Was 2013 the year of the curated marketplace? With so much buzz about the concept last year, and several notable marketplace startups recently receiving funding – $18.1 million went to digital gift card marketplace Raise.com; Olacab, a marketplace for cab bookings raised $20 million; and travel marketplace darling Airbnb closed a $200M Series C – it looks like the sector will continue to grow in 2014. So it’s worth reflecting on what’s remarkable about the trend as we track its evolution. One of the things we’ve seen in working with our portfolio companies is that the power of curation is achieved differently and by distinct verticals.
The Internet allows anyone to share, sell or post information, no matter his or her notoriety or anonymity level. With this comes access to many things, ideas, products, and clutter. Curation is powerful because it cuts directly through the noise giving us access to exactly what we want, when we want it. Consumers are increasingly interested in the convenience and time saving value of curated marketplaces. And it turns out that companies are seeing a lot of value in human curation as well.
There are two types of curation: self-created and imposed. Self-created examples include Twitter (choosing whom you follow), Google (news alerts for certain keywords) and Amazon (with each purchase and product search, Amazon is curating your online experience). But imposed curation is becoming ever more helpful as exemplified by Scripted (a marketplace for on-demand writing services provided by highly experienced, proven freelancers), Lending Club (financial lending marketplace for company-approved lenders), Vaunte (clothing and accessories site with goods being sold by an approved set of New York socialites) and Bleacher Report (sports news featuring crowdsourced articles based on the story’s popularity and appeal).
In these cases, trust between the consumer and curator is essential to the success of the marketplace. Consumers and users must trust these platforms in order for them to keep coming back time and time again for access and repeat purchases. Consumers are often willing to pay more for the benefits of convenience and time-savings they get from a curated platform, but in return they are trusting that the companies have invested in the curation process. Some marketplaces have successfully built this trust with consumers by implementing rating systems or simply being open about their curation process.
In a recent conversation with Scripted CEO Sunil Rajaraman we discussed how buyers and sellers become loyal to the brand when trust is successfully built into the curation process. For instance, customers are loyal to Uber, but not necessarily to specific Uber drivers. The value of this is immeasurable. Once trust is built into the marketplace, consumers often become highly loyal customers and brand advocates.
So where are marketplaces headed in 2014? “In the early days, marketplaces such as Craigslist were broad but now we’re shifting to specialized, vertical led marketplaces. Once customers start referring their networks they’ll spin like a flywheel and clear leaders will emerge. So it’ll be an exciting year for highly verticalized curation – business writing, transcription, craftwork – we will see marketplaces pop up for every vertical with a lot of attention and a lot of funding in the space,” said Rajaraman.