Reverse Pitch | ‘Building C2C marketplaces is tough, but defensible if done well’

Marketplace platforms like Alibaba, Uber and Airbnb have created huge value. Building consumer-to-consumer (C2C) marketplaces like Airbnb is harder because one must rethink an existing value chain by removing middlemen and putting the onus of transaction on end-consumers. In some markets, the power of middlemen is high and proportional to information asymmetry. Also, the larger the cost of a transaction going wrong, the greater the power of middlemen. The cost could be monetary (like in real estate, cars) or emotional (like a poor holiday experience). This can become an opportunity for a new disruptor because there is more value to be captured by removing middlemen. Also, once a user finds a platform that saves him the middleman’s fee while delivering the same experience as before, he is likely to remain loyal.