On a yearly basis, we deliver a scam awareness calendar to help online marketplaces prepare for scam spikes in the year to come. We base the scam calendar on trend observations from previous years and analysis of major happenings in the coming year. Our trust and safety team is working day-by-day with analyzing data to find fraudulent behaviors, and proactively supports our clients with information to help them stay ahead of scammers.

Fraudulent behaviors on marketplaces are constantly fluctuating, as we witness periods of increased and decreased scams. Scam spikes are typically triggered by holiday seasons, festivals, events and other large happenings in a year.

For you and your moderation team to stay on top of the scam spikes, you need to be aware of when and where scammers might appear. In this article, we will share some of the most common types of scam for 2019 and when you are likely to see them spike. If you want to learn more about the specific scam spikes, visit our scam awareness calendar where we predict spikes on a month-by-month basis.

Tech release scams

We are spoiled as consumers with new tech releases every year. In so many ways it’s neat that we continue to develop and outperform our technical developments. And often, we witness competing companies triggering each other to step up their game and drive development. One of the most reoccurring battles between brands is between the two phone giants Apple and Samsung. When Samsung releases their phone of the year, Apple can’t wait to release theirs.pan>

These two annual releases are considered some of the most important product launches of the year, by tech enthusiasts and consumers. Unfortunately, this also attracts scammers looking to deceive eager buyers.

As with previous years, we’re expecting the scam spike in the weeks leading up to the launch of a new iPhone or Samsung. To protect your users, make sure to be on the lookout for pre-order listings, cheap prices compared to market price, phrases such as ‘item is new’ or ‘as good as new’ or ‘brand new in box, as well as deceiving phrases used in the description.

Samsung is rumored to release Samsung Galaxy S10 on March 8th, with prices starting at $719. Rumors are also floating online, that Samsung will launch the world’s first foldable smartphone in March this year.

Apple, on the other hand, usually host their big annual product release in early/mid-September, and if they stick to their tradition, we’re expecting their new iPhone to be launched on September 10th this year. Visit this page to stay on top of the latest news surrounding the next iPhone release.

 

Holiday booking scams

One of the most common actions targeted by scammers is vacation and holiday bookings. When we’re dreaming ourselfves away to various destinations in front of our computer or phone, scammers strategically expose us to exclusive vacation deals that looks stunning, but which in reality doesn’t exist. At Besedo we witness these types of scams on a daily basis, but April and August are considered peak season for holiday scams – when we book our summer and winter vacations.

Make sure your users stay safe on your site. Be on the lookout for fraudulent holiday rental ads and offers that are ‘too good to be true’. And more concretely, your moderation team need to look out for high quality or stock pictures, free email domains, IP’s, large group rentals, price below market, full payment in advance etc.

Want to learn more about holiday scams?

Check out this article: It’s that time of the year again, the peak season for vacation rental scams.

 

Shopping scams

Shopping, shopping, shopping. We all do it, we all (most at least) love it. Phenomena like Black Friday, Cyber Monday, after Christmas sales, Singles day etc. are periods where consumers are rushing to get exclusive deals and discounts.

While offline consumers are in the risking to be trampled in packed stores, online shoppers need to be vary of scammers trying to capitalize on the shopping frenzy by deceiving consumers with ‘super deals’. Be ready for a period of increased scams during and after the shopping peaks. Your team needs to be on the lookout for things like “too good to be true prices”, stock photos and phishing emails.

Learn more: Holiday shopping moderation guide and Online marketplace owners’ checklist for holiday shopping.

 

Big events scams

Every year there are multiple events taking place, everything from sports events to concerts and festivals. Unfortunately, most large events also attract a wave of scammers. In 2019 there are two major sports events, the Asian Cup and Copa America. For these kinds of events, your moderation team should be pay extra attention to ads with many available tickets for sale, low prices, miscategorized tickets, ultra-cheap airline tickets, address and phone number are geographically disconnected, and requests for bank transfer payment only etc.

Besides the two football tournaments mentioned above, there’s a lot of concerts and festivals already sold out, which means tickets may be for sale on your marketplace. Stay ahead of the scammers, learn more about ticket scams and how to keep your users safe.

 

Back to school scams

Being a student often comes with a tight budget and a need to find new accommodation, often in very specific and possibly unfamiliar areas. This, naturally, makes them vulnerable to potential fraudulent rental deals and loan offers. Make sure your moderation team pays attention to new users posting flats/flat shares, pricing, emails, stock photos, and dodgy loan offers.

New courses usually start twice a year, every January and September, and it is during these months we typically see an increased number of scammers trying to trick students of their money.

Here’s how to automatically reduce student accommodation scams.

 

Stay ahead of the scammers

Most of the scams we’ve listed will happen throughout the year and your team should always be looking out for them. However, by knowing when a spike is likely you can better prepare your team and you can staff accordingly.

By being aware of scam spikes and adjusting your moderation setup accordingly you can both keep your users safe, reduce time to site and shrinkage. If your team size isn’t flexible, a good way to manage spikes with minimal impact to the end user is to increase your automation levels when the volumes grow.

With the right setup you can automate up to 80% using filters alone and with tailored AI you can reach even better quality and levels.

Want to know more? Get in touch with a content moderation solution expert today or test our moderation tool, Implio, for free.

Want to know how the industry is predicting marketplace trends 2019?

2018 is coming to its end, and what a year it has been! We entered the year talking about classifieds becoming marketplaces, by enabling complete transactions through payment solutions on their sites. And we’re leaving it, with marketplaces looking to expand their offerings with more value-added services, beyond transactions, to complement their offering and make sure that users have the best possible experience on their site.

In an industry where it feels things can change overnight, it makes you wonder what will happen in 2019?

In order to answer that question as accurately as possible, we turned to the ones who know the most about our field; marketplace experts and professionals. Here is their prediction of marketplace trends 2019.

The industry’s verdict; here are the top marketplace trends 2019.

“There’s one dominating trend for marketplaces in 2019: Convenience. Improving the user experience way beyond enhancing the user interface is the direction everybody is heading. Finding the best deal, the perfect job, employee, car, home, tenant or roommate will be made easier than ever. And there is more. The marketplaces are integrating services like delivery, payments, contract handling, insurance, finance. Users will be able to arrange everything if not with one click then at least from one hand. Smart technology – assisted by machine learning and artificial intelligence – will facilitate the process. Superb customer support with a strong human component will be the determining factor for success.”

Katja Riefler, Principal, Managing Director Aimgroup

“Digital marketplaces will continue their growth in 2019 and I believe that transformation will not be radical, but more disruptive business models will continue to appear. AI will continue to drive transformation and I am sure it will lead to more AI driven marketplaces. The three main categories where I believe this technology will be most influential are categorization, fraud prevention, and price recommendation.

Optimizing for voice search will be certainly a growing activity. I also see a shift of paradigms in the online classified businesses as it seems to be moving towards tech businesses and also towards transactions model. I am looking forward to seeing what the new developments in the business will be.

In May we’ll be in Budapest for our spring conference where I am hoping to find out more about how other professionals from our industry see the future. This year we are developing a new concept: “ICMA: The sharing conference” to build on the very open and familiar atmosphere from our events where we are learning from each other. Happy 2019 and see you in Budapest!”

Lucian Luncan, chairman of the board at ICMA, Head of Classifieds at RussMedia Digital

“For years, trust has been the mantra of marketplaces, and that continues to be true in 2019. However, trust is just one of multiple key elements in a more personalized user experience expected by visitors in the new year.  

Time is money and users will not want to scroll through page after page of listings irrelevant to them. If you want to win you present your visitors with a few, but high quality, safe and relevant search results.  

To be able to provide a truly personalized user experience for each individual visitor, marketplaces will also have to truly embrace machine learning in 2019. Without good algorithms in place, it will be impossible to predict needs or label content in a way that will provide sellers with quality leads and buyers with great recommendations.  

Finally, with the move from classifieds to marketplaces that offer a full stack experience with value-added services, it will be more important than ever for companies to free resources from tasks that business critical but aren’t adding to their USP.  

In 2019 a lot more marketplaces will realize that some parts of their operations can be easily outsourced to experienced partners. Those that embrace this line of thought will be able to pour all resources into developing unique features and adding ancillary services and I anticipate that they will be the ones growing the most in 2019.”

Patrik Frisk, CEO Besedo

“As a lot of pivotal trends are on the rise, 2019 is going to be a very interesting year in the industry – like a season finale of a Game of Thrones season. The online classifieds are being pressured on one hand by performance players like facebook and google moving into new categories, on the other hand, by players coming from the transactional side like fix-pay tech-enabled brokerages etc.

That creates a very interesting dynamic on the market, where the new playing field becomes: customer service and personalization. Not reach, not # of listings, but how much does each player know about each of its customers and how well it can adapt its platform to each user’s needs. So it all comes down to data collection, insight creation, personalization. Problem with that is – most online classifieds have platforms which are made for “mass production” not customization. So we expect a lot of industry players to heavily and swiftly move into these directions:

  • Investing in user data collection and analytics
  • Verticalisation: in order to serve users better, launching platforms for each segment of users.
  • Move into transactions and performance: additional costs related to new tech need to be covered by deeper integration into the value chain. The marketing revenue pool simply won’t be enough.
  • From destination to distributors: classifieds will still use their domains and brand to attract traffic but will use those platforms to segment users and send them to the most fitting vertical, rather than trying to service them all within one platform.

As a company which helps classifieds battle all of those issues ahead, we are very excited about 2019! To sum up: Who will win in the battle of Facebook vs classifieds? Will existing players manage to turn their “faces” towards their users fast enough? Can the transactional players grow fast enough to join the battle of giants? Find out on the 2019 episode of “real estate migrates online”.”

Andrzej Olejnik, Founder & CEO at Homsters.com

“The market is changing in 2019 with the European Emission Test changes where it is directly proportional to the Road tax and also Company car tax in the UK. 2019/2020 being the second stepped rise in three consecutive years in cost for both tax elements. This means a change in the profile of new cars being registered with Diesel registrations expected to fall by 8% and petrol and electric expected to continue to strengthen. This is mainly down to people withdrawing from company car provisions and replacing it with a personally ran car and claiming Mileage from their employer or asking for an additional salary increase to compensate.

So the direct result of this for car classified sites will be both an increase in traffic looking for a used car to use replace outgoing company cars, an increase in interest of alternative all-inclusive payment methods for new vehicles such as personal contract hire and increased awareness of CO2 emissions and Bik and a much higher volume of related questioning when looking at potential new company cars. This is where Ripley chat can identify and learn new lines of questions and appropriate answers, engaging customers quickly and accurately retaining them on your classified site and capturing unique leads.”

Gareth Law, Head of Sales at Ripley chat

“The year 2019 will be a turning point for the whole marketplaces industry. A perfect storm of AI-driven technology shift combined with mobile first trends and generation shift with millennials taking over shall force all industry players to adapt quickly or vanish.

Already, several newcomers on the market are disrupting the legacy system, and there is no comfort zone for legacy monopolistic brands anymore. Competition is global and local at the same time, so there is no place to hide.

The only way forward for traditional marketplaces is rapid adoption of AI in the core of their businesses. Potential of this technology is just too huge to neglect. AI is transforming today’s marketplaces in very a profound way by revolutionizing UX for both sellers and buyers, so perfect matchmaking becomes a reality, and overall economy of platforms increases significantly.”

Davor Anicic, Business Developer Styria Data Science

“Buyer-seller conversations on marketplaces, especially in the high-value automotive and real estate, are still likely to start with a call in 2019, but they’re increasingly unlikely to end there. Our data shows conversations that start as a phone call or on-platform chat rapidly move to a preferred communication utility like WhatsApp – where sharing information is easy, instant and media-rich.

Marketplaces will need to keep pace by finding smart ways to better leverage these communication utilities to protect sellers and buyers while allowing them to connect safely.”

Mark Griffioen, Co-founder at Sudonum

“It’s hard to believe another year is behind us, 2018 was a fantastic year and 2019 looks like being the year of the consumer, it’s all about you! 

Here are my top 6 predictions for marketplaces in the coming year: 

Peer to Peer is here! The sharing/gig economy has been growing fast, it’s enabling individuals, manufacturers and small businesses to sell direct, build real relationships and fuel local economies rather than big corporates pockets. Keep an eye on automotive, clothing and homewares moving to new models next year. 

It’s been quite a year for privacy and Identity with fraud and data leak scandals appearing every day. It’s so important that we are all able to validate that you are who you say you are, without having to “do stuff” in the analogue world. We’ll start to see super simple ways to verify your identity, move your ID from site to site and have confidence that others are who they say they are too. 

Nothing will be more important than Trust, it’s the ultimate customer-centric measure. Without it, you can’t have loyalty, and without loyalty, you don’t have customers. Trust will take center stage in 2019. 

AR, VR, and IoT – am I predicting a rise in acronyms? Not quite, but we’ve been playing with Augmented Reality, Virtual Reality, Voice Commerce and connected devices like watches for a while. In 2019 we’ll start to see a huge uplift in sales, customer service interactions, and beautiful shopping experiences.   

True Omnichannel experiences in retail are the only thing that can save our high street brands.  We’ve been talking about this for a decade but in 2019 multi-channel marketing and multi-channel interactions to sell products will be at the heart of everything. Done properly you can expect 166% higher engagement than single-channel campaigns.  

Finally, we know that Real Time and Controlled Payments are set to go boom and delight consumers in 2019. Everything we are seeing is being driven by demand for real time, instant payments. This means you can pay or get paid in seconds. Couple those instant payments with new ways to protect yourself. At Shieldpay. We hold your money until you’re ready and move it in real-time when you’re happy. Good times. 

2019 to me will be the year where consumers are finally at the centre of everything. You’ll be super confident buying, or selling with anyone, anywhere online – and what’s more, you’ll be able to make that happen by shouting at Alexa from your bed! 

Have a fantastic Christmas and New Year from everyone at Shieldpay!”

Tom Clementson, Director of Consumer & SMB Shieldpay

Is your marketplace ready to compete and grow in 2019?

As the marketplace industry has kept on changing, the role of content moderation has changed too. With moderation previously only seen as a fraud prevention activity, it has now developed into becoming an enabler for marketplaces to achieve high content quality, user safety, and excellent user experience.

It’s vital to have a solid moderation set up in place in today’s landscape, but it may not be what differentiates your site 2019. In many cases, it may make sense to outsource parts of or your entire moderation to a third-party solution provider who’s an expert in the field. This will help you free up valuable resources to develop innovations that will boost your competitive advantage.

If you want to learn more about content moderation and how we can help your marketplace grow, get in touch with a moderation expert.

We wish you a happy new year and a successful 2019!

AI has arrived! While some marketplaces are already benefiting from the technology, others are researching the right solution. Regardless of which state your marketplace is in, research mode or not, it’s always beneficial to know which AI solutions are out there and to evaluate which will bring the most value if implemented.

The tremendous upside of utilizing the right AI solutions is marketplace growth. Often through increased user experience, lower conversion barriers and safe transactions. But finding the right AI solution for your online marketplace isn’t the easiest of tasks. And spending resources on either developing or purchasing the wrong AI solution wastes money and slows momentum.

Considering the jungle of AI solutions available in the market it’s not easy for decision-makers to make the right prioritizations.

And even once you’ve carefully evaluated your needs and requirements in an AI solution, you also must consider if it makes sense to develop the solution internally or if it would make more sense to buy AI from a third-party solution provider.

Clarifying AI for marketplaces

With so many question marks surrounding this topic, we decided to help online marketplaces straighten things out. Together with Lars Schön, from giosg, we held a 30-minute webinar where we explored how marketplaces can benefit from AI and how to decide whether to build or buy.

Watch the full recording of the webinar below:

Wow, the ICMA conference at Malta really came and went in a split second. And the initial take away from the conference is clear, the industry is facing game-changing challenges and there is a new future lurking beyond the horizon.

Throughout the conference one topic continuously resurfaced; across the board, traditional classifieds has started adding services and value to their platforms, as they’re moving towards becoming online marketplaces.

Blockchain was the theme of this conference and it was made clear that this technology is not yet considered a disrupter in the classifieds and marketplace industry, but more seen as a potential enabler for classifieds to become marketplaces. But in the grand scale of things, it’s not clear how this would work for the large audiences’ classifieds and marketplaces are catering today.

Voice search is another technology that’s under development and the ability to automatically determine gender, age, urgency and much more, can become a competitive differentiator for those who get this right.

Besedo at ICMA

At the conference, we were joined on stage by Jelena Moncilli, Anti-Fraud Specialist at anibis.ch. Together we shared anibis.ch’s incredible journey from 0% to 94% automated moderation.

Jelena shared insights on the challenges they were facing, why they turned to us at Besedo for support, and ultimately how Automation improved their moderation process and user experience.

We recorded the entire presentation and it’s available for you to watch here.

In addition to the presentation, we’ve also created an in-depth case study together with anibis.ch. The case study explores the details of their incredible journey from 0% to 94% automation. By downloading the case study, you get the opportunity to benchmark your current moderation setup and spot areas for improvement.

Case study - anibis journey from 0% to 94% automation

Want to know how we can help you improve your moderation setup too?

Every online marketplace is unique and has their own requirements. To meet the unique needs of our clients, we combine state-of-the-art AI technology with 15+ years of moderation expertise and experience working with global marketplaces of all sizes.

Get in touch with a content moderation expert today.

From day one of online marketplaces and classifieds existence, sites have faced the challenge of trust. At the early stage, when the concept was new, the primary challenge was to convince the market that it was safe to transact with strangers online.

Today the foundation for trust has been laid, but online marketplaces are still facing the challenge of building trust in their individual sites and in the users that frequent them.

The trust stack

In order to dissect trust into tangible areas, Rachel Botsman has developed a trust framework for the collaborative economy, which she refers to as the Trust stack.

The trust stack consists of three levels of trust;

  1. trust in the idea
  2. trust in the platform
  3. trust in the user

 

The first level, trust in the idea, has today been widely overcome as the industry has matured and the general public, in large, is comfortable using marketplaces. The two latter levels in her trust stack, trust in the platform and trust in the user, is where individual online marketplaces can influence and need to perform.

If you think about it, what is it that a marketplace is facilitating? A marketplace’s main service is enabling strangers to engage and transact with one another. Then your actual product is not the technical platform, it’s trust.

Therefore, it’s not a surprise that achieving a high level of user trust is a key component to improving your acquisition, conversion and retention rates. It’s in this form marketplaces are rewarded by their users for facilitating a safe platform and experience.

How can marketplaces build trust?

There are multiple components that go into building trust in the platform and the user for a marketplace. In a recorded webinar, together with Shieldpay, we dissect trust building and discuss the methods that will help your marketplace facilitate a safe platform and experience.

building marketplace trust webinar

Want to see how trust will improve your marketplace success?

We combine state-of-the-art AI technology with more than 15-year expertise in content moderation, helping online marketplaces build trust, improve content quality and user experience.

Get in touch with a trust expert today.

At some point, most early-stage online marketplaces reach a point where it makes sense to look for investments to continue accelerating their growth. Only 6% of new companies manage to secure the investment needed every year. If you want to succeed in getting funding it’s important that your business is properly prepared and ready for investment.

In our webinar ‘what VC’s actually look at before investing in an online marketplace‘, investors Mathias Ockenfels and Daniel Hoffer share exclusive insights and thoughts on how marketplaces best prepare to get funded.

Watch the full webinar here >>

 

Expert Q&A on how to secure funding for online marketplaces.

Following the webinar, the audience had an opportunity to ask questions of the investors. Now we are sharing all the answers to help other marketplaces prepare for investment.

Q: How do speakers validate the valuation of pre-seed or seed level startups?

A: The actual “validation” of a company’s valuation that we have used when investing happens in the following round when new, external investors come in and set a price that is – hopefully – higher than the price we’ve previously set. If the question was geared towards the way how we “set the price”: It happens based on fundamentals of the business, such as e.g. revenue & user growth and absolute (monthly) revenue number and other relevant KPIs as well as simple “market dynamics” – demand drives the price so several investors competing for a deal can drive the price (= valuation) of the company.

 

Q: What’s the future for online marketplaces? Is there still space for new players?

A: The answer to this question would probably require and merit its own “webinar” so I am just trying to keep it short and crisp here: New technologies such as blockchain or also AR/VR devices enable new opportunities to build marketplaces in areas that do not even exist today. It also allows new entrants to disrupt incumbents in already existing fields by applying new solutions to better solve an existing problem.

 

Q: From an investor’s point of view, is it better to have good traction in a single smaller area or to have a broader global presence?

A: These are not mutually exclusive. You can start from a smaller niche, e.g. in order to test and prove your approach and model, and then branch out into a bigger geographic area, once you have found product-market-fit and the right go-to-market strategy. The question is whether your model is scalable and still has the potential to grow into bigger (geographic) markets that are not yet covered. On the same topic, you may also enjoy this blog post: www.startupsventurecapital.com/building-hyper-local-multi-country-platforms

 

Q: Should I implement monetization before I look for funding?

A: Without knowing the details of the particular business, it is hard to generalize. As mentioned during the webinar, we, at Speedinvest x, are also investing pre-revenue and even pre-launch. Generally speaking, the more “proof points” the better and being able to “make money” (= monetization) is definitely a strong proof point. That said, often trying too hard to optimize monetization too early can harm your growth and overall potential of the business.

 

Q: Is there a difference between go-to-market strategies for Europe and the US?

A: Again, it’s very hard to generalize as it very much depends on the particular business. Overall, there are, for example, different regulations and mentalities between countries and regions which may require adjustments in the product and/or go-to-market that might differ significantly from each other. For example, Uber faced strong headwinds from regulators when they tried to expand their US-American model to Europe and tried to “copy it 1-to-1”. In many cases (i.e. countries) this did not work, and Uber failed to expand to these countries (e.g. Germany) and eventually lost those to local champions that adjusted – or better – “localized” the model to local “standards”.

 

Q: Will I have to give up control of my company if I accept funding?

A: Venture Capitalist typically only take a minority stake in the company and do not aim “to run the show”. If I believed that I would be better at doing something, I would found the company myself and not invest in another entrepreneur or team. We look for founders that are specialists in their field and understand their business better than we, as investors, do.

 

Q: How do I calculate market size?

A: The answer to this question would require and merit its own “webinar” or workshop. If there is general interest in doing a webinar on market sizing, I am happy to do so. Meanwhile, I can recommend these articles to learn more:

 

Q: What’s the best way to prove product/market fit to an investor?

A: See more on this below in my answer to the last question. In general, the usage and hence engagement of the users of our product should be “in line” with the use case the product is targeting and hence the problem it is solving. This might differ significantly based on what market you are in, whether it’s a B2B or B2C product etc. Strong, supporting references from first users/customers are an important indicator, too. Besides, people paying for your product is always a strong signal as it shows general willingness to pay and that the product is actually solving a real problem worth paying for.

 

Q: How do I prove the network effect of my platform if it hasn’t taken off yet?

A: Network Effects typically only unfold and become more “tangible” after a certain, critical mass of users or data is reached. Then they become traceable through cohorts (retention of users by activity & revenue). Until this is not the case, you may use indirect indicators such as (a high) buyer-seller-ratio, active users from organic traffic growing quicker than those coming from paid, (a high) virality coefficient, high NPs (as indicator for word-of-mouth) or engagement of your community (if applicable) through ratios of MAUs vs. WAUs vs. DAUs (more on that below).

 

Q: You mentioned engagement numbers earlier as one of the KPIs you look at before investing. Could you give some more details on which numbers are important and perhaps how marketplaces you have invested in achieve great numbers there?

A: Pls see my answers to above and below questions. The “benchmark” very much depends on the problem your product is trying to solve. What usage pattern would you expect based on the e.g. buying behavior of customers on both sides of the marketplace? That`s your benchmark!

 

Q: Do investors look at how prepared my company is for scaling?

A: The easy answer to that question is “Yes”. The crux is what does “scaling” or “scalability” actually mean? As a general thought, it basically means that the business is ready to grow x-fold in size (in terms of revenue, customers, users) in a given period without having to add the proportional amount of manpower/headcount and, at the same time, maintaining healthy unit economics (CAC to CLTV-ratio etc). Usually, this can only be achieved through product automation, a scalable technology platform and efficient marketing/sales.

 

Q: What does an early-stage startup need to achieve before they begin looking for investments? What would be the first signal?

A: It very much depends case by case. If you want to learn more about how to prepare for your Series A financing, you can read more from me on this topic here. For more early-stage seed-funding, I would recommend this transcript of my interview with Besedo. Generally speaking, it’s always helpful to show early signs of product-market-fit with a minimum-viable-product that customers/users actually use along the usage patterns you would expect from the particular use case the product is addressing – or better – the problem it is solving. For that we look at Monthly, Weekly and Daily Users (MAUs, WAUs, DAUs) and their ratio to each other as well as related cohort analysis.

 

Prepare your marketplace for funding.

To help you prepare your site for funding we encourage you to download the checklist on how to optimize your marketplace for funding.

Success comes from user engagement, and engagement increases with the quality of your content. Get started with your moderation at an early stage to ensure high quality user-generated content on your site. Our all-in-one content moderation tool, Implio, is available for free and will help free up your time to do what you do best – growing your marketplace.

Few people know online marketplaces better than Mathias Ockenfels, partner at Speedinvest x, a Berlin-based early stage focus fund investing in network effects. We spoke with him to better understand why online marketplaces hold their value, how founders can get investment ready, and exactly what investors are looking for before investing in a marketplace.

Int: Thanks for taking the time to speak with us Mathias! Could you give us a little insight into your career so far?

MO: For sure – I’m Mathias and I live and breathe online marketplaces! I’ve been involved with them for the past ten years — since my student days. Before launching Speedinvest x, I was the German general manager for Uniplaces, a marketplace for student accommodation. I started out as an investment manager at Zurich-based Mountain Partners Group, before landing roles at Point Nine Capital, another early stage fund focused on SaaS and marketplaces; and heading the mergers and acquisitions arm at Ricardo Group, then a subsidiary of South African Naspers.

Int: So… why online marketplaces? What is it about them that drives your interest?

MO: I’ve been building online stores since I was a teenager but came across the idea of ‘network effects’ when researching my degree thesis. It’s underpinned by a very simple but powerful concept: the value of the network increases with every new participant who joins the network.

This idea predates the internet – it stems from telephone networks. The more people used a phone, the more it made sense for others to have a phone. From an online marketplace perspective, once you’ve built a critical mass of users, it’s hard for a competitor to penetrate or disrupt your market – even if your product is inferior (just look at craigslist!).

From a business perspective, one of the first investments I helped broker was for a company called ‘Yourdelivery’, a Just Eat competitor, which later rebranded to Lieferando and was eventually acquired by the Takeaway Group that IPO’ed for around €1bn. Shpock’s sale to Schibsted was another deal we saw come to fruition here at Speedinvest.

Basically, it’s clear that online marketplaces, given the right team, environment, and backing have huge potential.

Int: What kinds of marketplaces do you invest in now at Speedinvest x? 

MO: Speedinvest x sits underneath our parent company Speedinvest and focuses solely on early-stage online marketplaces and network effects-driven startups in Europe and North America.

Even more specifically, rather than ‘type’ of marketplace, we’re more interested in the stage or phase a company’s at, as we aim to be the first institutional investor a marketplace encounters: at both Seed and Pre-Seed stage.

That’s the phase we feel most comfortable getting involved in; and it’s where we can add the most value, too. We often invest in a company several times within the same phase.

Int: Aside from investment (!) what else do you offer the companies you work with?

MO: As VCs it’s not our job to come up with the idea, it’s to find the entrepreneurs who are creating them. When we do, we get very operationally involved. Most of our team come from an entrepreneurial background, so they know what founders are going through! We often place a dedicated team member within each company we invest in.

Also, because we can tap into Speedinvest’s experts in Europe (Austria, Germany, and the UK) and the US, we can help marketplaces grow their teams, presence and go-to-market strategy – thanks to Speedinvest’s dedicated HR (known as the Speedinvest Heroes) and growth hacking (known as the Speedinvest Pirates) teams.

Int: What do you look at when deciding whether to invest in a marketplace or not?  

MO: The overall market must be big enough, in order for it to offer the kind of return we’re looking for. It doesn’t make financial sense for us to invest in something that is very niche.

We’re looking for teams that tackle billion-dollar markets; companies that are on track to achieve product-market fit; the kind that are solving real pain points for their users. We also look into the team and overall growth, but we take both a qualitative and quantitative approach to ensure we get a range of KPIs and statistics.

We talk to their customers and users, to get a good feel for what their real pain points are, and to determine the extent to which they perceive the business is solving these problems.

From a quantitative aspect, we look at a range of factors: how the numbers stack up, growth dynamics; as well as non-financial KPIs: such as engagement numbers and how people are using the product. This can include everything from weekly and daily active users to booking or transaction numbers. Basically, we are looking at anything that shows us how people are using the product and how engaged they are; and whether these are in line with the kind of engagement we would expect based on what the problem the marketplace or platform is solving.

For example, with a platform like Shpock, you’d expect to see more frequent, long-term usage, as a typical use case. However, with a real estate platform, user activity would typically be high over a few weeks; as those buying a home tend to conduct their search on a short-term basis, but actually move home rarely.

Retention is important, too. We therefore often look at cohort analysis of users. Once a startup is starting to generate revenue we look at how fast it is growing. But, making money isn’t the primary concern at the Seed- or Pre-Seed phase. The really important thing is to achieve that critical mass of users – which is why we take engagement figures into account and consider it as more important than actual, financial traction.

Int: So you’re not necessarily concerned if a marketplace isn’t making money from the outset? 

MO: One of the biggest mistakes founders make is monetizing too early. A small profitable business is not a bad thing, but it won’t be a game changer – or a good VC case. It might seem counterintuitive, but building a marketplace is about hitting critical mass as fast as possible so the network effects can kick in.

If you start monetizing too soon you risk people shying away, which impedes the network effect. That’s why we pay such close attention to engagement numbers. The ratio between daily and monthly users indicates the ‘stickiness’ of the platform. The higher that is, the better the market fit; and the more compelling a case it becomes for investment.

Int: What’s the most effective way for marketplaces to reach that critical mass?

MO: It all depends whether you’re building a vertical or horizontal marketplace.

With horizontal marketplaces, you should try to build liquidity early and focus on quality afterward. Get as many listings as possible and once you introduce listing fees, you’ll soon put an end to fake or prank listings. That said, it’s important to monitor and remove scammer from the outset – to protect users and to ensure the best experience for all.

If you’re building a vertical platform; quality comes first. You’re essentially creating a marketplace giving people access to a supply that no-one else has; a niche where you can make a difference and deliver a unique experience.

Being niche gives you the opportunity to truly cater to your target audience and provide a very targeted service and platform, however, there is such a thing as being too niche.

To be successful, the chosen niche needs to have broad enough appeal to build ‘quantity’.

Or If you can capture a large enough percentage of transactions (say, 20-30%) then that may be good enough even if it’s very niche – but that hinges on you providing enough value to ensure customers are willing to pay that kind of money.

Int: Some great info here… what would be your best piece of advice for online marketplaces looking for investment? 

MO: Try to have your numbers in place from the very beginning so you can come across as professional and on top of your numbers. Follow engagement numbers daily and show how changes to the marketplace alter user behavior.

And – show us you care! Because we invest at an early stage, first and foremost we invest in the founders. We want to be sure of them, their drive, and passion. If you’re not passionate about the industry you’re in, or the idea you’re working on, others won’t feel that excitement either. Authenticity accounts for a lot. Usually, the best ideas come from those with experience of the pain points; those who genuinely want to solve a particular problem. Rarely do those who start a business that ‘seems like a good opportunity’ have that same passion.

Int: And finally, do you think the online marketplace sector could exhaust itself? 

MO: A lot of people do – but I don’t. There’s lots of competition out there, and many categories are already covered. But, consider the B2B space. It’s still largely untapped.

In B2B there are lots of asset-heavy categories – such as construction materials, machinery or storage – assets that don’t get used to their fullest extents. Companies like Stowga (one of ours…) who uses the sharing economy approach to warehouse space, is growing in popularity.

There are some great ideas out there, and we want to back the entrepreneurs that have those ideas and help make them a reality.

Thanks Mathias! A lot of great information and a huge help to a lot of early-stage marketplaces. For more information on how to get investment for your online marketplace, contact Speedinvest x

To learn how content moderation can help you get better engagement numbers talk to one of our solutions designers

Mathias Ockenfels investor

Mathias Ockenfels is a Berlin-based Partner at Speedinvest x, an early stage focus fund under the Speedinvest umbrella investing into network effects. Mathias eats and breathes marketplaces: Prior to launching Speedinvest x, he was a General Manager for the German market at Uniplaces, a marketplace for student accommodation.

Before that, Mathias was a Principal at Point Nine Capital, a Berlin-based early stage fund focused on SaaS and marketplaces. Earlier in his career, Mathias worked at Naspers, previously the parent company of online auction and classifieds platform ricardo.ch, where he was heading the M&A department of the group. He started his career as an Investment Manager at Zurich-based Mountain Partners Group. Mathias holds a german-french double-diploma from European School of Business Reutlingen and Neoma Business School Reims.

In 2017 alone, victims lost US$ 19,061,703 to romance and dating scammers. New tech helps you protect your users, but it also gives scammers new opportunities to deceive them.

We sat down with Steve Baker, former director at FTC, and Patrik Frisk, Besedo CEO, to discuss the future of romance scams and how artificial intelligence can help you prepare.

Steve Baker: I will start by sharing some rather terrifying stats:

  • At any one time, there may be 25,000 romance scammers online; most of them located in Lagos.
  • More than 14% of all profiles created are fraudulent.
  • US/Canadian victims reporting have lost nearly a billion US$ over the last three years.

 

 

What can dating sites do to help prevent romance scams?

Steve Baker: With so many potential victims it’s important that companies take responsibility for the safety of their users, and learn how to spot scammers and how to prevent them from reaching end users.

Companies need to:

  • Provide better warnings, especially to people contacted by fake profiles.
  • Screen profiles thoroughly.
  • Moderate 1-to-1 messages.

 

Patrik Frisk: This is exactly what our clients are doing. They realize that it’s not only bad for the bottom line when users get scammed, they also feel responsible for keeping their users safe. We help them understand what dating scams look like, how to deal with new trends and we are vigilant in updating our clients when scammers change tactics.

The framework for the dating scams we encounter daily is actually quite basic:

  • Grab attention.
  • Build a relationship with the victim.
  • Move the communication off-site as quickly as possible.
  • Continue building the relationship until the victim is deemed ready for monetary requests.

 

When we talk about scams and how to detect it we often refer to what we call scam markers. Scam markers are specific elements within a text, picture or the surrounding data that indicates that there’s a chance this could be a scam.

When it comes to romance scams these are some of the most common scam markers we encounter:

  • Specific phrases and words, such as “I am a God fearing man/woman”.
  • Location.
  • Number of submissions.
  • Broad age range interest (18-99 y/o).
  • Picture selection (stock photo, stolen).
  • Occupation (businessman in Africa, military out-stationed in Africa, missionary in Africa).

 

To prevent scams we help our clients through a number of different solutions:

 

 

How are users affected by romance scams?

Steve Baker: The emotional damage is often at least as bad as the money loss. In fact, Australian law enforcement believes that Australia has more deaths from suicides over romance fraud than they do from murders.

Patrik Frisk: We have handled customer support for big dating sites and we have seen the heart-wrenching complaints from the few people who report getting scammed. There’s no denying that these people have been severely hurt and that their trust in the site they were scammed on has been severely shaken if not completely broken.

Steve Baker: Yes, it can be quite a traumatic experience, and it’s not only women that are touched by this as many believe. The number of male victims matches that of females, they are just far less likely to complain. Romance fraud also targets the LGBT community and it’s a global issue with scammers operating out of centers in, for example, Africa, Russia or the Ukraine.

 

What does the future of romance scams look like? Are we about to get them under control?

Steve Baker: I am afraid not.

Unfortunately, while we have companies like Besedo working hard on creating solutions and technology to help prevent fraud, scammers are also working overtime to develop new ways to con victims. In the future, we will see crooks using new technology to target users and circumvent out of date moderation processes.

We will also see scammers picking up video as a channel to communicate with and use as a method for sextortion. This will most likely lead to an increase of organized sextortion gangs.

Sextortion is when scammers lure victims to either get naked or perform sexual acts on a video call and record the act to later threaten to distribute it unless paid.

Patrik Frisk: I can only agree with this prediction, unfortunately.

We are seeing a lot of sites starting to add video chat to their site, which is a great way to make “first dates” safer for the users and also a great way for higher user engagement and revenue. Unfortunately, it also gives scammers another channel to utilize for sextortion, that Steve Baker mentioned. According to cyberbullying.org, 40% of sextortion victims met the perpetrator online. If we don’t put great processes in place for video moderation, we expect that number to grow as video becomes more common on dating sites.

Steve Baker: I also foresee that crooks increasingly will watch what law enforcement does and learn from that to better avoid capture.

Patrik Frisk: That prediction holds true for content moderation processes as well. We know that scammers are learning from getting their fake profiles rejected and continuously invent new ways to slip through the moderation net. It’s one of our internal research teams most challenging and important jobs to keep up with new scam trends so we can ensure that scammers are caught as quickly as possible.

Steve Baker: One of those new methods is to use social media, both as a platform to scam, but also to support the credibility of fake profiles the scammers create on online dating sites. Many people will do a quick cursory check of the social media profile of a potential love interest, both to learn more about them, but also to verify that the person is real. Scammers have learned this and will increasingly create a fake online personality that stretches over multiple platforms rather than just a fake profile on a singular site.

Finally, I predict dating companies are going to get more scrutiny for their practices. Cases against Western Union and MoneyGram show that companies that don’t take basic precautions to protect their customers are at risk.

Patrik Frisk: Government legislation and increased responsibility being put on marketplaces is definitely something we are likely to see in the future. One new trend scam, that may get harder to combat because of this is a shift in where the scam takes place. Scammers have gotten a lot better at creating genuine looking profiles, which moves the scam detection to 1-to-1 messages.

One of the main challenges with moderating 1-to-1 messages is, of course, user privacy. How much will people approve of us looking into their private conversations?

In Europe, we’re seeing a lot of initiatives towards protecting user data, GDPR that goes live in May for instance. This, unfortunately as mentioned, may make it harder to keep users safe from scammers in the digital world. GDPR is most likely only a first step as we step into an age where user privacy will be a huge discussion point.

The solution is to let AI handle the sensitive task of keeping users safe while also respecting their privacy and government legislation. AI moderation is moving from a tool to cut costs into a necessity for legal compliance. This is one of the reasons to why we are working hard on implementing free AI modules in our moderation tool. To make it available for smaller sites who, due to volumes required for tailored models, otherwise would not have access to AI moderation.

As far as long term trends go, we will probably see VR becoming a stable element on dating sites, similar to what we’re experiencing with video right now. When that time arrives, scammers will most likely latch on to this new communication channel and abuse it for fraud, but when this happens we will be ready with a solution to keep them at bay and keep your users safe.

Sexual harassment has featured heavily in the media of late, as scores of women who’ve remained quiet about their experiences have bravely spoken out with a simple yet meaningful hashtag: #MeToo.

While the highly inexcusable exploits of men in positions of power, like Harvey Weinstein (among many others) may now be well documented, undesirable activity doesn’t have to be anywhere near as precarious to qualify as sexual harassment; particularly in digital environments like dating websites and messaging apps.

According to one study in Australia, the harassment of women online has become a ‘digital norm’ with nearly half of all women experiencing abuse or harassment online – including 76% of those under 30. These worrying statistics are just the tip of the iceberg. While much is being done to raise awareness of online harassment, for many it’s both unclear what exactly constitutes it and many dating sites still struggle with how to deal with it.

Defining online sexual harassment

According to Childnet International, an organisation that promotes internet safety for young people, there are four types of online sexual harassment

  • Non consensual sharing of intimate images and videos — for example, revenge porn.
  • Exploitation, coercion and threats — such as blackmailing someone with compromising images of themselves.
  • Sexualised bullying — includes so called ‘slut-shaming’: demonising women for dressing provocatively.
  • Unwanted sexualisation — this covers a wide range of behaviours from unwanted and even unprompted messages to making inappropriate comments about someone’s appearance.

It appears that while some instances of sexual harassment criteria are obvious, others could be seen as arbitrary – particularly in the ‘Unwanted’ category. Why? Because what one person may find appropriate may in fact cause harm to another. Since the Weinstein allegations much has been made of ways to tackle individual behaviour from both a female and male perspective, but what are dating sites doing to tackle sexual harassment?

Education and empowerment

Organisations such as the Online Dating Association in the UK place a strong focus on educating consumers and online dating businesses about best practices, including ways to keep users safe from sexual predators.

However, while more needs to be done to prevent extreme cases, there also needs to be greater focus on prevention, which means taking a stance on inappropriate messaging. You only have to look at Bye Felipe on Instagram to see some prime examples of just how casual obscenity has become.

And then there’s Bumble: the first dating app to be specifically designed for women. It’s core value is advancing, empowering, and helping women. Like other dating services, it only initiates contact when there’s a mutual match, but unlike other services women make the first move. And it’s now the fastest growing dating site in the world

Making a stand

As more women take a stand on harassment, inappropriate comments are going to be called out more frequently. That’s why it’s vital that women in the public eye continue to speak out against sexual harassment – as Oprah Winfrey did at this year’s Golden Globes– in order to give others hope, encouragement, and courage.

But the issue cannot be solved by individuals alone. Companies have a huge social responsibility and need to weigh in too. Popular platforms and companies must play their part. Speaking out is one thing. But more can be done. Dating and classified sites can help protect their users via content moderation; an effective way of monitoring, flagging and removing inappropriate images and messages. Not only does it counter sexual harassment, it’ll reduce user churn too.

There’s a clear difference between malicious behaviour and accidental offence. And while it’s relatively straightforward to create content moderation filters that flag specific words and phrases, what’s less easy to achieve is an understanding of context. But it is possible: through a combination of machine-learning and manual moderation.

No-one should have to endure fear or humiliation of any kind, at any time, in any place: on-or offline. As an increasing number of online marketplaces, classifieds, and dating sites put more stringent measures in place to prevent harassment, perhaps those who’ve been guilty of sexual harassment in the past will think twice before sending an inappropriate message.

In the meantime, the tide is turning against offenders and the issues affecting so many is firmly in the public spotlight. Change is coming, but we can’t rest until then. Here at Besedo, we’re trying to raise awareness through our #WeToo social media campaign. Why not join us?

Tweet this: Companies have a social responsibility to help fight online sexual harassment. Learn how. 

Ready for 2018? Here are some of the online marketplace trends we think will have the biggest impact on our industry over the next 12 months.

2017 was a landmark year for online marketplaces and classified sites, but what can we expect for the year ahead? Here are a few trends we think will gain traction.

 

1) Virtually There

When many of us think of ‘Virtual Reality’ we are transported back in time nearly 30 years – to when clunky, blocky visuals and impossibly heavy wearables were heralded as ‘the future’. Yup, VR took a while to catch on (and improve), and while it’s by no means a fixture in our homes, more and more businesses – from travel brands to interior designers – are using it to show customers what’s possible.

The real estate sector, in particular, continues to benefit from VR. With more traditionally ‘physical’ sectors made remotely accessible, there’s ample opportunity for all kinds of online marketplaces to help customers experience different environments – like ‘trying on’ clothes or even VR dating – without the cost and inconvenience of travel; opening up even more ways to create value.

 

2) Marketplaces Go Truly Global

Whether the US Federal Communication Commission’s decision to dismantle Net Neutrality laws – which effectively gives ISPs carte blanche to direct internet traffic however they choose – will have global ramifications remains to be seen. But in the immediate future,  classified sites are almost certain to continue adapting to the needs of an international audience; using local, on-the-ground knowledge to attract a broader customer base.

For example, ‘Housing As A Service’ sites – like Homealike and Wunderflats – that allows customers to rent fully-furnished flats for a short period of time, are catering to an increasingly mobile city- and country-agnostic workforce.

In a similar way, as more classified sites that rely on user-generated content expand to different nations and draw a bigger customer base, they open themselves up to increased targeting by scammers. Scamming is a global phenomenon, and one of the easiest ways for scammers to slip under the radar is to ‘pretend’ they’re in one country when they’re actually based in another. This means that online marketplaces may need to exercise greater awareness of where their customers are actually based, and use geolocation detection as part of their moderation and fraud prevention strategy.

 

3) Bring On The Blockchain

2017 is already being heralded as ‘the year blockchain went mainstream’ by many tech pundits and futurists. But that doesn’t just refer to bitcoin and its meteoric rise. For many, the blockchain itself – the technology that bitcoin’s built on – is infinitely more interesting and important than cryptocurrency. Why? Because it could completely revolutionize how our personal data is controlled – which could have a huge impact on online marketplaces.

It sounds complex, and it is, but the basic principles are straightforward. Essentially, a blockchain is an unforgeable digital data record: decentralized ledgers that are run and owned by no-one and everyone: not a third party. When data is anonymized and secure, its value is controlled by our willingness to share it: a 360 degree shift from how it’s been handled historically. For example, say we allow our shopping data to be accessed by an online retailer who wants to analyse local appetite for a new product line. Blockchain technology would both maintain our data’s anonymity and allow us to assign a value to our data. Yup, we could even earn money by granting access to it.

The first blockchain real estate transaction was made last year. And yes, it was by a high profile advisor to a niche startup. But this wasn’t just a show of what’s possible; it was a wake up call. Not just to real estate agents, but to online marketplace owners too. Businesses, governments, and even financial institutions are beginning to experiment with blockchains too; and for online marketplaces we’ll definitely see continued innovation as data usage and online security practices get increasingly sophisticated.

 

4) Impact On The Internet Of Things

For online marketplaces, the sharing economy presents new opportunities too. There are some 8 billion devices connected to the internet – from laptops to washing machines. And as automation becomes more commonplace, the ability to create value through sharing digital assets is becoming increasingly widespread.

While it’s been possible to share access to physical goods via online marketplaces (think Uber and Airbnb) for some time, thanks to securely managed blockchain technologies, more and more people are leveraging their digital assets and goods as a source of income: such as renting out their hard drive storage space, or selling their unused text message allowances. Automation allows us to simply ‘set and forget’ these transactions and activities; which is great… as long as security is brought into the mix as well.

 

5) Trust & Safety: Crucial Components

While the opportunities for online marketplaces to expand are ample, this places renewed focus on a particularly important area: trust. Any online marketplace navigating new digital territory needs to prioritise safety and security, but we’re willing to bet that the role of dedicated ‘Trust and Safety’ specialists will become integral parts of any online marketplace’s business operations: particularly as the EU’s GDPR legislation comes into effect at the end of May 2018, giving individuals greater control over how their personal data is used. Such increased scrutiny around data privacy might make human content moderation a lot trickier, and may also mean that some things – like one-to-one messages – can only be reviewed by AI.

As scammers find new ways to exploit burgeoning technologies, the emphasis on trust mechanisms, like content moderation, will continue to gain ground. While we will see an increased need for specialists who can predict  and crack down on fraudulent user activity. Simultaneously we will see a rapid rise in the requirement to automate moderation activity, with bespoke machine learning filters custom made for particular site needs.

To find out more about content moderation and how our Implio tool works, contact the Besedo team.

Have a great 2018!