Finding Value from Different Perspectives: The Campaigns of Menu

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Sep 18, 2023
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Finding Value from Different Perspectives: The Campaigns of Menu
In the world of transportation, traditional taxis have long been the go-to choice for getting around. However, Menu, a transportation company, has taken a unique approach by offering a shared ride service using minivans and box-type vehicles typically used for chauffeured services. This innovative campaign has allowed Menu to provide airport shuttle services with greater flexibility and at a fraction of the cost compared to trains and buses.
At first glance, this may seem like a completely unrelated topic to the concept of managed marketplaces. However, upon closer examination, we can find common points that connect these seemingly disparate ideas.
Managed marketplaces, also known as full-stack marketplaces, are platforms that go beyond simply connecting buyers and sellers. They aim to improve the overall customer experience by taking a more active role in the execution of transactions. One example of this transition can be seen in the food delivery industry.
The initial wave of food delivery marketplaces, such as Just Eat, Grubhub, and Takeaway.com, focused solely on connecting restaurants with consumers. However, challengers like Deliveroo, DoorDash, and Uber Eats were able to disrupt the market by offering a superior experience. These companies not only connected demand and supply but also took ownership of the last-mile delivery. This allowed for more predictable delivery times and real-time tracking, enhancing the overall customer experience.
Similarly, Menu's campaign to offer shared ride services using different types of vehicles can be seen as a form of managed marketplace. By providing a unique transportation service that combines the convenience of taxis with the affordability of shared rides, Menu is actively involved in enhancing the interaction between passengers and drivers. This additional involvement does not disrupt the network effect between passengers and drivers, but rather strengthens it by providing more value.
Another aspect of managed marketplaces is the ownership of additional services, such as background checks, verification, and customer service. This level of involvement varies depending on the product or service being offered. For instance, regulated services like childcare marketplaces need to ensure that all service providers are background checked and qualified before being accepted into the marketplace. This extra layer of involvement helps establish trust and safety for both buyers and sellers.
However, it's important to distinguish between true "managed" marketplaces and marketplaces in name only (MINOs). True managed marketplaces aim to enhance the network effect between buyers and sellers, while MINOs take on the role of the supply side themselves, effectively removing network effects.
A prime example of a MINO is Opendoor, a platform for selling homes. Instead of listing properties and connecting buyers and sellers, Opendoor takes on the role of the supply side by purchasing homes directly from sellers after an assessment. This eliminates the network effects that are the defining feature of a marketplace.
The consequences of losing network effects are significant. Capital requirements increase dramatically for MINOs, as they need to acquire a substantial inventory to provide a satisfactory level of service. In contrast, true marketplaces can leverage the supply to attract demand organically, reducing customer acquisition costs over time and generating exponential returns on marketing investments.
In conclusion, the concept of managed marketplaces can be found in various industries, ranging from food delivery to transportation. These marketplaces aim to enhance the customer experience by taking a more active role in the execution of transactions. Whether it's through owning additional services or providing unique offerings, these marketplaces seek to strengthen the network effect between buyers and sellers.
To succeed in building and growing a managed marketplace, here are three actionable pieces of advice:
- 1. Understand the needs of your target audience and design your additional services or offerings accordingly. By addressing pain points and providing value-added features, you can enhance the overall customer experience.
- 2. Maintain a balance between involvement and preserving network effects. While it's essential to be actively involved, be cautious not to disrupt the natural dynamics between buyers and sellers. The goal is to enhance interactions, not replace them.
- 3. Focus on scalability and profitability. Managed marketplaces can be more capital-intensive compared to traditional marketplaces. Therefore, it's crucial to have a clear strategy in place for sustainable growth and profitability.
By following these pieces of advice, you can create a successful managed marketplace that adds value to both buyers and sellers while leveraging the power of network effects.
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