Why is Investing in a Service Marketplace A Great Startup Idea?

Quick Summary: Are you an entrepreneur keen to launch your business but confused about where you should invest your money? Well, service marketplaces are one great idea. The best part is that you have a wide range of niches to invest in. Know more reasons why you should build a brand in this ecosystem with our blog.

Service marketplace models present a compelling opportunity for startups to evolve their business. As the digital economy continues to boost, the demand for convenient and efficient service solutions is also rising. 

As per the Statista reports, the global service marketplace industry size is projected to reach USD 4.5 trillion by 2027. Hence, entrepreneurs looking for a business opportunity must consider investing in a service marketplace. And, if you already have a concept in mind, then all you need is a reliable marketplace solution development partner.

Some of the major reasons why this market is growing are diverse service options, convenience, transparency, quality assurance, and secure transactions. From home services to taxi booking, dog walking, accommodation booking, and handyman services, a number of tasks can be done through a robust platform.

Want more reasons why you should invest in a service marketplace business model? This blog will highlight all the top reasons.

Let’s begin by looking at the thriving demand for service marketplaces.

Numbers Prove the Rising Demand for Service Marketplaces

If you are looking for solid reasons to invest in the service marketplace ecosystem, you need to check the numbers and stats. It provides a clear image that building your brand in this industry will ensure a good user base along with exceptional services.
Let’s look at the important numbers:

• Fiverr, a popular service marketplace, connects over 12 million freelancers with 5 million businesses, facilitating over $4.4 billion in transactions in 2022.
• Thumbtack is a popular handyman service marketplace. Its website had a traffic of 6.21 million as of November 2023.
• We all know about the popular ride-sharing app, Uber. It generated a revenue of $31.8 billion in 2022.

Intrigued by Uber’s incredible journey? If so, hop onto our blog “The Uber Success Story: From Idea to An $80 Billion Valuation“. And, learn how innovation, strategy, and perseverance led Uber to redefine the ride-sharing landscape.

These numbers prove that the service marketplace ecosystem is a wide industry where businesses provide a range of services. From freelancing platforms to ride-sharing, handyman, and dog walking, there are several options for startups to invest in.

The section below explains the top ten reasons why startups should consider investing in a service marketplace model.

9 Reasons To Invest in a Service Marketplace Model

With the advancement of technology, people want quick and reliable solutions. From hiring a professional to fix the leaking tap to having someone take their pet on a walk, there are great opportunities in the service marketplace industry.

If you invest in it, you are sure to gain the following benefits:

1. Several Ways to Make Money

As a startup, you want to be sure about making good money. Before investing in any business idea, you want to ensure the security of incoming money. For this reason, investing in an online service marketplace is a great opportunity. 

One of the biggest reasons for investing in a service marketplace startup is the potential for multiple revenue streams. Various service marketplaces generate revenue from different channels like commission fees, premium listings, and subscription models. These channels ensure that the brand always makes money in one way or the other.

Hence, as a startup, you can add as many revenue streams as you want. In the beginning, you may add one or two ways, and as the business grows, you can add monetization methods.

Ready to unlock the full potential of your service marketplace? Let ValueAppz be your partner in building a financially resilient and thriving online ecosystem. Contact us today for a free consultation. 

2. Global Brand Presence

One of the primary goals of startups is to take their brand to a global level. It is only possible if the products or services have a global demand. One good example of this is Airbnb. Through its services, users can book accommodation whenever and wherever they want.

Thus, when you build a similar platform, your brand is assured of reaching a global audience.

Further, the service marketplace ecosystem allows companies to make their services accessible to customers worldwide easily, driving international growth and market penetration. As the business is completely run on digital platforms like a website or app, connecting with people gets easier and broader.

→ Learn how you can build an accommodation platform like Airbnb with our guide.

3. Start With Low Investment

Another great advantage of investing in a service marketplace is the low initial overhead costs. Unlike traditional businesses that require huge investments in equipment, inventory, and physical space, service marketplace models just need a digital platform.

Firstly, it eliminates the need for heavy initial investment in infrastructure, staffing, and technology. Startups can rather use existing marketplace infrastructure and focus on refining their services.

Secondly, service marketplaces usually operate on a commission-based model, enabling startups to align their expenses with their revenue generation, hence minimizing financial risks.

Therefore, startups can enter the market with significantly lower overhead costs, preserving capital for business development, innovation, and customer acquisition.

→ Ready to explore the lucrative world of marketplace business models? Dive into ‘Top Marketplace Business Models to Invest in 2024 and Steps to Launch One‘ to discover your next entrepreneurial venture.

4. Rising Demand for Digital Platforms

The demand for digital platforms is on the rise. So is for the marketplaces. With the help of a digital marketplace, people get easy access to services whenever they need them. On the other hand, the sellers can reach millions of people through the platform, ensuring that more dealers register.

Talking about sellers, popular marketplaces like Amazon have over 9.7 million sellers globally. Hence, with engaging marketplace solutions that have necessary features like a user-friendly interface, secure payments, product and service categorization, and advanced search options, you can ensure that more buyers and sellers register to the platform.

So, if you are planning to start a service marketplace, building a digital platform is crucial so that you can tap into the growing demand, increase visibility, and attract the target audience.

Ready to tap the booming service marketplace?

ValueAppz can help you build a stunning and engaging service marketplace that attracts both buyers and sellers, boosting your brand and letting your marketplace thrive. For more information, get in touch today. 

5. Business Flexibility and Adaptability

Investing in the service marketplace industry also provides startups with a greater degree of flexibility and adaptability in several aspects of their business operations. Service marketplace models are often designed to adapt to changes and updates, allowing entrepreneurs to quickly modify their services, pricing models, and promotional strategies.

Therefore, startups can swiftly adjust to the changing market needs, ensuring that they always stay ahead. Online service marketplaces also offer businesses the flexibility to scale their business. 

For instance, if your business offers handyman services, you can instantly register a professional handyman when needed. It will ensure that there is no gap in the business operations and that you get to expand your services rapidly.

Book a free demo today to discover how we can turn your service marketplace dream into a reality. 

6. Better Customer Trust Due to Verified Services

Another advantage for startups investing in a service marketplace is the trust and security measures integrated into the platform. These often include identity verification, background checks, and customer reviews. 

With these built-in mechanisms, startups can demonstrate their commitment to ensuring the credibility and professionalism of their service providers, ultimately enhancing trust and confidence among customers.

In addition to decreasing the possibility of conflict and promoting constructive interactions, a secure platform helps ensure the long-term viability of the service industry. The adoption of these measures becomes a strategic advantage, differentiating companies as accountable guardians of a trustworthy and secure service environment in a time when internet trust is critical.

For instance if you are building a car rental platform, all the car owners will have to go through a verification check along with uploading their respective documents. Therefore, when a user comes to avail services, they would have a guarantee of trusted services, giving your marketplace a boost.

→ Want to build a car rental platform like Turo. Know the step-by-step process with our in-depth guide.

7. Cost-Effective Marketing Strategy

Businesses often have to spend hefty amounts of money to advertise their brand and its services. However, this is not the case with online service marketplaces. With a service marketplace, you can take advantage of low-cost marketing techniques by utilizing network effects. 

The user base grows as additional service providers sign up for the platform, resulting in a self-sustaining marketing loop that lowers the requirement for significant marketing expenses.

Also, network effects’ self-sustaining quality promotes organic development while reducing marketing costs. Startups may take advantage of this momentum as the user base grows as a result of word-of-mouth and recommendations within the service industry.

8. Network Effects and Community Building

The last reason why you should invest in the service marketplace industry is the network effects and community-building opportunities it offers. The more people sign up, the more valuable the platform becomes due to these self-reinforcing processes. 

The platform gets more appealing to new users as its user base grows and draws in a wide variety of service providers and customers. By fostering a feeling of community, trust, and involvement, this positive feedback loop strengthens the value offered as a whole. 

As an entrepreneur, you may take advantage of this community’s power to draw and keep users as well as build the platform’s reputation, which will help them establish a strong market position and foster a vibrant ecosystem that benefits all parties involved over time.

Cost of Building a Service Marketplace

When investing in a service marketplace model, startups should carefully consider the cost of its development. On average, the development cost ranges between $15,000 to $60,000. The final price depends on several factors like the type of service marketplace, number of features, design, and development team. Therefore, you must acknowledge all the cost factors before you invest in it.

Build A Leading Service Marketplace with ValueAppz

As discussed above, the development team is one of the most important factors in deciding the development cost. With our services at ValueAppz, you can develop your platform at a price that fits your budget.

Our online service marketplace solutions services ensure that our clients get the best for their startup. Also, with our readymade solutions, you can save plenty of time and money and quickly launch your brand in the market.

Get in touch with our team to discuss your service marketplace startup idea.

Key Takeaways

• The worldwide services market is expected to reach USD 4.5 trillion by 2027, according to Statista, driven by the growing need for practical and effective service solutions in the digital economy.
• Service markets provide a variety of services that may be effectively enabled through a strong online platform, including home services, taxi booking, dog walking, accommodation, and handyman services.
• Some major reasons to invest in the service marketplace model are global reach, flexibility, diverse revenue methods, technological innovation, low initial costs, and community building.
• The average service marketplace development cost ranges between $15,000 to $60,000.

Frequently Asked Questions

Qn. 1: Why Invest in Marketplaces?

Investing in marketplaces gives entrepreneurs access to a low-cost, scalable platform that has built-in security features and user experience benefits, promoting trust, efficiency, and adaptability.

Qn. 2: What is a Services Marketplace?

A services marketplace is an online platform where companies or people may provide and receive a range of services through a centralized marketplace, from professional to practical.

Qn. 3: How do I Start a Service Marketplace?

To start your service marketplace, follow these steps:

• Identify your target niche
• Understand users’ needs
• Choose the features
• Build a robust platform
• Test and launch the app

Qn. 4: Why Should a Startup Consider Investing in a Service Marketplace Model?

To take advantage of a service marketplace model’s scalability, cheap startup costs, and potential for improved user experience and flexibility, startups should think about investing in one.

Qn. 5: What Advantages do Service Marketplaces Provide over Traditional Business Models?

In comparison to traditional company models, service markets provide benefits, including scalability, fewer operating costs, access to a diversified consumer base, and a simplified user experience.