Marketplace chicken and egg problem: getting first sellers

The marketplace chicken and egg problem is the founder’s first real job, long before technology. Buyers do not come to an empty site, and sellers do not sign up to a site without buyers. It is rarely solved with advertising and almost always with hands-on work on a narrow patch. The Marketplace Factory team, which builds complete marketplaces from a single sentence, brings together here the methods that work, the ones to avoid, the numbers to track and a 90-day plan.

Why start with sellers

The short answer: kick-start the marketplace by bringing in one side first, the one with the most to gain from joining, which is usually supply. It is also the conclusion of a glossary entry on the chicken and egg problem, updated in April 2026, where most of the examples in this article come from. The seller has a financial reason to sign up: they hope for customers. The buyer wants choice; if they find none, they leave and do not return.

So the order becomes: recruit supply, make it presentable, then open to buyers when they will find enough to choose from.

There are exceptions. When demand is rare and concentrated, a few companies posting assignments for example, you start with them. The same glossary cites Florence, a healthcare staffing marketplace, which began as a simple Google Sheet where nursing homes added the shifts they needed to fill.

Shrink the patch

The biggest mistake is opening “everywhere, for everyone”. With fifty sellers spread across a country, each visitor finds two offers near them. With fifty sellers in one city, they find fifty.

Examples abound: GrubHub started with a single Chicago neighbourhood, Kickstarter with the arts community, Curtsy, a dress rental marketplace, with a single sorority. In his essay “Do Things that Don’t Scale” (July 2013), Paul Graham recounts how Airbnb’s founders went door to door in New York to recruit hosts and help them improve their listings, and how about thirty days of that work made the difference between failure and success.

So choose one trade, one city, one audience. You will widen once that first patch works without you.

Ten methods that work

1. The list of fifty names. Before anything else, write down fifty possible sellers on your patch, with a way to reach them. Directories, social networks, word of mouth, competitors who already list them: fifty names is a week’s work.
2. Calls, then meetings. Call, suggest a coffee, show what their page will look like. Paul Graham describes the “Collison installation” by Stripe’s founders: instead of sending a link, they set the product up on the spot, on the person’s own laptop. Do the same.
3. Create the listing with them. Sit next to the seller and fill in their first listing together: photos, price, availability. A complete listing sells; an empty one drives people away.
4. Founding-member status. The first ten or twenty get a written perk: featured placement, a badge, a guaranteed rate. They are taking a risk; acknowledge it.
5. Waive your commission while you prove it. Three or six months free for the seller, with the end date and the next price written down from the start. Payment fees and, where it applies, the share of sales in your own subscription are still yours to pay: put a figure on the gift before you offer it.
6. Bring the first request yourself. A seller who gets a customer in week one becomes your best ambassador. Find those first customers yourself: your network, local associations, nearby businesses.
7. Be your own first seller. The founder of PaulCamper, a campervan rental marketplace, started by renting out his own. If you have a real offer, publish it under your name.
8. Existing networks. Trade bodies, guilds, associations, schools: one partnership can bring twenty sellers at once.
9. The physical world. Fairs, markets, shop windows. The founders of Drive Lah, a peer-to-peer car rental service, found their first users by leaving flyers on windscreens; those of Greenpal, a lawn-care marketplace, by hanging notes on house doors.
10. Local pages and proof. One page per city and trade helps sellers and customers find you. Publish early results: a booking, a review, a seller’s testimony.

What to say on the first call

A recruiting call fits in five points. Prepare them, and use the same pitch with everyone.

1. Who you are, and why this trade in this city: a true reason beats a start-up speech.
2. What the seller gains: customers they would not have had, a page in their name and, if you take a commission, no cost until they sell.
3. What you ask of them: twenty minutes to create their listing with you, and quick replies to requests.
4. What you do not promise: a number of customers. Promise instead what you will do to find them.
5. The next step: a meeting booked, not “I’ll send you a link”.

Three objections come up. “I’m already on a big platform”: nothing stops them being on both, and yours is local. “I don’t have time”: you create the listing together, now. “How much does it cost?”: answer with a price and a date, never “we’ll see”.

Give sellers a reason to stay before buyers arrive

A seller registered on a platform with no customers eventually forgets it. The same glossary describes a remedy: offer sellers a tool that is useful even without buyers, sometimes called “single-player mode”. Freightos first presented itself to freight forwarders as a tool to automate their quotes; Encore, a marketplace for musicians, as a professional network. On your marketplace, the seller’s public page, their calendar or their request management can play that role: they send their own customers there, who discover the other sellers along the way.

What not to do

Publish fake listings or fake reviews. The temptation to fill the site with invented offers to look busy is strong. It is banned. In the EU, the Unfair Commercial Practices Directive treats as misleading any practice that “contains false information”, and since the Omnibus Directive, submitting or commissioning false consumer reviews is banned in all circumstances. In the UK, the CMA’s fake reviews guidance explains the ban on fake and concealed incentivised reviews; in the US, the FTC’s final rule on fake reviews allows civil penalties against knowing violators. And the first buyer who asks for a fictitious offer will never come back.

Hide who is selling. EU consumer law requires marketplaces to tell buyers whether each seller is a trader or not. Your own offers must carry your name.

Open everywhere at once, spend on advertising before you have supply, promise customer volumes you cannot guarantee, or sign up sellers without supporting them: a listing without photos and a seller who never replies do more harm than an empty page.

Numbers to track

No need for a complex dashboard. Every week, track:

The signal that matters most at the start is simple: do sellers get requests, and do they answer quickly? If so, open wider. If not, do not recruit more sellers: go and find more buyers.

A 90-day plan

This timeline assumes you spend much of your time on it. The steps matter more than the dates: do not move on until the previous step is reached.

What Marketplace Factory helps with at the start

• Show before you recruit. Describe your marketplace in one sentence: complete proposals arrive in a few minutes, without a line of code. Your first idea needs no account; to keep going, a free account is enough, with no card. You walk into the first meeting with a marketplace in your name to show, not just an idea.
• Open right away, payments included. On Launch, at €79 a month excluding VAT plus 2% of sales paid online, your marketplace is live at your-name.marketplacefactory.app, with online payments on your Stripe account. During the beta, you try everything without paying a thing: payments run in test mode. You can also start in request mode, without Stripe: customers send requests that the seller confirms, and your first sellers do not need to open a payment account, which removes a barrier to signing up.
• Reward founders. The back office lets you feature a listing for thirty days.
• Become a brand. On Pro, at €199 a month excluding VAT plus 1.5% of online sales, you move to your own domain (up to three), emails sent from that domain, connectors and several administrators.

Prices and details are on the pricing page. Next: choosing between commission and subscription once your first sellers are in, our guide on how to build a marketplace, and the case of service marketplaces, where recruiting providers decides everything.

With Marketplace Factory, you do not recruit with a promise: you show every seller a working marketplace, in your name, from the very first meeting.