Analyzing the a16z Marketplace 100 ranking
In 2022, Andreessen Horowitz released their “a16z Marketplace 100” ranking, which features the largest consumer-facing marketplace startups and private companies. This presents an excellent opportunity to study how the marketplace ecosystem has evolved since the previous year. After analyzing the rankings for both 2021 and 2022, we have identified some interesting trends worth discussing.
Which industries stole the show?
The ranking is composed of diverse marketplaces, so we decided to study the industries they belong to and see if there are certain industries that are clearly dominating the marketplace ecosystem.
Over the past two years, some industries seem to have mastered the workings of a marketplace and have the highest number of marketplaces in the rankings.
Despite the addition of new criteria such as Apptopia data for app performance and SimilarWeb data for website traffic, three out of the top five 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, it managed to retain its spot in the top five.
Survival of the best…
When analyzing the rankings, we observed the industries that entered the ranking, the ones that survived, and the ones that gave up their spots from 2021 to 2022. Marketplaces like Peek, TickPick, Heavenly, and Lug Fresha gave the Beauty, Tickets, Games, and Home Services industry a significant boost for 2022. Tickets and Home Services saw a delta growth of 4%, while Beauty and Food followed closely with a 2% increase. These industries not only survived but have emerged as the ones to watch in the future. On the other hand, we saw a drop in the wholesale, fashion, and childcare side, which was a result of marketplaces like Kidpass, Tundra, and 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 are the most popular offering of marketplaces throughout 2021 and 2022. Although the number of physical service marketplaces in the 2022 ranking was slightly less than in 2021, 74% of the new entrants in 2022 belonged to this segment. This analysis aligns with the current industry observation that the physical product marketplace segment is saturated, with more opportunity on the side of services. To understand how these categories are defined and what they comprise of, you can refer to our whitepaper that dives into the nitty-gritty of marketplace classification.
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.
It is clear that either both the buyers and sellers pay or just the sellers. This tends to hold true in the case of both products and services. Marketplaces like Gympass, or Modsy where only the buyers are charged, are 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 that can be charged from them.
However, there has been a clear shift from charging only the supply to equally splitting the costs between both buyers and sellers.
As for physical listings, the trends across both goods and services have remained consistent in 2021 and 2022. In the case of digital listings, we see a stark shift in the way these marketplaces have chosen to operate, with an increasing focus on a model that depends on both Subscription and Commission in 2022.
Our analysis yielded 4 key findings:
- 4 categories to watch: Ticketing, Home and Professional Services, Games, and Beauty
- Physical Services remain the most offered category in successful marketplaces, accounting for 74% of offerings
- Shift in trend from more of the supply side paying (from 50% to 40%) to charging both customers and vendors (from 35% to 45%)
- Commissions / commissions & subscriptions are the most frequently used revenue models, which is consistent with the shift in trend mentioned earlier.
To further explore these findings, we have prepared a selection of whitepapers that use the a16z Marketplace ranking to provide concrete examples. Check them out for a more in-depth analysis!