Wednesday, March 6, 2013

Niche Vertical Marketplaces in Forums

Inside popular online forums, marketplaces emerge.  Whether you’re into Vinyl Records, Guns, Watches, Computer Accessories, or Baby Clothes there is an online forum to serve your needs where people buy and sell these goods in sub-forums.

The members of these communities are essentially hacking forum software to make these transactions work.  The sales sub-forum will often have guidelines that forbid any conversation other than sales (in order to keep the signal-to-noise ratio of the new sales threads in the sub-forum high enough). Selling goods online requires trust, so these communities will often dedicated a sub-forum to just seller/buyer reputation: the sub-forum will contain only reviews of transactions with other members. 

I find this behavior fascinating.  I can’t think of a more painful piece of software to use to create an online marketplace than forum software.  It’s such a kludgey experience, but people tolerate it.

I think these sales forums emerge for a few reasons, despite the painful user experience hurdles that stand in the way:

  1. Forums help birds of a common feather flock together, and once they’re together, commerce is a natural behavior. Just like an collectors conference/meetup will foster commerce, the same phenomenon happens online. It’s a natural extension of communication.
  2. Buying and Selling using forum software enables users to avoid the 10% bite that eBay takes out of any transaction.
  3. People in a forum often have very similar taste, so the goods listed in the forum will match that taste very well. Goods listed on eBay have a much lower signal-to-noise ratio in terms of taste.

I’ve long thought creating a private-label marketplace web service that ties into the identity system of various forum software engines would be an interesting startup idea.  These forums have already accomplished the hardest part of building a marketplace business: creating initial liquidity. So, if those communities could carry their inventory and reputation into a piece of software that offered a superior user experience, I thought it would be a compelling value proposition to both buyers and sellers.  I’m not sure you could ever build a marketplace with a meaningful take rate on the gross market transactions (see motivation #2 above), but I’m sure there would be other revenue generating opportunities such as advertising, affiliate revenue, or promoted listings.

I’ve seen one company try this approach without much success, so maybe it’s not a great idea.  But, if you’re working on this idea already, I’d love to learn more because I’m personally fascinated by this behavior.  Or, if you like this idea, just take it and run with it.

Notes

  1. tjpegan reblogged this from thegongshow
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    “I’m sure there would be other revenue generating opportunities such as advertising, affiliate revenue, or promoted...
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