The proven two-sided marketplace playbook, based on 10+ years of experience

Two-sided marketplaces are phenomenal businesses. We’ve seen this first-hand at Sharetribe, where we’ve helped founders build successful marketplaces for over a decade.

But don’t take it from us—just look at the numbers.

In 2024, 64% of North American consumers said they make most of their online purchases through marketplaces. Third-party sales are set to become the largest and fastest-growing retail channel by 2027, accounting for 59% of all global e-commerce.

At their core, two-sided marketplaces connect two user groups—typically sellers and buyers, or providers and customers—and make transactions between them easier and more efficient. Famous examples include Airbnb (hosts and guests), Uber (drivers and riders), and Etsy (creators and shoppers).

The appeal is obvious. With no need to hold inventory and powerful network effects, two-sided marketplaces are one of the most scalable and profitable online business models. But success isn’t guaranteed. Marketplaces have unique challenges, and the founders who succeed are the ones who are prepared for the obstacles and know how to harness the benefits to the fullest.

In this article, we’ll share what we’ve learned over the 10+ years we’ve worked with marketplaces to help you make your business idea a reality.

This guide has also been turned into a video by Sharetribe's Head of Content, Mira.

A two-sided marketplace is a platform that brings buyers and sellers together. The marketplace doesn’t sell anything itself. Instead, it helps these two groups find each other, interact, and make secure payments.

Marketplaces can support different types of transactions:

• Products (like Vinted or Amazon)
• Services (like Thumbtack or Rover)
• Rentals (like Turo or Swimmy)

And they can target a range of users:

• C2C (consumer-to-consumer) or P2P (peer-to-peer)
• B2C (business-to-consumer)
• B2B (business-to-business)

The most common way marketplaces monetize is through commissions, which is when the platform takes a cut out of each transaction. A key benefit is that the marketplace only charges a fee when it provides value to its users.

Some marketplaces use listing fees or subscriptions to earn revenue. You can find more ways to monetize in our guide to marketplace business models.

Here’s a graph of how the two-sided model works in practice:

While marketplaces and traditional e-commerce sites may look similar on the surface, they operate very differently behind the scenes. Let’s break down the main differences between these platforms:

As you can tell from the examples we shared earlier, this model powers several unicorn companies. The trend shows no sign of slowing down: the global sharing economy was valued at $366 billion in 2024 and is projected to reach $1.4 trillion by 2030.

But you don’t need to take on the giants to build a successful two-sided marketplace.

Quite the opposite. The best way to start a marketplace (even one that eventually becomes a unicorn) is to succeed first in a small niche.

Marketplaces thrive across industries. Here are some examples of famous marketplaces and industries.

• Product selling: Amazon, eBay, Alibaba, Etsy
• Vacation rentals: Airbnb, Vrbo
• Rental spaces: Swimmy, LandTrust, Studiotime
• Transportation: Turo, Getaround, Gett
• On-demand services: Uber, Lyft, Doordash
• Groceries: Instacart, Mercato, Grubmarket
• Events: Eventbrite, SeatGeek, StubHub
• Freelance marketplaces: Upwork, Fiverr, Toptal
• Health and wellness: Styleseat, Fresha, Booksy
• Fashion: Poshmark, Vinted, Depop
• Home services: Thumbtack, Taskrabbit, Handy, Dolly
• Education: Udemy, Coursera, MasterClass
• Childcare: UrbanSitter, KidPass, Wonderschool

These platforms all have their unique focus, but their core model is the same. They facilitate transactions between their user groups and make money in the process.

At Sharetribe, we’re proud to power over 1,000 marketplaces, from small businesses to companies that have raised millions in funding. Here are three examples that showcase how solo founders and small teams can succeed with the two-sided marketplace model.

Drive lah is a peer-to-peer marketplace for car-sharing.

The idea for Drive lah was born out of frustration with the existing alternatives to renting a car in Asia. Renting from one of the established players was expensive, availability was spotty, and the cars always had to be picked up and dropped off at inconvenient locations.

When founders Gaurav Singhal and Dirk-Jan der Horst started Drive lah, their goal was to get the product out as quickly as possible. The decision paid off.

“The best thing we did was getting Drive lah to market quickly,” Gaurav says. “We spoke to our users all the time, ran experiments, made tweaks to the platform, and continued to improve.”

Today, the Singapore-based marketplace for car-sharing has expanded to Australia, grown to a business with 30+ employees, and raised millions in funding from investors.

You can read the full Drive lah story, and here’s a podcast episode where Gaurav Singhal talks about balancing speed with quality.

The Octopus Club lets parents buy and sell preloved clothes, toys, and other kid gear.

The founder, Ana Rachel Estrougo, had bought her furniture and clothes second hand for many years. But when she became a mother, she found it hard to buy quality items for her baby the same way. So she founded a marketplace to solve the problem herself.

For that first year, The Octopus Club was a one-woman show. Marketing, customer care, social media, taking product pictures, seeding supply—Ana did it all herself.

It was a crazy year, but looking back, Ana reflects on the moment she knew The Octopus Club could be a success: “When people I didn’t know started buying and selling from each other, it was a very powerful experience. That’s when I realized I had a business.”

However, Ana knew she needed help growing The Octopus Club. She launched a crowdfunding campaign, and in 15 days, she reached her maximum target of £150,000 pre-revenue. She’s also been able to grow the marketplace organically, with very little paid marketing.

Read Ana and The Octopus Club's entire story.

Sugarlift is a mission-driven art gallery with a two-sided marketplace. The platform bridges the gap between brick-and-mortar galleries and the digital world to make buying art more accessible.

“The problem with the art market wasn’t a lack of artists or a lack of demand—it was a lack of infrastructure,” says founder Wright Harvey. “I saw it as an economics problem. If we could remove the opaqueness of pricing and inventory and create engagement, we could help everyone discover great art.”

Wright didn’t have the technical know-how to build a marketplace website, but that didn’t stop him from launching and growing Sugarlift. Today, there are over 500 artists on Sugarlift’s online marketplace, many of whom are exhibited in the physical gallery every year.

Learn more about Wright and Sugarlift here.

Marketplaces thrive when (and only when) they solve a problem for buyers and sellers.

For buyers, marketplaces:

• Make it easy to find and buy what they need
• Provide access to a wide selection to compare and choose from
• Help them find more affordable alternatives

For sellers, marketplaces offer:

• Access to a big pool of customers
• A community to learn from and connect with
• A set of powerful tools to manage bookings and payments

The model offers significant benefits to the marketplace founder as well:

• Low initial costs and risk, thanks to the two-sided model and great SaaS offering
• Multiple monetization options
• Easier scalability than other business models
• Network effects
• Cross-side virality

Let’s look at each of the founder benefits in more detail.

If you want to start a conventional online store, you need to own or create the inventory you’re selling. That’s a big investment.

And a big risk if your business doesn’t work out.

On a marketplace, your supply creates your inventory. You only need to invest in the platform where your suppliers can list their products (or services or rentals) and find customers.

Building such a platform used to require a big initial investment as well, but that has changed.

Coding the platform with all the two-sided functionality would take months and at least $50,000. Using no-code marketplace software like Sharetribe (or one of the many Sharetribe alternatives available nowadays) can cut the time and cost by as much as 90%.

This means if you have the beginnings of a marketplace idea, you could launch your business in a day—without any initial investment other than your time.

Few other business concepts have equally low startup costs.

One of the marketplace model's greatest advantages is its flexibility in generating revenue. Unlike traditional e-commerce, you’re not limited to product margins. You can design a model that fits your niche, users, and long-term growth goals.

Here are the most common monetization strategies for two-sided marketplaces:

• Commissions: Take a percentage of each transaction between users. This is the most popular model because it scales with activity and aligns your success with your users’ success.
• Listing fees: Charge sellers or providers to list their products or services on your platform. Works well when listings offer high visibility or value.
• Lead fees: Allow buyers to submit requests and charge sellers for access to those leads. This is ideal for high-value, low-volume services (like construction or consulting).
• Subscriptions: Offer providers a recurring paid plan to access the platform or unlock premium features to build predictable revenue.
• Paid advertising: Let users pay for extra visibility, like promoted listings, homepage features, or search placement.

Depending on your audience and marketplace dynamics, you can use one model or combine several. But when you’re first building your marketplace, we recommend starting with just one business model so you can test whether it works.

Once you’ve seen your business succeed, you can consider adding other monetization options, but only if they won’t ruin the user experience for buyers or sellers.

Learn more about how to choose the right business model and how to set pricing in your marketplace in our in-depth guides.

When you don’t need to own inventory, it’s not only getting started that becomes easier. Scaling is faster, too.

You can introduce new categories or locations with the same playbook you used to launch. Big, risky investments in physical infrastructure are never necessary.

If you’ve chosen your marketplace software well, you can easily adapt it as you grow. You can learn from real users and eliminate all the guesswork.

These insights will ensure you only invest in building features and functionality you know can bring value to your user base.

In fact, many successful marketplaces have been built by bootstrapping. They haven’t needed any outside investment to grow.

(That’s not to say investments wouldn’t be available—many investors say they are particularly drawn to marketplaces thanks to the unique growth possibilities.)

The most successful marketplaces grow through network effects. As more users join, the platform becomes more valuable to everyone involved.

More buyers attract more sellers, and more sellers attract more buyers. It’s a growth loop that reinforces itself, which a conventional business could never achieve.

Unlike traditional businesses, where growth often increases complexity or cost, marketplace growth creates momentum. This flywheel effect is one of the two-sided model’s most powerful advantages.

Cross-side virality is another powerful growth lever, especially for peer-to-peer marketplaces similar to Airbnb, Etsy, Eventbrite, or Poshmark.

On any of these platforms, a new buyer is also a potential seller. So, whenever you acquire new customers, some of them will likely sign up and list their own items as sellers. For example, a guest on Airbnb might become a host. A shopper on Etsy might open their own store. This dynamic turns each new user into a potential growth engine.

Former Eventbrite VP of Growth Brian Rothenberg said, “If cross-side virality is happening on your marketplace, be very happy. This is a huge lever.”

Why? Because with cross-side virality, acquiring a new buyer often means acquiring a seller, who brings in more buyers, some of whom become sellers. It’s exponential growth, baked into the behavior of your users.

What makes two-sided businesses powerful is also what makes them challenging.

If you’re considering the model, take note of how successful founders have solved these five persistent marketplace challenges:

• Knowing what kind of platform you need to build
• Solving the chicken-or-egg problem
• Reaching liquidity
• Preventing platform leakage
• Defending against competitors
• Iterating on your business model and pricing

People love marketplaces. If you ask for feedback on your marketplace idea, many will say they love it.

That doesn’t mean they’ll use it (or pay you for it).

But if you don’t ask for feedback, you risk building a desert platform.

Cristóbal Garcia learned this the hard way. He first worked on a music quiz platform that the team developed for four years. The project failed—users didn’t bite. For his next project, he spent thousands of hours learning to code a platform and two years building it. Then he learned his product didn’t really solve a problem for users.

Cristóbal’s mistake was not validating his marketplace idea first. But how do you do that if anyone you ask will say they love your idea without giving it a second thought?

By asking the users about themselves, not about your business idea.

First, list your assumptions. Break down your business idea by answering these questions:

• What problem are you trying to solve?
• Who has the problem?
• How is this person dealing with the problem now?
• How are you planning to solve the problem?
• Why is your solution better?

You can also list your assumptions about your value proposition and user acquisition channels.

Then, interview potential users to validate your assumptions. You can find people to interview through communities built around your marketplace idea. Think online communities (Facebook groups, Reddit, LinkedIn, Discord), local meetups, or even other marketplaces that serve a similar niche. Ask politely if they are open to a short user research chat.

Focus on open-ended questions about how they currently solve the problem you’re tackling. Try to understand their experience and their pain points. Here are some examples of questions to ask:

• What’s hardest about renting X or finding Y?
• Have you tried to solve it before?
• How do you make decisions or find new tools?

After going through this process, you should have a relatively good idea of your users’ problems and how they could be solved. As marketplace investor Mathias Ockenfels told us: “If your marketplace doesn’t solve a real problem, it doesn’t have a reason to exist.”

Marketplaces with the best supply win customers. Marketplaces with lots of customers attract the best supply.

What can you do when you need one side to get the other?

This is called the chicken-or-egg problem, and there are many tactics to combat it. In our experience, the best tactics focus on getting the harder side to commit to the platform first. That’s usually the supply.

Getting sellers or providers on board early gives your marketplace something to offer: listings, availability, or inventory. That makes it easier to attract buyers and build initial momentum.

Here are some ideas for building the initial supply for your marketplace:

• Contact suppliers who are active on other marketplaces: You’ll need to have something better to offer them. Think: better tools, smoother payments, or a more trustworthy environment.
• Go to online forums or Facebook groups: There may even be some online business directories for your suppliers.
• Knock on doors and cold call: Sounds old-fashioned, but we’ve seen this work countless times. Greenpal founder Bryan Clayton and his co-founder handed out over 100,000 door hangers. Florence co-founder Charles Adler drove nurses to their shifts.
• Build a single-player mode: Bring in supply with a value proposition that doesn’t require buyers, like great tools to manage bookings and handle payments and taxes. This tactic worked really well for Freightos.
• Offer a fee holiday: Waive commission fees for your first wave of sellers. This reduces friction and gives them a reason to join early, especially when they’re taking a risk on an unproven platform.
• Create verified seller badges: Highlight early adopters with a trust badge or featured placement. Recognition can be a powerful motivator, especially in reputation-driven verticals.

On the topic of the chicken-or-egg problem, we recommend NFX’s 19 Tactics to Solve the Chicken-or-Egg Problem and Grow Your Marketplace. It’s a classic.

Two-sided businesses need to find a balance where both sides (buyers and sellers) are just the right size to serve one another.

This is called liquidity. Liquidity means the likelihood of a seller making a sale on your marketplace and of a buyer finding what they’re looking for.

And if you ask any marketplace expert, investor, or founder, it’s the North Star metric for any marketplace.

If you take away one thing from this article, it should be this: Don’t focus on volume when you start a marketplace. Focus on liquidity.

Build something that solves a painful problem for a small number of users. Focus on a tight niche (like music studios) or a specific location (like Singapore, but you could go as small as a single city or neighborhood) and find liquidity. Build a small user base that loves your product.

After you have found liquidity, you can start growing your marketplace. And you now have a playbook you can use to expand, one successful location at a time.

Marketplace leakage is a risk you get as a by-product of the two-sided model.

Leakage happens when sellers and buyers use your marketplace to find each other but make the payment outside of your platform—and skip paying your commission.

There are a few technical things you could do to remedy leakage. Many marketplaces limit communication on their platform or only reveal users' full names or addresses after a payment has been made.

These tactics might work. But they also might backfire if they hurt your user experience.

In our experience, the best way to deal with leakage is to prevent it. If users get enough value from your marketplace, they won’t go through the trouble of bypassing your payment system just to avoid your commission.

The value you provide can be:

• Security and trust: Offer reviews, verified users, insurance, reliable payments, buyer protection, dispute resolution, or anything else that gives people peace of mind about transacting with strangers.
• Operational tools: Help sellers manage their bookings or stock, handle cancelations or returns, and file taxes. Well worth a small commission.
• Reduced friction: Buyers tend to value convenience more than the lowest prices. Your marketplace should feature fast discovery, easy filtering, saved payment methods, and mobile-friendly flows.
• Marketing reach and exposure: Help sellers attract more customers than they could on their own. Promoted listings, SEO visibility, or email promotions are all value adds you can offer.
• Automated recordkeeping: Give both sides access to transaction history, receipts, and communication logs, which are helpful for taxes, disputes, or customer support.

When your platform does more than connect users—like actively helping them succeed—leakage becomes less appealing. If it’s easier, safer, and more profitable to stay on your marketplace, most users will.

A marketplace lets strangers interact and exchange money and goods. This can only work if there’s trust.

Your users need to trust both each other and your marketplace. Creating trust should be a key strategic goal to consider while building your business. Here are some examples of ways to build marketplace trust:

• Curate your supply: Focus on quality over quantity and help your sellers craft thorough, informative listings. They’re an immediate trust signal.
• Establish rules: Create a code of conduct and be strict and transparent about enforcing it.
• Help users communicate with and relate to one another: A low-key communication tool on your marketplace can do wonders. So can user profiles with photos and some relatable personal information.
• Build trust into your platform: User verification, double-sided reviews, secure payments, and escrow are examples of technical features that support trust.
• Offer trust-enhancing additional services: Could you add insurance or buyer protection to your offering?

Creating trust is a requirement for a marketplace to work. It’s also the groundwork for building a defensible marketplace brand. Through building trust, you can start turning your marketplace user base into a community.

Copying your marketplace idea and platform technology is easy. But stealing away a community of committed users is hard.

Julia Wadehn, former COO of the RV rental marketplace PaulCamper, said of their community:

“Our community gives us a unique selling point, high defensibility, and great retention of supply. For many of our customers, being a part of the PaulCamper community has led to a deep emotional connection. They won’t list elsewhere because they want to be a part of PaulCamper’s story and help us become the biggest.”

There’s no one-size-fits-all approach to marketplace monetization. What works for a peer-to-peer rental platform won’t necessarily work for a high-volume product marketplace or a B2B service exchange.

Two-sided marketplaces come in many forms and are often categorized by:

• Transaction type: Rentals, services, or physical/digital products
• Niche or industry: From outdoor land rentals to secondhand fashion to legal staffing
• Transaction profile: High-value vs. low-value, frequent vs. occasional, impulse vs. considered purchases

These variables, plus your competitive landscape and user expectations, will shape the right business model and pricing strategy for your marketplace. And chances are, you won’t get it perfect on day one.

The best marketplaces experiment and adapt. Airbnb moved from a split-fee model to host-only fees for professional hosts outside North America, after tests showed that hosts with this setup got 17% more bookings.

Meanwhile, DoorDash introduced tiered commissions between 15% and 30% that allow their restaurant partners to trade margins for greater reach, visibility, or delivery range. This also gave DoorDash a new way to reduce churn.

If you're considering updating your pricing or fee structure, communicate it clearly to your users. Here are a few ways to do that well:

• Give at least 30 days’ notice: Let users prepare and ask questions before changes go live.
• Offer legacy pricing to early users: Reward early adopters with a grace period (e.g., six months of old pricing).
• Frame fees as investments in trust: Position changes as part of expanding protections, better tools, or platform improvements.
• Show the ROI: Include examples like “Your $5 sponsored listing delivered 18 clicks and 2 bookings” so sellers know they’re getting value.

Marketplace pricing is never static. Think of it as an evolving part of your product: something to test, learn from, and improve over time.

We’ve covered a lot of marketplace examples and success stories. Now, let’s focus on you: how you can build your own marketplace platform and launch your business.

In our experience, the simplified steps to build a successful two-sided marketplace are:

1. Choose your business model
2. Decide how you will build your marketplace
3. Build your MVP (Minimum Viable Platform)
4. Establish trust and compliance
5. Bring in your initial supply
6. Launch to customers
7. Reach problem-solution fit and product-market fit
8. Build, learn, improve, and repeat

Building a marketplace startup is a big undertaking with lots of details to consider at every step. We’ll focus here on giving you an overview and link to more in-depth resources you can check out when you need them.

Your business model defines how your marketplace makes money. And getting it correct early on is crucial. The best model for your marketplace idea will incentivize the right behaviors and build long-term trust between your users and your platform.

Some models scale seamlessly as marketplaces grow. Others are better for validating your idea early or attracting high-intent sellers. The best choice depends on your audience, vertical, and types of transactions.

Here’s a breakdown of the most common marketplace business models and their pros and cons:

There’s no right or wrong answer, but these revenue models can help you decide where to start. And as we mentioned earlier, there’s always the option to layer on another monetization option once your marketplace takes off.

There are many ways to create a two-sided marketplace website. Here are your options, with links to read more about each.

• Coding from scratch: This approach is a huge undertaking that requires lots of time, senior dev skills, or a budget north of $50,000. Rarely recommended.
• Coding on top of open-source software: This option can be slightly easier and cheaper, but doesn’t offer the best developer experience.
• Building with WordPress: This method is even easier but still takes a month or two and some dev. The interplay of several independent plugins may cause issues with UX and maintenance.
• Using a combination of no-code tools: This approach requires no coding skills, but learning the no-code language can take a surprisingly long time.
• Using a no-code marketplace SaaS tool: This is by far the fastest and easiest option, but also the least customizable.
• Using an API-based marketplace tool: This option combines the benefits of SaaS and custom development, making it easy to launch yet still customizable and scalable.

For most founders, the best solution is whatever gets your first version launched the fastest.

Build a version of your marketplace idea that solves a core problem for a core group of users. Nothing more, nothing less. We call this your Minimum Viable Platform (MVP).

Don’t make it buggy or ugly, but also don’t waste precious time building anything that isn’t absolutely crucial for testing your idea. Launch as fast as you can and start learning about your audience.

Here’s why this matters: every extra week you spend building unvalidated features is a week you’re not getting feedback from real users. And in marketplaces where you need to serve two audiences at once, early learning loops are everything.

Here are our top tips for building a successful MVP:

• Focus on a narrow use case: Serve one niche group of users with one key problem. Solving a small problem well beats trying to do everything poorly.
• Limit your geography: A local launch makes it easier to build supply, learn fast, and stay close to your users.
• Skip non-essential features: User profiles, reviews, payments, and listings are vital for any marketplace. But referral programs, advanced search, and mobile apps can wait.
• Make it lovable, not just viable: Even if your feature set is minimal, the experience should still feel thoughtful, clear, and easy to use.

Once you launch, your real work begins: observing how users behave, listening to their feedback, and identifying what needs to change.

Seed your marketplace with high-quality supply before you launch it to customers. Without it, your platform will feel empty, and early buyers won’t have anything to engage with.

Seeding your marketplace with compelling, trustworthy supply helps you start strong. It creates the illusion (and eventual reality) of liquidity, builds buyer confidence, and gives you something to promote from day one.

Here’s how to do it well:

• Personally onboard your first suppliers: Don’t rely on sign-up forms. Reach out directly, help them create listings, and answer their questions. A manual approach builds relationships and helps you spot friction in your onboarding flow.
• Curate, don’t just collect: Especially in the early days, prioritize quality over quantity. A smaller pool of highly relevant, professional-looking listings is better than dozens of empty or low-effort profiles.
• Leverage your niche: If your marketplace focuses on a specific geography or vertical, use that to your advantage. Suppliers in narrow niches are often more motivated and easier to reach.
• Make onboarding dead simple: The more effort it takes to list on your marketplace, the more dropoff you’ll see. Remove unnecessary steps, provide templates, and consider creating listings yourself on your sellers’ behalf.
• Offer incentives to join early: Waive fees, promote early adopters on your homepage or socials, or offer verified seller badges to create urgency and social proof.

Want a full playbook for getting your supply side off the ground? Check out our guide to building marketplace supply. You can also learn from Studiotime founder Mike Williams’ real-world experience onboarding his first providers.

When you have a good number of initial listings on your platform, it’s time to launch to customers. If you validated your idea well before building your MVP, you may already have ideas about where to find the first set of customers.

Your goal isn’t a viral launch. It’s a focused one. You want to reach the right early adopters who can give you signal-rich feedback and start the flywheel turning.

Here’s how to make your customer launch successful:

• Tap into your existing validation research: If you did user interviews before building, go back to those people as they’re your warmest leads. Invite them to try the platform and ask for honest feedback.
• Choose one or two traction channels to start: Don’t spread yourself thin. Focus on channels that match your audience’s behavior. Local Facebook groups, niche forums, LinkedIn, Reddit, or community newsletters can all be effective early-stage sources.
• Make your first users feel special: Early adopters should feel like VIPs. Offer them dedicated support, referral rewards, or exclusive access to features. Their word-of-mouth will shape your reputation.
• Track key signals of success: Instead of obsessing over vanity metrics, focus on meaningful engagement. Are customers completing transactions? Are providers getting bookings or sales? Are people coming back?
• Be present: Monitor interactions closely. Answer user questions and follow up manually. This is your chance to understand what’s working, what’s missing, and what’s broken.

For more in-depth tactics, check out our guide to planning your marketplace launch. We also have a comprehensive resource about how to choose your early growth strategies.

Before you consider scaling, make sure you’ve built something that truly works for both sides of your marketplace.

That means reaching two critical milestones: problem-solution fit and product-market fit.

Problem-solution fit means you’ve validated that your marketplace solves a real problem for a specific group of users. You’ve found early adopters who are willing to try your platform and are excited about the value it delivers.

You’ll know you’ve reached problem-solution fit when:

• Users say things like, “I’ve been looking for something like this.”
• Early users keep coming back, even if the platform is still basic.
• Sellers and buyers both say they’d be disappointed if your marketplace disappeared.
• You’ve reached marketplace liquidity.

At this stage, your job is to learn, listen, and refine your value proposition. Make sure your messaging clearly communicates the core problem you solve and who it’s for.

Product-market fit means your marketplace has started to grow organically. You’ve built something people want, and the experience is good enough that they stick around and tell others about it, too.

Here are the signs of product-market fit:

• Users are referring others without being asked.
• Supply and demand are both growing steadily.
• You see repeat usage and steady gross merchandise value (GMV) growth.
• Churn is low, and satisfaction is high.

When you hit product-market fit, you’ll feel it. Everything starts to get easier. This is when it makes sense to invest in scaling your marketplace through paid acquisition, new markets, and feature development.

At this stage, you have a good balance of supply and demand, and you’ve reached (or are well on your way to reach) liquidity. You’re in the perfect position to grow, but only if you keep learning.

Now that real users regularly engage with your marketplace, you also have a constant feedback loop. These insights enable you to identify and fix friction points and invest in what’s working. Every iteration should make your marketplace more efficient, trustworthy, or valuable to your users.

Here’s how to keep improving:

• Analyze the entire user journey: Where are people dropping off? Which steps confuse them? Which features drive repeat usage? Use behavior data (like funnel metrics and heatmaps) alongside qualitative feedback to prioritize your roadmap.
• Talk to both sides regularly: Buyers and sellers often have very different expectations. User interviews and surveys help you find hidden pain points and new monetization opportunities.
• Watch your liquidity hotspots: If one location, category, or use case is thriving, double down. Expand your niche, replicate success in a new city, or introduce new services where demand is clearly strong.
• Scale with purpose: Don’t add features or expand your audience just because you can. Only invest in what will remove friction, increase value, or unlock new demand.

To make sure you’re on the right path, keep tracking the key marketplace metrics that actually matter, like liquidity, GMV, transaction volume, repeat purchase rate, and GMV retention.

When you’re ready to scale more intentionally, read our guide on proven strategies for scaling your marketplace, from geographic expansion and vertical layering to advanced growth loops and referral incentives.

Two-sided marketplaces connect buyers and sellers. Examples like Airbnb, Uber, and Etsy show how these platforms thrive across markets and niches.

Successful marketplaces benefit from low initial costs, scalability, and two-sided dynamics. These are tremendous benefits for a founder.

At the same time, marketplaces have unique challenges: solving liquidity, balancing supply and demand, building trust, and managing platform leakage.

Most importantly, founders need to balance building a technically advanced platform with moving quickly and iteratively.

For most founders, the key to creating a successful marketplace is to prioritize building their user base. They built a barebones Minimum Viable Platform and started facilitating transactions and learning about their audience as early as possible. Only once they knew enough about their users’ behavior did they invest more into their tech.

We strongly recommend this approach to all the founders we work with at Sharetribe. It’s the best way to build something people will really love, without heavy upfront investment and risk.

If you want to build with marketplace software, consider Sharetribe’s extensible no-code marketplace builder. Start with a free trial and get your fully functional two-sided marketplace up and running in a matter of days, all without ever having to write a line of code or build custom features. 

We wish you the best of luck with your marketplace business!

In most cases, you should focus on building the supply side first. A marketplace with no supply offers no value to buyers, while having supply ready makes it easier to attract demand.

However, there are exceptions, especially in B2B marketplaces. If a well-known buyer can attract multiple sellers, it may make sense to land key demand first. You can also consider tactics like subsidizing early buyer acquisition to balance both sides. Learn more in our guide to onboarding supply.

Most two-sided marketplaces charge a commission between 5% and 25%, depending on industry, transaction value, and business model.

Product marketplaces like Etsy often charge around 5–10%. Meanwhile, service marketplaces like Upwork or Airbnb tend to charge closer to 15–20%.

Some platforms combine commission with other revenue streams, like listing fees or subscriptions. High-value or infrequent transactions usually have lower rates, while frequent, low-value transactions allow for higher rates. Ultimately, your commission should balance platform profitability with seller and buyer satisfaction.

Marketplace liquidity means users can reliably find what they need: sellers get bookings, buyers find offers. Without liquidity, both sides get frustrated and churn before your marketplace gains traction. In short: as a marketplace, liquidity is ultimately your product.

Liquidity typically focuses on matching speed (how quickly users find what they need) and success rates (the percentage of listings or requests that result in transactions). Building liquidity in a small niche or geographic area first is the fastest way to validate demand and generate momentum.

Once you achieve liquidity in a focused market, you can expand to adjacent categories or locations.

The best way to prevent off-platform transactions is to deliver more value through your marketplace than users get by going direct. You can:

• Build trust features like dispute resolution, reviews, and secure payments.
• Offer conveniences like streamlined booking, scheduling, or insurance.
• Use delayed payouts or escrow to protect buyers while ensuring sellers get paid.

Additionally, some marketplaces use technical deterrents like restricting contact info before payment. But the strongest defense is always providing clear, ongoing value to both sides.

The most common legal hurdles for two-sided marketplaces include:

• Payments: You must comply with financial regulations like KYC (Know Your Customer), AML (Anti-Money Laundering), and payment processing requirements. Choosing the right marketplace payment provider will help.
• Taxes: You may be responsible for sales tax, VAT, or facilitating tax reporting for users.
• Data protection: GDPR (in Europe) and CCPA (in California) govern user data privacy.
• Liability and user protection: You may need terms of service, dispute resolution processes, and sometimes insurance.

These requirements vary by region and business type, so we recommend consulting with legal experts as early as possible.

Early-stage marketplaces can succeed with a web-only platform, especially since responsive web apps are faster to launch and more flexible to update. You should consider building a mobile app if:

• You’ve reached product-market fit and want to boost retention and repeat transactions.
• Your users prefer mobile-first experiences, such as for on-demand services (like ridesharing) or rentals (like vehicles).
• You need mobile-specific features like push notifications or location services.

In most cases, it’s best to delay investing in a mobile app until you’ve validated demand and proven your core business model on the web version.