As I’ve spent more time building marketplaces and advising other marketplace founders, I’ve observed a phenomenon that isn’t common across all marketplaces. I’ve tried searching for any existing writing and thus far have been unable to find a definition for it so I decided to take a stab at defining it myself. I’m calling them crossover network effects: When supply becomes demand in a marketplace and demand becomes supply.
Most marketplaces are two-sided with supply on one side and demand on the other with little to no crossover. Sellers have access or control of supply that keeps buyers coming back. An example of this would be trucking and marketplaces like Convoy where shippers are matched with truckers. It’s unlikely that shippers will ever get into the trucking business. On the other hand, there are numerous marketplaces where buyers can become sellers and vice versa. The frequency with which this crossover occurs in marketplaces happens along a spectrum. When it does happen, however, the marketplace as a whole benefits because it accelerates growth and stickiness. Crossover network effects bring down the CAC (cost of acquisition). There is also less education and onboarding friction because they already understand the value…
