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Pattern description
Pattern description
A two-sided market facilitates interactions between multiple interdependent groups of customers. The value of the platform increases as more groups or as more individual members of each group are using it. The two sides usually come from disparate groups, e.g., businesses and private interest groups.
Inventive problems
Inventive problems
It’s necessary to perform all the operations of the Value-added chain to create the product.
It’s necessary to perform minimum number of the operations of the Value-added chain in order to minimize the overall workload of company.
The customers should visit as few places as possible (it's the best - one place) to find information about products (goods and services) and suppliers, so as not to waste time on shopping, visiting companies or surfing the web.
The customers should visit many different places (shops, companies, Internet sites) to find the most complete information about products (goods and services) and suppliers.
Application examples
Application examples
Online marketplaces such as eBay, Amazon, or Zappos enable seller–buyer interactions as well, and as such they are also two-sided markets. Consider Groupon: this company brokers discounted gift certificates (‘deals’) between buyers and vendors, promoting the idea of a group discount, whereby a greater discount is obtained from merchants. Customers benefit from these discounted offers and rebates, while the merchants involved enjoy exposure to large numbers of consumers. In each of the markets it serves, Groupon presents a daily special offer. Interested customers can sign up for the offer, and if a predetermined number of customers is reached, the offer becomes available to them all. This reduces the risk for merchants, whom Groupon charges a percentage of the sales price on the discounted product. The site generates considerable indirect network effects: the deals attract a great number of potential customers, and this in turn inspires many businesses to place offers on Groupon. The company serves thousands of markets worldwide and claims that it reaches over 70 million users in more than 35 countries.
The ad-funded business models run by JCDecaux, Facebook, and Metro newspapers are also Two-sided Markets connecting advertisers to users. The two groups come together through indirect network effects; advertisers benefit from classic customers who circulate the ads and customers benefit from advertisers who cross-subsidise merchandise with their advertisements. JCDecaux, for example, works with city authorities and public transport operators to provide street furniture for free or at reduced rates in return for exclusive advertising rights. Advertisers pay for prime locations and transit media opportunities, while cities benefit from free or reduced-cost public services and advertising design innovations.
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