Speedinvest Blog

Full Stack Marketplace: Insights From Our Marketplace Meetup in Paris

August 29, 2023

Marketplaces started as a simple model, facilitating transactions by two parties. Over the years, transactions have become more complex and required additional services, and verticalization from their operators. Financial Services, Logistics, Communication, and Curation are only some of the services marketplaces come up with today in order to create amazing user experiences.

Recently, we hosted our first Marketplace Meetup in Paris. While our main event in Berlin this coming September, the Marketplace Conference, covers all topics around marketplace startups, our break-out events in London and Paris hone in on specific topics. 

In Paris, we talked about “The Full Stack Marketplace.” Our Paris event had three specific sessions, covering the whole spectrum of layers you can add on top of your marketplace. We talked about Financial Services for Marketplaces, had a Panel discussion with Ankorstore, Selency and BlaBlaCar and finally wrapped it up with a Fireside Chat moderated by Jeroen Arts and the CFO of Byrd.

Below is a complete summary of the key takeaways from two of the panels, but I highly recommend that you have a look at the sessions as well. You’ll gain a better understanding of the context and learn about specific case studies and real world scenarios.

Financial Services

The first panel discussed financial services you can add to your marketplace, the right level of engagement and depth of integration. We were honored to welcome Pete Flint (General Partner Nfx), Vincent Huguet (Co-Founder of Malt), Nicolas Debok (MD at Eurazeo), and Yann Ranchere (Venture Partner at Anthemis), who moderated.

For this session, we asked our panelists:

  • What defines a fintech-enabled marketplace? 
  • How should you set up your services? 
  • What kind of exposure do you take on as a marketplace by adding more and more financial services? 
  • What risk do you run into?

Setting the stage: Buy or build?

  1. The primary function of a marketplace is to take out friction. Over time, marketplaces moved closer and closer to the transaction, embedding financial products into the user journey. Especially in the current fundraising environment, there’s a desperate need to increase margin and lock-in effects, which often is the case in fintech-enabled marketplaces, generating higher switching costs. In supply constrained markets, all financial services create stickier supply.

  2. Every layer you add on top of marketplaces, which is served by an external party, tends to eat into your margin. There’s no obvious answer to the question whether buy or build is the right approach. It’s therefore more important than ever to look into internal company historical data and decide for yourself.

  3. It was very helpful for Malt to include third party providers (e.g. factoring) in their product back in the day, because the gap between recorded revenue and pay out to freelancers was starting to grow. Every layer you are able to add to increase trust, increases the value of your marketplace towards your customers.

  4. Companies often risk running into legal issues if they’re not making the right decisions on buy or build, inhouse or external. In the case of Malt, it’s critical that the regulator does not see them as the employer of the freelancer. Keeping the right level of in-house knowledge around legislation is crucial, yet hard to scale efficiently in a growing company. Therefore, Malt decided to go for a hybrid approach, serving corporate customers through inhouse services, while SMB clients are more exposed to external partner solutions. As the regulatory environment becomes more complex, your legal department should not grow as quickly as your sales team.

  5. Focus is key. First, focus on your key problem and don't get distracted from financial services too much. Companies tend to move to the most attractive market, so choose the more favorable regulatory environment.

  6. Remain data driven and learn to underwrite. The algorithms from a third party will pick the best clients. You have access to the data, so you’re better equipped to underwrite. If you work with a third party, you lose a lot of metadata.

  7. If you’re not asking for upfront payment, you’re providing financial services.

  8. Legacy financial services use algorithms stuck in the ‘60s. The data sets of many recently founded marketplaces are much better and more granular than legacy institutions that were built in a different environment.

  9. Now with the cost of money rising due to higher interest rates, marketplaces with a certain GMV (Gross Merchandise Volume) should ask themselves if they should go directly to the bank for better terms as smaller fintechs. Even mergers and acquisitions (M&A) to acquire fintech solutions as a marketplace might become more interesting. Malt will continue to work with partners, investors will continue to dig into the margin profile, and high margin, sticky, and low operational complexity is highly sought after by investors. In a world where capital is more expensive, marketplaces have to focus even more on repeat purchases.

Layers on top of your marketplace

Our second panel, moderated by myself with Charlotte Cadé (Co-Founder Selency), Ben Retourné (VP Product & Design BlaBlaCar), and Thomas Lombard (VP Market and Ankorstart) was centered around all of the different layers and services you should (or shouldn’t) add to your marketplace business.

One of the key questions of marketplaces is the range of services and features they want to offer. We asked our panelists: 

  • How do you collect feedback and translate it into features and services? 
  • How do you establish trust on your platform? 
  • Where does the focus need to be? 
  • Why is communication more important than ever?

Key Takeaways

  1. For B2C and C2C platforms, integrating product marketing into the product team helps to figure out what features and services require user education. B2B marketplaces tend to educate clients efficiently in one-on-one offline events in order to build up trust and touchpoints.

  2. Net Promoter Score (NPS) tracking is one of the most efficient tools to identify features dragging down or keeping up customer satisfaction.
  1. Setting up premium features in order to accommodate special customer needs helps to drive retention and re-purchase frequency. The Ankorstore plus program and the Selency Turbo Feature are both great examples of how to execute on implementing premium features. .
  1. Trust over everything. No matter if ID validation on Bla Bla Car or hand-selected curation at Selency, establishing a safe environment for suppliers and customers remains one of the most important characteristics of marketplaces.

  2. Keep communications on the platform and create an environment that increases the number of interactions between transacting parties. By having a top-notch communication layer, you can avoid transaction leakage and integrate customer support deeper in the platform. More and more marketplaces are seeing their communication features as a core part of their offering and they dedicate a lot of resources to enable interactions and foster a community.

  3. The only “features” you need from the first day are user centricity and a focus on the UX. If you enable any seller to sell on your platform while maintaining a high level of quality control, you’re off to a great start.

  4. Conversational commerce will shape the future of marketplaces. Users will demand personalized shopping experiences and learn more about the product and purchasing options.

  5. Ensuring stellar fulfillment and convenience at scale will continue to separate the wheat from the chaff.

Highly Managed Marketplaces

Chris Bourdeau (CFO of byrd) and Jeroen Arts (Partner at Speedinvest) wrapped the event up talking about the nuances and dynamics of a highly managed marketplace.

If you want to dive deeper into what it takes to scale managed marketplaces, the recording below has everything you need. We decided against summarizing it because we believe that this panel has the most impact when watched in its entirety. Trust us!

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