A yardstick for your marketplace

An online marketplace is a platform that connects buyers and sellers so they can trade various exchange units. The owner of the marketplace plays the role of the intermediary and facilitates the exchange between buyer and seller.

With so much evolving technology and potential offers, it is often difficult to stay focused on the core benefit of the marketplace. At Partner.Cafe, we share a specific and innovative model to help you out called the Fluidity Index.

Five R’s and the Fluidity Index

The Fluidity Index is based on practical elements of marketplaces and identify the areas of most impact. Based on research, measures and experience, a total of fifty criteria have been identified and placed into five areas. These areas are also called the Five R’s and are Reach, Relevance, Revenue, Real ease of use and Return Rate. Let’s briefly dive into each of them :

            Reach : is a measure of the size of the marketplace in terms of interaction and visitors and look in details at criteria that maximizes the connection points. Items like public or secured access, quantity of traffic or visitors and accessibility are among the criteria used.

            Relevance : looks at the you guessed it relevance for the audience. Specialized marketplace for very specific audience would typically score high on this area, as the value proposition and the content would be optimized for those exchanges. The value-based items solutions update, technical validations, appropriate case studies and similar content are criteria in this area.

            Revenue : well, the name says it all, no ? How big is the marketplace and indirectly what is its market share compared to competitive exchanges. Here we also looking at wallet share of both buyer and seller and at growth or expansion rates. Also, having various avenues for revenue and a net incremental business impact would mean a high score.

            Real ease of use : an area to be brutally honest it is. Many claim to be ‘easy to deal with’ but several criteria can measure that : from click counts and navigation maps, pick lists and bundled offering, combined with among others the integration into back end systems .

And last but not least :

            Return Rate : that one is tricky as it has two R’s by itself. We all know that customer acquisition costs (CAC) is a key cost component in any marketplace campaign and related operations, so ensuring that customers do come back is  only good for revenue but also for profit. Among the various criteria, we have identified stickiness schemes, loyalty rewards, pull through mechanisms or specific offering with high return ratios

Checkpoint for strategy direction

These Five R’s in turn provide a compact score, the Fluidity Index, which allows for tracking and easy benchmarking. By comparing the five areas, one can spot strengths and weaknesses and in turn look at improvement areas. The index then serves as a strategic yardstick, to measure alignment with stated strategy and ensure operational competitiveness.

Note also that an added bonus of the Fluidity Index model is that it is applicable and relevant for the various roles involved in the marketplace exchange which include both the marketplace owner (‘do I offer the most ?’), the buyer (‘is it making sense spending time here ?’) and the seller (‘should I work with this marketplace ?’).

Separately, we also highlighted the process of building articulated propositions, using our stacked value proposition which you can find <here>.

Fluidity Index and Marketplace types

Different types of marketplaces do exist, serving different purposes ultimately, as we explain <here>. These can be broadly split into three types : transactional places, process matching environment or community-based exchanges.

The generic model of the Fluidity Index can be applied to all those types and certainly more and provide for comparison points across the Five R’s criteria.

The table below summarizes how real-life marketplaces of different types stack and compare, across the various types. Our research shows that marketplaces tend to favor two or three of the Five R’s criteria, rarely up to five, depending of the type. We also identified that, beyond the fact that the more Revenue-oriented are the more Criteria-rich, marketplace types have an opportunity to develop along two or three more criteria and increase Relevance among others.

One Index – Five Criteria – Fifty Areas : your turn now !

Interested to know more ? Want to check where do you stack up ? Check us <here> to find out ! You’ll get your personalized rating and our direct feedback.

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