A very nice read on marketplaces economy and the metrics one should watch. The problem with marketplaces is that their early metrics are usually quite bad as they haven’t reached true network effects, making it impossible to distinguish good and bad companies.
Most marketplace startups I speak to tend to focus on metrics like GMV, net revenue, number of users, average order value and CAC vs LTV. Whilst these metrics are fundamental, they don’t really capture the interactions between the supply and demand side on a platform. I believe that to truly understand a marketplace and to be able to improve its performance it’s worth going one level deeper by trying to measure the liquidity of a platform and its key drivers. In this post, I hope to provide entrepreneurs with some of the tools to do this. This includes some key ratios such as Search To Fill Rate, Utilization Rate, Time To Fill, and Buyer to Supplier Ratio.