The former CEO of market by mono said that new marketplaces often find themselves in a situation where they spend as much on customer acquisition as they bring in. As a result, the model doesn’t make a profit right from the start.
The former CEO of market by mono said that new marketplaces often find themselves in a situation where they spend as much on customer acquisition as they bring in. As a result, the model doesn’t make a profit right from the start.
In his Facebook post, Citrus CEO Artem Shevchenko described a typical situation: businesses come up with the idea of "doing it like Amazon or Kaspi,» but cannot explain exactly how they will make money.
According to him, the problem lies in the basic economics. In most popular categories (electronics, technology or clothing), the market is already formed: it is clear how much advertising costs, how many people go to the site and what proportion of them buy. That is, attracting one buyer has approximately the same price for all players.
«If you are a new marketplace, you buy a user on the market. For example, for 1000 UAH. And then you try to sell the same user to the seller. But the seller is not an idiot. He can buy the same client himself — for the same 1000 UAH. At this point, your margin is zero.»
This means that the platform is not actually adding value, but is trying to make a profit on the transaction. In such a situation, it is easier for sellers to work directly, without an intermediary.
«You simply become a buffer between the buyer and the seller»
Shevchenko also points out that typical solutions like «let’s make a better product» or «let’s get more traffic» don’t solve the problem. If everyone buys customers for the same price, scaling will only burn through the budget faster.
There are only a few scenarios where the model can work. For example, if a company can attract customers much cheaper than others or convince more people to buy from it. Another option is to enter a segment where people are not yet used to buying online, and the platform actually creates new demand.
«If you can’t clearly explain before launch what will lead to better CAC or conversion, don’t start. Because after launch, this answer will NOT appear!»
In conclusion, he emphasizes that the marketplace is not a universal growth tool, but a model with strict rules. If a company does not have an advantage before launch, the launch turns into an expensive experiment with no guarantee of results.
Previously, dev.ua wrote about how Artem Shevchenko, the former head of monomarket and current CEO of the Citrus chain, stated that the key driver of the marketplace within monobank is «purchase in parts.» Without it, the product actually loses its meaning.
