I have spent more than 15 years of my product management career working in marketplaces at companies like CareerBuilder, Upwork and now Built In.
What Is Marketplace Product Management?
In this article, I’ll answer the following questions:
- What are marketplaces?
- What are the different types of marketplaces?
- What are the unique aspects of marketplace product management?
What Are Marketplaces?
Marketplaces are digital platforms that bring two sets of users together. Just as markets are a place for people to come and buy goods and services, a digital marketplace connects sellers who have a product or service to sell to buyers online. Think about the platforms you use every day, like Amazon, Airbnb, Netflix or Craigslist — these are the marketplaces we’re talking about. Marketplaces also connect people by way of a shared or common purpose like Bumble.
I started my career in marketplace product management 15 years ago at CareerBuilder. I fell in love with the role because it allowed me to bring people together, establish connections and discover new things.
What Are the Different Types of Marketplaces?
Let’s take a deeper dive into the different types of marketplaces. I found the marketplace categorization that Casey Winters, the chief product officer at Eventbrite, used in one of his articles instructive.
3 Types of Marketplaces
- Light Marketplaces: A platform that enables peer-to-peer transactions without facilitation from the marketplace.
- Managed Marketplaces: A platform where users can exchange goods or services, but the marketplace manages the payment process to ensure a trusted and quality experience.
- Heavily Managed Marketplaces: A platform where the marketplace facilitates the delivery of the good or service.
- Source: Casey Accidental
I prefer to think about these marketplaces on a spectrum from physical products to service-based marketplaces to pure connections-based marketplaces.
What Does a Marketplace Product Manager Do?
Unlike SaaS or other general product management roles, marketplace product management contains four aspects that make it unique:.
- Marketplace Economics
- Marketplace Science
- Marketplace Conversion Optimization
- Marketplace Trust and Safety
1. Marketplace Economics
The most fascinating aspect of working in marketplace product management is the importance of economics.
Growth and Supply-Demand Balance
Marketplace product management answers the simple question: “Do we have enough supply to meet demand?” and vice-versa. If the balance is off, you very quickly have unhappy users. As a result, the goal is to generate two-sided growth with a good balance. At each of the job marketplaces I’ve worked at, including CareerBuilder, Upwork and Built In, this has been a big focus. Often, the balances were measured by supply-demand ratios over different dimensions, such as skill, function and location.
In addition to the supply-demand balance, product managers also have to manage price equilibrium. One of my favorite examples of price equilibrium in product is Uber’s surge pricing, in which the price for a ride temporarily goes up during moments of peak demand. Companies like Airbnb and Upwork don’t engage in surge pricing to the extent that Uber does, but they do monitor the supply-demand balance and guide their suppliers on price accordingly.
We don’t see this as much when it comes to salary in job marketplaces like Built In. For example, despite labor shortages — especially in tech — tech salaries have remained off the charts. However, I haven’t seen job marketplaces play a direct role in wage or salary equilibrium.
2. Marketplace Science
Ensuring a quality transaction, whether it’s the purchase of a product, service or connection, is also of extreme importance. While we addressed balancing supply and demand in the marketplace economics section, marketplace science — or discovery science — goes a step further, focusing on delivering quality transactions and connections on the platform.
Marketplace science involves creating algorithms and data science models to improve search, match and recommendations results for users to ensure they find what they need and make a transaction. Deep personalization takes it to the next level accounting for each user’s unique preferences, needs and wants, and then tailoring their experience to match.
We often use marketplace liquidity metrics to capture the efficiency with which platforms are able to match buyers and sellers. In a liquid market, a seller is quickly able to find a buyer without having to cut the price of the asset to make it attractive. And conversely, a buyer won’t have to pay an increased amount to secure the asset they want.
For example, one of Upwork’s liquidity metrics included utilization rate on the supply or freelancer side, which measured if the freelancer was able to fill all of their available hours with work. On the demand side, we measured search-to-fill ratios to see if a client in need of a freelancer was able to find one within an appropriate amount of time. Deeper metrics like bids to transaction and supply-demand ratios are also looked at to measure the performance and efficiency of the marketplace.
3. Marketplace Conversion Optimizations
One of the key value propositions a marketplace can offer is making transactions both simple and efficient. We do this by becoming laser focused on funnel optimization.
For e-commerce platforms, this may involve optimizing the purchase steps, while for jobs marketplaces, it might mean optimizing the job application process. This optimization sometimes involves simplifying purchase transactions and offering payment flexibility. Funnel optimization, however, only produces linear improvements. With funnels, you also need continuous activities and an investment of resources at the top.
To get compounding optimizations, we need to think beyond funnels and uncover growth loops. Growth loops are closed systems in which the inputs are run through some process, generating an output that can be directly reinvested as an input again.
Let’s consider a content loop on Built In. When a new user signs up, reads an article on Built In and then shares the article on social media, they help to generate a new user again who then feeds into the same growth loop.
4. Marketplace Trust and Safety
At the end of the day, marketplaces are held accountable for establishing trust and making the platform a safe place to transact. Users expect these places to keep the bad actors and fraudsters out to ensure a safe transaction, especially as the marketplace begins to grow.
Whether we’re talking about driver safety at Uber or keeping fake resumes and profiles off of job marketplaces, these are key problems marketplace teams work on. There’s a broad spectrum of trust-building solutions product managers can turn to, including creating identity verification and background checks, monitoring content or user activity, establishing a code of conduct and providing user reputation transparency through reviews and ratings.
Challenges of a Marketplace Product Manager
As a marketplace product manager, you have all the general challenges of a general product manager along with some additional aspects to think about.
Getting the balance right for your buyers and sellers is of utmost importance because it leads to a virtuous circle of growth. Allowing your buyers or demand side to easily discover goods or services that they need or want and simplifying the transaction is the next most critical aspect. And last but not the least, building trust, an aspect that marketplace managers are constantly thinking about.