Business Model 101: The story of C2C marketplaces

Nokia Beta Labs recently announced the launch of Nokia Listings. The application’s purpose is to connect buyers and sellers, as well as employers and job seekers, via mobile phones – thus acting as a digital local marketplace.

It will be intetresting to see how the Indian digital consumer takes to this. This space, has so far, not really evolved well enough in India. Here are a few reasons:

1. C2C marketplaces in India: Attempts at forming C2C marketplaces haven’t been very successful in India. Baazi might have been a success to some extent but the trick to forming a successful C2C marketplace is to simultaneously get a good base of buyers and sellers. Running deal sites is far simpler where you can artificially (non-organically) source deals from businesses and then get an interested audience for the same. Hence, it remains to be seen whether this attempt works.

2. Mobile Local Search in India: Zook, Google, Yahoo and others have unsuccessfully tried to create a mobile local search service. In a country like India where data is rarely standardized (and hence, not easily searchable), starting a local search service over SMS is all the more difficult where you have to return the correct answer within the top 3 results. Starting such a service where the publishing is also over SMS could increase complications as implementing search can be tough if the database itself isn’t content-rich

3. Inherent challenges with solving certain problems:

a. Job search on mobile: In a job market as evolved as India, it is difficult to fathom aa job classifieds service doing well on an SMS-based phone. A full-fledged app experience may still help but over SMS, anything beyond pushed alerts may not really be of value. Also, I don’t see job search as being as critically needed over a mobile device as is local search since you may need to know about the nearest restaurant on the move but you can still wait to get on to the web to figure out your next job jump. I do believe mobile becomes more relevant in a case like that of Babajobs where you are catering to the job needs of a segment that doesn’t have access to the web.

b. Real Estate marketplace: Nokia believes that a C2C marketplace may do away with having to deal with brokers in finding apartments for rental etc. In a country like India, I don’t see that happening too soon. People still don’t use digital marketplaces while advertising for real estate. In fact, most advertisements on existing classified sites like Makaan and Indiaproperty are by brokers. Hence, while marketplaces solve for aggregation of an otherwise scattered listings space, they do not yet solve for disintermediation.

This is not the first time that a digital marketplace has been launched on the mobile phone. CellBazaar in Bangladesh was among the first such services to launch an SMS-based marketplace in partnership with Grameen Mobile. However, the company learnt soon enough that the service wasn’t easy to use on SMS. Over time, they moved to a web-based service and the SMS marketplace ended up becoming a means to get a new customer onto the marketplace who would then typically migrate to the web version for future usage. It remains to be seen whether a mobile-only marketplace will kick off well.

This post was first published at Venturati

Sangeet Paul Choudary is a leader in the New Ventures group at Intuit Asia-Pac.

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