Two Market Problem

The "Two Market Problem" is one where a company is attempting to put together a new market where one does not currently exist. It is a bind that companies often encounter where they must lure enough sellers onto their platform or sales space in order to entice buyers to come but not enough buyers makes it difficult to get those first sellers.

The Two Market Problem is easier to imagine if one pictures an internet without eBay, a world in which there has never been an eBay. As an entrepreneur, someone decides that they want to put together a site where people can clear out their attics and hoarders to snatch it up. How does one lure those hoarders if there is no one selling on the site? And how does one get packrats to sell their junk if there's no one around to buy it?

Additionally, the Two Market Problem can be encountered at various stages. Should a platform start as one where people can trade baseball cards, there is no guarantee that enough of those traders also have doilies they want to sell to lure the old lace set into the site's new expansion.

Many of the companies that appear on Shark Tank that advertise themselves as "platforms" have or will encounter this problem. Sometimes it is acknowledged on the show but it will always be pointed out here when we see it.

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This page was last edited on 9 September 2020, at 12:23.