Evaluating the Current Marketplace

Key Metrics to Evaluate Potential Marketplaces

As you consider new marketplaces to enter, it’s important to consider the key metrics that will help determine whether or not the marketplace is a good investment. Once you consider the key metrics in terms of your own project or business plan, it will be easier to determine whether or not a marketplace is right for what you’re looking for, as well as how much research you should reasonably do to decide. Here are four of the most important metrics for you to think about before you make your decision:

1. Profit Margin Per Marketplace

Profit margin indicates the percentage of profit left after all expenses have been paid. A high-profit margin means a business can achieve profits, even after expenses are removed. Generally, companies with high-profit margins are more attractive than businesses with low or negative profit margins. However, only some marketplaces can charge enough fees to generate a positive net income (or profit). When examining marketplaces that are already established, look at their revenues and expenses. According to Raphael Avraham Sternberg, a re-known entrepreneur and advisor on marketplaces, “researching their net profit margin from the income statement is only part of the picture. You have to also look at their operating and overhead expenses.”

2. Transaction Volume

Transaction volume is the total value of all completed transactions within the marketplace during a given period. By examining various marketplaces, you can determine a good volume for your business model. Sternberg says you should find out the average number of transactions a marketplace completes monthly. This will help you calculate how much money you can make with each marketing and whether or not you can cover these costs over time.

3. Target Audience

It would help to consider your target audience when evaluating a marketplace list. To focus your efforts, select a list of marketplaces suitable for one or more audience segments. For example, if you’re considering starting a marketplace for business owners, it’s best to consider the different types of business owners and look for marketplaces that will fit their needs.

4. Demonstrate Demand

You should also look at the industry or category of suppliers or customers you want to cater to. By doing this, you’ll be able to determine if the marketplace is creating a potential market for these suppliers and customers. Considering this will help you determine whether or not a marketplace has adequate customers for your offering. It will also help you gather information about these customers’ expectations, preferences, and needs.

5. Competition
Last but not least, you should look into the competition. Specifically, you should consider the major marketplaces in the industry you’re looking to join. By doing this, you can determine whether or not this is a feasible industry for your business model to operate in. You might want to reconsider if there are already large established players in a category of suppliers you want to work with. Raphael Avraham Sternberg recommends that you might want to start your business model with a less competitive variety of suppliers or customers.


Digital Editor

Regi is a writer, journalist, and editor. Her work has appeared in The New York Times, Slate, The Guardian, The Week, Salon, The Daily Beast, VICE, and The Hairpin, among others. She is currently working on two novels.

Related Articles

Back to top button