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I built an eight-figure marketplace business. Don't build one.
Legiit has done 8 figures in gross sales since 2018.
Around a million orders. A 45 person team across six continents.
And if you told me you were going to build a marketplace, I would tell you not to do it.
That's not false modesty. It worked out very well for me. I've also watched tons of people try it and fail.
It's not a good business model.
The margins are razor thin. We keep 15% of a sale now, and when we started it was 10%.
Our average order is about $90.
So do that math. You can't run a whole company on that. Which is why we had to build other ways to make money on top of the marketplace. Software like Legiit Leads. On site advertising. Legiit Seller Plus for freelancers. Legiit Command Center.
It's also why paid ads don't work for a marketplace. There's no margin in a percentage of a sale to buy traffic with. We had to build separate front end offers just to make advertising viable at all.
And you're not even running one business. You're running two.
You have to have freelancers to service customers. You have to have customers to give freelancers work. Too many customers, the customers are unhappy. Too many freelancers, the freelancers are unhappy.
Every day. Forever.
Then there's the fraud.
One incident cost us 6 figures. I can't go into the specifics because of an NDA, which should tell you everything about how much fun that was.
And the support.
For the first six months I answered every single ticket myself, under an avatar, so nobody knew it was the founder answering. By the end I would literally flinch when a new ticket came in.
I'm glad I did it, because it's the reason we answer in about 90 seconds and solve the average issue in about 12 minutes today, with actual humans, 24/7. But nobody builds a marketplace dreaming about tickets.
The only reason any of it worked for me is that I didn't start with a business model.
I started with an audience.
When the marketplace I used to sell on started dying, I opened a store on my own website, and my Facebook group and email list kept me alive.
Then freelancers started asking if they could sell through my site too.
Then a customer I'd sold a $16 service to, a guy with a web development agency, offered to build the real thing with me. He's still my co-founder and CTO today, by the way.
I thought Legiit was going to be a side product for my SEO business.
People were asking for it before it existed.
The pitch decks talk about network effects. They never mention that part.
If nobody is asking you for the thing, the model doesn't matter.
So before you build anything, marketplace or otherwise, be honest with yourself...
Is anyone actually asking you for it?
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