Recessions are challenging times for any business.
Customers tend to spend less, and businesses reduce spending in response.
It's a vicious cycle that can destroy smaller companies that cannot withstand the strain of a prolonged recession.
However, not all businesses suffer from recessions.
Some thrive during recessions because they have identified niches that consumers continue to value even when their discretionary spending is low.
This article will explore different types of marketplaces that thrive in a recession — and how you can leverage these ideas for your business.
These marketplaces do just that and more by leveraging the strength of network effects, economies of scale, and branding as competitive advantages.
B2B eCommerce or Marketplaces That Streamline Purchasing
B2B eCommerce marketplaces are designed specifically for business-to-business sales.
These platforms are built for businesses selling to other companies, such as large manufacturers, wholesalers, and distributors.
They are generally robust and scalable and can cater to many products and huge businesses.
One of the main advantages of B2B platforms is that they allow for customizations and specific branding to make your offering look unique and distinct to your customers.
With the recent economic turmoil, Alibaba's sales continue to improve, with a revenue of 205.6 billion yuan ($30.4 billion) in the June quarter.
While an economic downturn tends to cause sales in marketplaces to go down, the opportunity remains for online marketplaces to build more brand awareness and communicate the value they give to their consumers.
Treating the brand as an asset to invest in will pay off even in an economic downturn.
B2C Online Marketplaces
Business-to-consumer marketplaces are online platforms connecting consumers with goods or services sellers.
B2C platforms are often more consumer-focused than B2B marketplaces and may offer a broader range of products.
Businesses like "used retail" can thrive in recessions!
The more money price-conscious consumers, the more consumers shop for products and services that help them save money.
Used wares businesses help people save money on essentials like clothing and household items.
"Used platforms marketplaces," like Facebook, also help individuals find cheaper alternatives to high-priced products.
An example of a B2C marketplace is eBay - during a recession, eBay enables consumers to find cheaper alternatives to purchasing brand-new products.
While not marketplaces, products like savings apps and money management tools allow individuals to track spending and set goals for saving money.
Classified Websites to Buy and Sell Used
Classifieds are websites that allow users to buy and sell almost anything – from used cars to furniture, weird items, and services to skills.
During the Great Recession in 2009, Pew Research Center found that users used the internet for information on bargains and job-related searches.
Moreover, 23% of those who used the internet for recession-related questions have used auction websites and classifieds to sell personal items to raise money.
Classified city-specific websites targeting a certain vertical are often easier to launch, as they have less competition.
Businesses and individuals looking to reach a broader audience can list their products directly.
However, Craigslist is not designed as a web store, and the website is often not robust or easy to use. It also doesn't have a great reputation for being trustworthy or safe so buyers beware!
Freelance Online Marketplaces That Help Reduce Labour Costs
Freelance marketplaces have been around for some time now but became more popular after the 2008 recession.
The rise of the freelance marketplace is primarily attributed to the internet, where many companies have outsourced their operations offshore.
Some also lost their talent pool when they could no longer afford them.
Upwork then called oDesk, reported that outsourcing on their platform nearly tripled in 2008.
Their data also showed an increase in US businesses' homeshoring to providers within the country.
While it may seem counterintuitive to pursue freelancing during an economic decline, the flexible lifestyle of freelance work is one of the reasons many pursue freelancing.
Instead of doing a 40-hour workweek, freelancers are employed on an as-needed basis, sometimes closer to halftime.
Moreover, freelancing can be an excellent way for skilled professionals to warm up to a job instead of maybe trying to find a traditional job during an economic downturn.
Since these marketplaces rely on their freelancers, operators also need to find ways to improve their services to maintain high standards on their platforms.
A key part of launching a Freelance marketplace is ensuring the calibre of the freelancers on the platform by vetting the freelancers that want to be part of the marketplace.
An example of this is Toptal, which only works with the top 3% of freelance experts.
Toptal freelancers undergo a meticulous screening process before they are accepted into the network.
Home Repair Service Platforms; Launched During the COVID-19 Recession
While the home service industry was heavily affected by the 2008 recession, it performed well during the COVID-19 recession.
This is due mainly to the home quarantine mandates, which made people rely heavily on their plumbing, appliances, and other household features.
This means people could no longer put repairs on hold as they might otherwise.
The most successful home service marketplaces have revolutionized the way customers interact with them.
They've changed their business models enough to meet customer needs in significant new ways.
For example, Handy is the first major online home cleaning company to offer online payment through a major credit card company and has partnered with financing company Affirm.
Now, customers can book home cleaning appointments, set up automatic payments, and have their home spruced up without any cash out of pocket at all.
Another example would be TaskRabbit, which introduced a feature that allows people to hire home cleaners and other service providers on demand with just a tap on their phones.
Convenience to go!
Online Teaching Marketplaces During the COVID-19 Recession
Online teaching marketplaces are platforms where instructors list their courses, and students browse through those courses and enroll.
Students can then access course content and interact with the instructor in online forums and other online course materials.
The online learning industry boomed with most of the population stuck inside their homes during the COVID-19 recession.
A report by Statista projected that by 2026, the global e-learning market would reach almost $400 billion.
Online teaching marketplaces thrive during a recession because students seek cheaper and more flexible educational options.
While online courses may not be as comprehensive as traditional classroom settings because of the lack of direct interaction between students and instructors, they allow students to learn at their own pace, from any location.
Aside from students, e-learning marketplaces are also used by workers during a recession to upskill or get an additional degree for higher pay.
E-learning gives workers the flexibility to learn while keeping full-time jobs.
All businesses experience challenges at some point in their lifecycle.
During such times, it's important to remember that recessionary times aren't necessarily bad for all companies.
It can be an opportunity for growth, innovation, and improvement.
What does this mean for online marketplaces?
It means that it's essential to keep an eye on the current state of the economy, and it's helpful to know which business models thrived during times of economic uncertainty.
This knowledge can give you insight into which types of companies (or online marketplaces) are resilient, scalable, and dependable, even during tough times.
Got an idea for a marketplace that will do well in an economic downturn? Sign up for a free trial at Yclas and let us help you turn your vision into reality