Investors love marketplaces for the power and elegance of network effects, which contributes to the liquidity (in terms of buyers and sellers). Startups focusing on marketplace-like business models face a challenge when they move into the mobile space. This is largely because of the fragmentation of users across two dominant mobile platforms - iOS and Android.
This creates a vicious cycle. Startups in their early stage often do not have the luxury of time or money to build across various mobile platforms at the outset. Therefore, any mobile marketplace offering would theoretically have its overall size reduced by about 50%. This would put further strain on the product to reach a point where the startup can invest into building for other platforms.
The article presents some examples where some startups have responded to the liquidity/network effects hurdle by creating a new business model to subvert the problem. As mobile phones continue to proliferate, as startups look for new sources of income, and as phones present new ways to segment consumers by willingness to pay, location, etc., mobile fragmentation and its effects on mobile marketplaces proves to be an even bigger issue.
Source: http://techcrunch.com/2013/11/10/the-mobile-first-impact-on-the-marketplace-network-effect/
This creates a vicious cycle. Startups in their early stage often do not have the luxury of time or money to build across various mobile platforms at the outset. Therefore, any mobile marketplace offering would theoretically have its overall size reduced by about 50%. This would put further strain on the product to reach a point where the startup can invest into building for other platforms.
The article presents some examples where some startups have responded to the liquidity/network effects hurdle by creating a new business model to subvert the problem. As mobile phones continue to proliferate, as startups look for new sources of income, and as phones present new ways to segment consumers by willingness to pay, location, etc., mobile fragmentation and its effects on mobile marketplaces proves to be an even bigger issue.
Source: http://techcrunch.com/2013/11/10/the-mobile-first-impact-on-the-marketplace-network-effect/
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