An overview of the Growing “SaaS Enabled Marketplace” Ecosystem
As a VC firm focused on both SaaS and marketplaces, we have not only witnessed the rise of the “SaaS enabled marketplace” hybrid model (SEM in the rest of the post) but also invested in several of them [Docplanner, Eversports, Deskbookers, Styleseat, Xeneta, Infakt]. Through our deal flow and our deep dives we encounter many of these startups in a variety of verticals and industries. This is why we wanted to share an overview of this fragmented landscape and make our approach transparent.
What’s our definition of a SaaS enabled marketplace?
From our point of view, a SaaS enabled marketplace is a business which combines the characteristics of both models:
- A marketplace component that connects two or more parties to conclude a transaction and thus can generate and benefit from real network effects.
- A SaaS (Software as a Service) component that offers software features to one — or more — of the parties. This SaaS component needs to be usable as a standalone software. This is how we differentiate pure marketplaces (like Uber) from SEMs like StyleSeat.
This “methodology” has been popularly described as “Come for the tool, stay for the network.” by Chris Dixon and SEMs are in the perfect position to embrace such an approach.
SaaS enabled marketplaces can be B2B, B2C or C2C and the SaaS component can be offered to the demand or / and to the supply side whether it’s a business or a consumer.
These companies also combine the business models of marketplace and SaaS as they can monetize the transaction through a fee or the SaaS component through a subscription. Mathias modeled the different options in the following diagram:
SEM Landscape
When we set ourselves the goal of mapping out the SEM landscape, we first and foremost embraced the process and the exercise. It was clear from the start that we couldn’t come up with an exhaustive list of all existing players in every vertical. Our main aim with this post is to give the community a first overview of the main SEM verticals and players, as well as sharing some lessons we have learned.
We’re planning to update our map in the months to come, in the meantime if you want to get on our radar just fill out this form:
In addition to the map here are some findings that we wanted to share with you. Please feel free to add your own thoughts in the comment section below — we’d love to read them!
SaaS born, marketplace born or native SEM?
A first observation we made while mapping this ecosystem is that there are 3 scenarios when it comes to SaaS enabled marketplaces:
- The company is SaaS born and the marketplace component is added after.
- The company is marketplace born and the SaaS component is added after.
- The company is SEM born.
These scenarios reflect really well the maturity of the overall tech ecosystem. As people and businesses are increasingly used to working with SaaS and to buying / selling goods or services on marketplaces the line between the two models is blurring and many products integrate both:
- More and more traditional SaaS players have reached a critical mass of users and can add marketplace features more easily now. E.g Atlassian which recently enabled Jira users to hire freelancers within the project management tool.
- More and more marketplace operators add SaaS features to help their buyers / sellers manage better their business, sometimes even outside of the transaction loop. E.g: DOZ started as a pure marketing freelancers marketplace and it offers now a complete project management tool.
- As this hybrid model becomes commonplace an increasing number of startups launches native SEM products.
A fragmented landscape
Another interesting finding is that for some verticals it was extremely easy to find SaaS enabled marketplaces while for some others it was very challenging.
In general, we found more players in verticals that were already mature in terms of pure marketplace and SaaS players. Allow us to clarify that point with some examples.
For instance, we had no problem finding SEMs for the “Travel & Tourism” or for the “Professional Services” verticals. If you want to book a flight, a hotel or want to find a plumber there’s a high chance that you’ll first search online. And this search will probably lead you to a comparison engine, a booking marketplace or an online listing.
In these instances going online and browsing listings has become a habit for both users and professionals. There’s no market education to be done.
The more mature a vertical has become, the more competitive it gets and the more pressure there is for suppliers to perform well. In such environments the SaaS enabled marketplace model very often emerges to help them perform better.
For example many of the SEMs we’ve listed in the two verticals mentioned above offer professionals not only plenty of features to manage their bookings (from simple calendars to complete booking systems) but also marketing features with ranking optimization, dynamic pricing, yield management, off- and on-platform-promotion etc. and even CRM or invoicing features. Providing just an online listing is not enough, established marketplace operators must provide additional added-value through a SaaS-component.
At the other end of the spectrum some industries, like Agriculture or Construction, haven’t (yet) reached the same level of maturity and we couldn’t discover as many SaaS enabled marketplaces.
To that end, the SEM model seems like a natural evolution of the marketplace and SaaS models which are “merging” their strengths into the same product.
SaaS component: B2B vs B2C vs C2C
On our map you’ll find every type of SEM possible: B2B, B2C and C2C. Concerning the SaaS component there are 2 main aspects that we want to highlight:
- The SaaS component is generally much lighter for consumers (“C”) than for businesses (“B”).
- In most cases the SaaS features are built for the supply-side of the marketplace rather than for the demand-side.
The first point seems obvious; the non-professional-users of these marketplaces generally don’t need — or want — to use a software tool to manage the transaction, in the vast majority of the cases they just want to buy something as fast as possible.
A notable exception to this situation is when these consumers are on the “supply”-side of the marketplace (the first “C” of C2C marketplaces), then they need SaaS-features to manage the good or service they sell. For example Livementor is an education platform that enables anybody to give online classes and hence offer a tool, in parallel of their marketplace, that helps tutors better manage their activity.
Which leads us to the second aspect — in most cases the SaaS-features we identified were built for the “supply”-side of the marketplace for use cases like.:
- Booking management: service or venue providers benefit from an integrated booking system (booking, real time availabilities, waiting list, analytics…) sometimes combined with CRM features.
- eCommerce management: a wide variety of features enable sellers not only to manage the transactions on the marketplace (order management, shipping…) but also their stock (Amazon Marketplace), their marketing (dynamic pricing, ranking optimization, promotions, vouchers etc…) and more.
- Supply management / procurement: mainly for B2B marketplaces which connect businesses with suppliers (ex: Quartzy).
- Specialized features: like Livementor’s dashboard for online tutors or DOZ’s project management tool for marketers.
To conclude on the SaaS component aspect it’s worth noting that vertical SEMs are, obviously, more deeply integrated compared to horizontal SEMs. Ex: Yardbook, a SEMs for landscaping businesses, has specific features which are useful only for this particular type of business.
Fast growing segments in crowded verticals
As we’ve seen above some verticals are more crowded in terms of SaaS enabled marketplaces than others. But, when we were exploring these verticals we could notice that many of them had very interesting and fast growing new segments.
This is, for example, the case for the Real Estate vertical. In this category you’ll find plenty of large, well funded players (Zillow, Opendoor…) but at the same time there are plenty of startups which are innovating on growing use cases like B2B short-term rental of retail spaces (flash retailing).
This shows us that even in crowded verticals there are still plenty of opportunities to deploy SaaS enabled marketplaces (which we would love to hear from!).
