What makes digital marketplaces so valuable?

Although China has put Ants Group IPO on hold, it was on its way to become the biggest stock debut in history, convincing investors around the world. Ant Group is bundling paying, borrowing, and investing, all in one marketplace, accessible by smartphone. It serves around one billion users. This platform was set to raise 34,5 billion USD. Let’s look at the key elements that make this digital marketplace such a success in Asia and so can inspire us with new business ideas.

November 2020 – Ant Group with Ant Financial is a spinoff from Alibaba that groups all its financial products. Their mission is to make it easy to do business anywhere and at any time. Alibaba is all about the creation of an ecosystem with the customer in the centre of it, streamlining the services offering as intuitive as possible. And they stick to their core competence and partner up with existing players if needed. Everything happens in the ecosystem, no need to leave it. In 2003 Jack Ma entered the e-commerce market and created Taobao, with the clear focus on their customers and less consideration for their suppliers, like Amazon does. Out of this clear customer centricity followed the detection of the need for a simple payment method, usable only by having a phone. When Alipay was introduced, Taobao soon took off and stayed at the top one e-commerce place in China. The strategy of clear focus on their e-infrastructure, payments and logistics has led them automatically to an ecosystem where they partner up with other institutions, like Ant Fortune that connects more than 80 Chinees fund institutions.

What strategy you need to follow to build a successful marketplace?  

Of course, the circumstances in China were favourable, Alibaba had the opportunity to begin from nothing in a market deprived from traditional access to financial products and services. But the strategy stands, and these are some key questions you need to consider:

What is the ecosystem that you are running in?

You know the financial industry well, but all relevant industry and market drivers that are present in your specific domain are worthwhile to look at to analyse. Is it a market with a lot of players, or a few? Are you a niche player with a low frequency of purchase, like mortgages or is your business high frequency, allowing a lower value per sale like payments? You also can discover new business opportunities like pear-to-pear lending. Today, on a European level, they are the rising marketplaces! Are their partnership possibilities? Multiple parties can work together on the same platform, even if they have diverse needs, based on ‘access roles’ and data disclosed on a ‘need to know’ basis. The Immoweb partnerships of Keytrade’s mortgages and Baloise’s rent insurance are a fitting example of this. Are there existing communities you can already tap into? Is there a new customer base that was unreachable or underserved before? Many rising Accounting Techs are serving small businesses: combining payments, factoring and insights in business dashboards. This is a service that was too expensive or not accessible for them in the past.

Who delivers value to whom?

How easy is it to ask for a fee for the service or product offered and what is the frequency of the transaction? Transparency is key as a marketplace is easy to compare offers of different suppliers and prices are publicly available. That explains the success of Independer insurance marketplace in The Netherlands. Are you running in a growing market or is it already saturated? Is there a fierce competition? Are their cross-sell opportunities? KBC says that they are converting non-clients into clients in their publicly accessible app, containing 3rd party services. And, markets that are small now, might be remarkably interesting once a digital marketplace is available. Could you set up a ‘double sided marketplace’ delivering added value to customers and multiple suppliers, like the recent partnership between Belfius and Proximus? And let us not forget that marketplaces have the potential to scale and grow enormously, like Taobao …

Banks and insurance companies are ideally placed to build out a marketplace as they stand for strong brands, delivering trust. Combined with a large customer base, they have all it takes to step into a market ecosystem.

Are you looking for a partner to take along on this marketplace ideation journey to crystallise your ideas and realise a new business potential you never though off? Come and talk to us!