A deep dive into the a16z Marketplace 100 ranking

With the 2022 release of Andreessen Horowitz’s “a16z Marketplace 100: 2021” – a ranking of the largest consumer-facing marketplace startups and private companies, we figured it was a good time to study how the marketplace ecosystem has evolved from the previous year. After deep diving into the rankings for both 2020 and 2021, we’ve listed and explained some interesting trends that caught our eye.

 

Which industries stole the show?

With the diverse marketplaces that the ranking consisted of, we decided to study the industries they belonged to and if there were certain industries clearly dominating the marketplace ecosystem.

 

Over the last two years, the following industries seem to have mastered the workings of a marketplace. They comprise the highest number of marketplaces, in the rankings. 

 

Up to 2021 the rankings were based solely on Gross Merchandise Value (GMV). With the 2022 update, additional criteria like Apptopia data for app performance and SimilarWeb data for website traffic were included. Despite this, 3 out of the top 5 marketplaces from 2021 held their leading positions on the list. Instacart and Valve retained their first and second place respectively. StockX dropped one place from 4th to the 5th position, but has retained its ground in the top 5.

Survival of the best…

With this graph, we observe the – new industries that entered the ranking, the ones that survived, and the ones that gave up their spots on the ranking from 2021 to 2022. We can see the addition of marketplaces like Peek, TickPick, Heavenly, Lug Fresha – has given the Beauty, Tickets, Games and Home Services industry a big push for 2022. Tickets and Home Services saw a delta growth of 4%, while Beauty and Food closely followed with 2% increase. Although it may be too soon to say, these industries not only survived, but have emerged as the ones to watch for the upcoming future. On the other hand, we saw a drop in the wholesale, fashion and childcare side. This was a result of marketplaces like Kidpass, Tundra, Threadup falling off the list. It is essential to note that this does not mean that these industries are less adaptive to the marketplace concept. They just didn’t manage to stay on the ranking. 

 

What are these marketplaces offering?

Physical Services stand to be the most popular offering of marketplaces all through 2021 and 2022. Although the number of Physical Service Marketplaces in the 2022 ranking were slightly lesser than that in 2021, 74% of the new entrants in 2022 belonged to this segment. This analysis is inline with the current industry observation* of the physical product marketplace segment being saturated with more opportunity on the side of services.

 

 

To understand how these categories are defined and what each of them comprise of, you can refer to our whitepaper on dives into the nitty gritties of marketplace classification. 

Where is the revenue coming from?

 

 

It is clear with the test of time that it is more common for either both – the buyers and the sellers to pay, or just the sellers. This tends to hold true in the case of both products and services. To have marketplaces like Gympass, or Modsy where only the buyers are charged is pretty rare. This may be because the revenue that comes in from just the buyers may not be sizable. Marketplaces thrive because of the number of buyers accessing the platform, thus limiting the fees charged that can be charged from them.

This is however, a clear shift from charging only the supply to equally splitting the costs among both buyers and sellers.

Revenue models have stayed fairly consistent

As for listings of physical nature, the trends across both listings of goods and services have remained consistent in 2021 and 2022. On the other hand, we see that in the case of digital listings there is a stark shift in the way these marketplaces have chosen to operate. There is an increasing focus on a model that depends on both Subscription and Commission in 2022. This seems to be inline with our earlier finds of shift in charging only the vendors to charging both the demand and the supply side.

Key findings

In our research, we identified four key learnings:

  • 4 categories have emerged from 2021 as ones to watch: Ticketing, Home and Professional Services, Games, and Beauty
  • Physical Services remain the most offered category of successful marketplaces at 74%
  • Shift in trend from more of the supply side paying (from 50% to 40%) to charging both, the customers and the vendors (from 35% to 45%)
  • The revenue models go hand in hand with the 3rd learning. Commissions / commissions & subscriptions make up the most frequently used revenue models

 

To deep dive even more, we have prepared a selection of whitepapers still using the a16z Marketplace ranking to provide the most concrete examples. Check them out!