Securing the Supply Side in Marketplace Growth

Creating and growing a marketplace entails many difficulties — but none more than nurturing the growth of the supply side.

Let’s dive into some examples:

Airbnb started with three airbeds — hence the name — in the founders’ apartment in San Francisco. Similar to other explosive startups, they scalped Craigslist for suppliers and sent automated messages encouraging signups. The founders would cultivate listings in low-supply areas by knocking on doors. In addition, professional photos were taken for listings with poor-quality images. They were obsessed with “doing things that don’t scale” — something often needed during the early days of a marketplace.

Uber paid drivers hourly rates regardless of whether they had rides or not. Other incentives included a referral scheme of up to $750 for both sides of the referral. While competing with Lyft, Uber also gave bonuses to drivers most likely to be working for both companies — spending around $50 million per week across different regions.

A steady stream of active suppliers is crucial in the development of any marketplace.

Atomic Networks

Marketplaces have different needs when it comes to suppliers. Firms such as Uber and Tinder benefit more from heavy supply in localised areas than scattered supply across a region. For example, riders in London need drivers in London — and people tend to prefer dating someone within a certain radius.

Rather than having thousands of users scattered across the U.S., a startup like Tinder is best off finding 100 users in a single location — which is exactly what they did. They launched at a college party. Downloading Tinder was the requirement to enter the party. Once it was over, they had a couple hundred users — who then used the app to find potential dating partners they didn’t get to speak to at the event. And from there it grew to what it is today.

Not having hyper-localised supply means that a large percentage of users could log into Uber and find the closest car is two hours away. Or worse, a user logs into Tinder and the only available partner in a 20km radius is Margaret, a three-time divorcée with several cats.

My Own Journey with Aluga Vaga

I’ve created a marketplace — alugavaga.com.br — that connects people with empty garages to those looking for parking.

I found existing garage listings on Facebook Marketplace and attempted to convince them to list on AlugaVaga, offering cash incentives. Some listings were added without even asking, hoping they’d acquiesce if I brought them a client. From this, I added the first 23 listings to the site — but they weren’t localised. Drivers were signing up in areas I didn’t yet have supply.

What’s Next?

When a driver signs up, they’re directed to a page where they can indicate the area they want to park. This week, I’m putting on my big boy shoes and doing what the Airbnb founders did in their early days — knocking on doors to cultivate supply.

I also plan on doing public outreach on a busy high street and recording street interviews for social media (which currently contains mostly memes — follow @alugavaga on Instagram, TikTok, and X).

I’ll let you know how that all goes.