants who can buy vegetables or fruits without the middlemen. However, for ensuring the marketplace’s success, onboarding the sellers and buyers are not sufficient; you have to ensure their requirements are met quickly.
For increasing the buyer’s and seller’s numbers, it’s important that the demands of both parties are fulfilled in a proper manner.
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How to Improve Marketplace Liquidity?
Now the question is how you can improve the marketplace liquidity. Below given are a few solutions that you must integrate:
- Design: Customers nowadays give much attention to website or app design. The reason behind the majority of users leaving the platform is the unattractive design. So, it’s vital that every marketplace must give attention to the website’s user-friendly design.
- Chats: The main task of the marketplace is connecting the buyers and sellers. In such a case, the best strategy that works great is to create a means of communication and in-app messaging is the best option to go for.
- Payments: For getting more transactions, it’s important to provide your customers with numerous secure and quick methods of payment. Nowadays there are numerous readymade payment solutions such as PayPal, Stripe, Braintree, and so on. As per the latest statistics, the majority of young people prefer shopping online so marketplaces must make the process of transactions as comfortable as possible for achieving high liquidity.
- Ratings: Integrate the rating system in your app or website. Since it provides customers with the means for sharing their buying experience. Visitors can go through the reviews to make a decision regarding product buying.
- Recommendations: Your marketplace can recommend goods on the basis of prior searches. This type of feature is AI-based and no doubt its time consuming too. However, it’s perfect in order to increase the marketplace liquidity and for increasing sales.
- Learning from the Customers Themselves: Make use of analytics for gaining insight into your customer behavior and try to understand their requirements from the marketplace. Collect data regarding how users begin to complain about late delivery, what products involve frequent reporting, and other cases. This will help you in creating a better overall experience for the customers.
So, all the above-given solutions must implement during product development as they can surely help you in improving the marketplace liquidity.
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Successful Stories of Airbnb and Uber in Achieving Liquidity
Do you know what makes Airbnb and Uber successful in achieving liquidity? Go through the below-given points to know about the same!
- Useful Content: Customers measure the expertise of any company through the content it offers. For Example, Airbnb provides visitors with professional images of apartments. As we all know people love visual things so they choose beautiful locations.
- Good First Impression: It’s important that you show your service value instantly for achieving success. Just telling the product is great is not sufficient; it’s vital for both buyers and sellers to understand the benefits clearly that they will get. Like; Uber provides cooperation for drivers properly on their homepage.
- Social Networks: There are a number of social networks like Twitter, Instagram, Facebook, and so on. Customers look for the latest news and search for great deals and offer through social media. Like if we talk about Uber then its account of Instagram is full of user reviews. Also, Uber posts stories regarding their company’s rewards. All these things help Uber in gaining trust and loyalty. So, it’s important to persuade customers that the service you are giving is completely secure and necessary too.
So, keep the above-given things in mind that will help you in achieving liquidity.
Using in-app Messaging For Enhancing Marketplace Liquidity
In-app messaging as well as real chats are great for improving marketplace liquidity. See how!
- Know the product, Know the Sellers: With real-time chat among the sellers and buyers, it will become easy for both parties to know each other well and the product too. This, in turn, helps them in making better buying and selling decisions. Let’s try to understand the concept with the help of an example! Suppose XYZ needs to purchase a few motor gears from eBay or some other marketplace platform. And he/she will make use of those parts in his vintage Chevy. So, can you expect XYZ to make use of those parts without getting assured that the parts are reliable and are sold by a genuine seller? Of course, no!
- Maybe they Need to Talk: Another benefit of in-app chat is that when a user is experiencing difficulty in the buying decision, simply messaging the sellers can help in streamlining their entire buying decision since they will get more information to finalize their decision. Thus, there will be a higher conversion rate leading to high marketplace liquidity.
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Not only this, there’s much more that you must know about adding in-app chat to your marketplace:
- Human Engagement: In the end, marketplace success is triggered after the effect of the network comes into play. For realizing the network effect potential, human engagement is important for all platforms, particularly for the marketplace.
- Relationship Building: Relationship building is something that in-app chat can help you with. Ensure the customers and sellers find the application beneficial. Also, ensure it’s robust and responsive technologically. Following this, ensure other features like media file sharing are working in a proper way.
- Increases Trust: The trust factors no doubt will increase automatically once you give your customers the choice to engage with a large number of sellers in the marketplace. Trust is the major reason behind the success of marketplaces like Uber, Airbnb, etc.
Summing Up
Let’s conclude this guide with the hope that it will help you in knowing all about marketplace liquidity. So, after going through the entire guide it’s clear that liquidity is the important metric that defines the success of the marketplace.
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