Signals #29 – 🐎 The dark Mercari horse

Overview

A peer-to-peer marketplace is simply a platform where users sell stuff to each other. eBay first pioneered this through their unique online auction format where buyers across geographies 🗺️, timezones, and languages could place bids on items. Rather than eBay selling things, it was a merchant or user on eBay as the seller. As a result, traditional problems of distribution also eluded these peer-to-peer marketplaces. When each item is purchased, the duty of shipping and handling fell to the merchant, saving the marketplace the hassle of warehouses, logistics, and much more.

But with the rise of Amazon and the steadily decreasing prices of new goods, the space for these marketplaces has slowly become smaller. But, in recent years, the market size of used goods has actually increased as a result of niche marketplaces. More Americans than ever are buying and selling second-hand items. Today, the landscape of peer to peer looks more similar to warring states, each with a unique but smaller piece of the total market.

The combination of new marketplaces and changing consumer tastes also means that many niches today are under-served. Let’s dive in.

Opportunities

The top opportunities in the peer-to-peer space leverage the fact that there are many different marketplaces. eBay is slightly different than Poshmark which is then slightly different than Mercari. These differences spell success or disaster for the merchant. As a result, there are plenty of opportunities to help merchants increase reach through cross-listing, building niche marketplaces for specific items, and more in the pro report.

  • Platform cross-listing 📝. It costs nothing to list the same item on multiple platforms and dramatically increases the visibility of the item. However, these listings need to be taken down once that shirt is sold on any of the platforms. The only tools available to merchants right now are created by mostly unsophisticated players (listingjoy, list perfectly, cross list).
  • Niche marketplaces 👟. GOAT is a marketplace that specializes in sneakers and fashion clothing. Their unique business model is based on an authentication where a purchase is first shipped to GOAT before being sent to the buyer. There are plenty of similar opportunities in board games, books, computer keyboards, pens, and everything in between.

How to Launch

Now, it’s time to explain the title of today’s post, Mercari. Mercari is a new peer-to-peer platform that originated in Japan and came to the US in 2016. What differentiates Mercari from the competition is its focus on consumers rather than merchants selling in bulk. While this limits the opportunities to build a business based on offering Mercari related services, it also means that few businesses have invested time to understand the platform. Thus, if Mercari ever relaxed its business policy (it has already taken the first step with pro merchants), it would be a literal gold rush of small businesses looking to access Mercari customers. Hence, it makes sense to bet on the dark horse, Mercari.

  • Start by specializing 🎯 in one of the platforms (perhaps Mercari). Learn about fee structure, audience styles, and how top merchants have found success. This is crucial for pursuing any of the opportunities outlined above and gives you a solid foundation to build off of.
  • Build an audience through content ✍️. Content marketing is all-important in the peer-to-peer space. Most merchants are small businesses where advertising or direct sales will be too cost-inefficient. As a result, content that can leverage SEO will reign supreme to attract businesses.

Cases

Platforms

  • Mercari – Peer to peer platform that focuses on consumers rather than merchants
  • eBay – The original online marketplace and still commands insane traffic in collectibles and antiques
  • Poshmark – Another peer to peer platform that focuses on luxury clothes and accessories
  • Facebook Marketplace – Local marketplace where buyer and merchant meet each other
  • GOAT – Marketplace that focuses on sneakers but authenticates all purchases
  • Closet Tools – Poshmark automation tool that makes $37k/month
  • List Perfectly – Online software to help people list across marketplaces with $2mm/year in sales
  • Reselling Revealed – Content platform for merchants with significant traffic

Forecast

  • New peer-to-peer marketplaces will pop up focusing on specific niches 🎲. Imagine a marketplace specifically built for board games where you can choose from dozens of slightly used Terraforming Mars for half off MSRP. Or a keyboard marketplace where used Anne Pros are only $25 instead of the $70 full price.
  • Merchants 📦 eventually dominate every peer-to-peer marketplace. Although the intention of peer to peer may seem powerful, every platform eventually focuses on its power users. For almost every peer-to-peer marketplace, that would be merchant users.

Enjoyed reading this issue and want to learn more? Consider subscribing to Signals Pro to access the full report with 150% more opportunities, ways to launch, and forecasts.

Thanks for reading. See you next week! 🤝