Marketplace Shifts: Make It or Break It

"A successful marketplace establishes a balance where supply, demand, and business benefit each other and succeed together". - Gilad, VP of Product at Eventbrite.

The balance between supply, demand and the mechanics of the marketplace that led to liquidity and trust are delicate, but that does not mean companies can avoid making changes.

Value Shift. A two-sided marketplace works when everyone is getting the right value out of the interaction. When you’re embarking on a value shift, one party will be getting less—or different—value out of their continued engagement.?

It’s important to see a value shift from the point of view of each side of the marketplace because it can impact more than just the party who’s experiencing the value change directly.

When DoorDash changed their policy to include tips in the guaranteed floor for Dasher pay, it decreased the value for some Dashers, who ultimately were paid less for the same service. Here, DoorDash wanted to offer minimum pay to Dashers without forfeiting margin. So they changed their policy in order to redistribute value across supply—a Dasher who received a larger tip, was now subsidizing the minimum pay for another Dasher who otherwise would be making less. All in all, it was mixed news for the supply side, but the company had been thoughtful and considered that carefully before making the shift. The surprise came from the consumer reaction. This value shift for supply upset the demand side of the marketplace: it outraged customers who felt DoorDash was taking the tips intended for Dashers. So even though the value on the demand side of the marketplace didn’t change at all, it was ultimately customers, not Dashers, who compelled DoorDash to change its policy.?

Control Shift. Sometimes a change may grant more power or control to one party at the expense of another.

Take refund policies as an example: if the marketplace mandates specific refund policies, suppliers lose the freedom to create their own. This dictates an important aspect of their relationship with buyers.?

Risk Shift. Risk shifts create the possibility of loss. If you get it right, you can keep actual losses relatively tiny, while positioning the risk shift, itself, as a differentiator.?

Once it’s clear that you’re dealing with a value, control, or risk shift, you’ll want to assess its scope. Consider some basic questions:

• How would the impact of the shift be distributed?
• Is this shift consistent with where you want to go as a marketplace?
• What impact could the shift have on the key value proposition of the marketplace?

Never Ever Do It

Making everyone happy.

- In an effort to alleviate every concern, teams may continuously increase the scope and make the project so big it’ll never get off the ground, or never completes.

+ Don’t confuse things or erode trust by painting too rosy a picture, but do remind the team why the shift is ultimately a good thing.

Avoiding the need for change and doing nothing.

- Don’t be paralyzed by indecision, which is often accompanied by rationalization and excuses. Integrity is key!

+ When a shift is risky, it is very reasonable to do it in phases and monitor impact.

Focusing on the angriest and noisiest.

- When you’re listening to customers and experts, it’s natural for the loudest and angriest voices to carry best.

+ Attempt to quantify and assess what each data point is really representing, proactively seek out feedback and insight from different customer segments.?

You can’t predict the future, but you can prepare for it

Scenario plans are generally useful for decision making and planning, and not particular to marketplaces changes.

To create a scenario plan, start with the worst case: the dangerous scenario.

This may very well be the scenario that triggers the fear and emotion we discussed earlier.

Following the dangerous scenario, describe other likely scenarios.

Usually, the two or three most likely outcomes that differ from each other on key dimensions will be sufficient.

The point is to prepare better, not to guess the future precisely.

Deciding to make a shift in a marketplace is hard.

Your stakeholders are entwined, the benefits can appear zero-sum, and someone somewhere is going to be anxious about any type of change.

But being able to name the type of shift your business needs can be clarifying—not only for you but for your collaborators across teams.

@Gilad (VP of Product at Eventbrite)

Have a nice and productive week everybody!

Cheers, Den