The COVID-19 pandemic radically changed the way we live — and even how we work.
In a survey of 4,000 professionals, Upwork found that about 10 million Americans are interested in freelancing.
The pandemic has driven many to realize that there is more value in working remotely or flexibly.
And this isn’t happening only in the United States.
All over the world, freelancers reportedly make up around a third of the global population of roughly 1.2 billion people.
And by 2023, this number might even rise, as the global gig economy is projected to generate $455 billion in value.
These gigs have sustained 3.42 million users on Fiverr, one of the most popular freelance marketplaces globally.
In 2010, it took Fiverr only one year to rack up $1 million in gross merchandise value.
By 2021, Fiverr reported a 57% increase in revenue at almost 300 million dollars yearly.
Are you interested in adopting this business model and starting your freelance marketplace?
Here is some advice on how you might want to build an online marketplace like Fiverr.
Study the Freelancing Market Intently
Fiverr pioneered Service-as-a-Product to “create an on-demand, e-commerce-like experience that makes working with freelancers as easy as buying something on Amazon.”
And its business model uses a two-pronged approach that targets both buyers and sellers.
Since its launch, it’s exhibited a clear vision.
Today, it’s used in 160 countries, but the platform believes the addressable market for freelancing gigs in the US alone exceeds $100B.
There are about a hundred freelance marketplaces globally, and leading the pack are Fiverr, Upwork, and Toptal.
To start, one might look at what worked for these freelance marketplaces.
That doesn’t mean you need to copy it, but it can provide helpful insights into why the model has been a success.
For instance, Fiverr uses a rating system to make sure that gig buyers can easily see the quality of work of sellers.
This aids buyers in deciding which freelancer they will hire according to their requirements.
Before you dive in, you may want to brush up on industry knowledge around freelancing.
For example, McKinsey predicts that 500 million more freelancers will be using platforms to do their jobs before 2030; your online marketplace can very well be just the thing that all these new freelancers will need.
It is also believed that almost 40% of full-time employees have a side gig that accords them more work-life balance and freedom in choosing their assignments.
Knowing these things will help you position your online marketplace at the best vantage point so that you can generate interest from freelancers and those who would like to hire them.
Find Problems That Your Online Marketplace Can Address
Fiverr is profitable, but that doesn’t mean it’s perfect.
There are many gaps between the way it’s being used or offered and the perceived value that buyers or sellers (or both) get.
One fundamental limitation is the lack of quality control on the platform.
This goes both ways: anyone can post gigs and sign up and sell their skills or expertise to fill that gig.
The buyer might be out to con people or the seller isn’t very skilled.
Another drawback can be that beginners won’t get to compete with more tenured sellers on the platform.
Sure, signing up is easy, but buyers often logically opt for more experienced sellers.
Additionally, Fiverr charges quite a lot.
While it already charges buyers, it also takes a 20% commission off sellers.
There are also cases where seller reviews are being manipulated so they can land more gigs.
And more importantly, the platform has to field some serious ethical questions, particularly how its business model might put sellers from poorer economies at a significant disadvantage.
Beyond Fiverr, the world of freelancing also naturally has problems.
In a survey among 1,800 participants, freelancing community FreelancerMap.com found that 68% of respondents said that finding clients is their top struggle.
This is followed by their failure to do two essential things: achieve work-life balance and ask for more competitive rates from gig buyers.
On top of these, 71% of freelancers struggle with saving money because of the inconsistency of their incomes, while 59% live from paycheck to paycheck.
In designing your freelance marketplace, you won’t be able to solve all these issues, but something to keep in mind.
But knowing about the current gaps in the market will help inform how you design your marketplace so that you can offer a platform that addresses the main pain points of the freelancing world.
In the end, you might create something that isn’t just like Fiverr but different.
Design Your Marketplace Features and Identify Your Unique Selling Proposition (USP)
Here comes the fun part.
After spotting problems that plague freelancers, you can establish which features you’d want for your online marketplace for freelancers and gig buyers.
First, understand why people freelance and what they hope to get out of it.
According to an article posted in Harvard Business Review, one of two workers expect to freelance by 2028.
In research conducted among 200+ freelancers in the US, they found that successful freelancers are those who, number one, know their worth.
In addition, they know how to build loyalty while still pursuing fresh experiences that get them out of their comfort zones.
Your online marketplace can give them these benefits by designing the right features.
But what kind of features do freelancers want?
Freelancer Jon Younger compiled these in a Forbes article, and top of the list is having access to personal marketing support.
There could also be gateways to furthering technical and soft skills, as illustrated by Fiverr through their Learn from Fiverr program.
Further, you might consider allowing freelancers to receive performance feedback, business reviews and coaching, and staying up to date with market trends.
Some freelance marketplaces like Fiverr already offer these features.
This is where you can come in.
You get to separate yourself from the competition through your unique selling proposition through this process.
Choose Your Freelancing Monetization Model
Fiverr earns primarily through three monetization models: transaction fees, course sales, and software subscriptions.
Fiverr takes a 20% commission from sellers for service and transaction fees while also charging buyers 5% of transaction costs for posting a gig.
The platform also offers a business feature, where companies can gain access to the most qualified freelancers on their website for $149 a year, with up to 50 users per account.
In addition, Fiverr offers professional courses by experts, which range from the basics of viral marketing to building your website through WordPress.
Software subscriptions are also available for businesses that want to manage their teams and process client requests.
This is available as a free offering and a paid service at $24 a month.
Take a moment to think about how you might want to monetize your freelancing marketplace.
You can monetize such a freelancing platform by charging a registration fee for buyers and sellers of gigs, exacting a commission from every transaction, or offering subscriptions to value-added features.
Similarly, you can boost certain gigs or sellers through sponsored listings, make money off third-party advertising, or leverage paid services or features.
Finding a suitable model depends on what you want to achieve versus what value you offer to your users.
Your monetization method doesn’t have to be set in stone.
You can grow and change how you earn as your online marketplace develops.
Build with Yclas Marketplaces
Want to start? Launch your online marketplace today with an easy-to-use platform to help you build what you want.
Yclas offers various templates for differing needs, replete with features that you can customize according to your specifications.
Coding skills or none, you can go live as early as today.