The Chicken and Egg Problem in Online Marketplaces — How to Solve It

No buyers without sellers. No sellers without buyers. Every marketplace founder hits this wall. It's called the chicken and egg problem — and it kills more marketplace startups than bad ideas, bad design, or bad timing combined.

The chicken and egg issue is the core reason why building a marketplace is harder than building a regular product. You're not convincing one group of users to show up — you need two sides to show up, and each side only comes if the other is already there.

But this problem is solvable. In this guide, I break down 15 proven strategies that real marketplaces — from Airbnb to Robinhood to Clubhouse — have used to break the loop and get their first users.

What Is the Chicken and Egg Problem?

The chicken and egg problem (also called the cold start problem) is the fundamental challenge every marketplace faces: your platform has no value until both sides are active.

A marketplace with great sellers but no buyers is useless. A marketplace with eager buyers but no listings is useless. You need both — and neither wants to go first.

This is different from a regular SaaS product or ecommerce store. Those only need to convince one type of user. Marketplaces need to solve a coordination problem — and most founders underestimate how hard that is.

Why It Kills Most Marketplaces

Most marketplace startups don't fail because the idea is bad. They fail because:

• They launch to an empty platform — no listings, no activity, no reason to stay
• They try to grow both sides simultaneously and make progress on neither
• They spend months building features instead of solving the cold start first
• They run out of motivation before the flywheel starts turning

The marketplace graveyard is full of well-built products with zero users. Solving the chicken and egg problem isn't optional — it's the first thing you need to figure out.

15 Proven Strategies to Solve the Chicken and Egg Problem

These strategies aren't theoretical. They've been used by the most successful marketplaces in the world — and by scrappy founders launching niche platforms from their laptops. Pick the ones that fit your situation.

Strategy 1: Focus on One Side First

Don't try to grow both sides at once. In most marketplaces, you should start with supply (sellers, providers, hosts). Why? Because buyers come for inventory. If you have quality listings, demand follows. If you have no listings, no amount of marketing will help.

Strategy 2: Go Niche and Dominate a Small Market

Trying to be "the marketplace for everything" is a death sentence at launch. Instead, pick a narrow niche — a specific category, location, or audience — and own it completely. It's much easier to get 20 sellers and 50 buyers in a tiny niche than 200 sellers and 500 buyers in a broad market.

Strategy 3: Fake It Till You Make It

Seed your marketplace with content before real sellers arrive. Create listings yourself, curate products from other sources, or manually onboard early supply. The goal is to make the platform feel alive when the first buyers show up. Many successful marketplaces did this in the early days.

Strategy 4: Be the First Seller

This is an extension of faking it — but more hands-on. Personally fulfill the supply side of your marketplace until real sellers arrive. If you're building a services marketplace, do the first few jobs yourself. If it's a product marketplace, sell your own inventory first. You'll learn exactly what sellers need.

Strategy 5: Strategic Misrepresentation (Be Careful)

Some founders stretch the truth about traction to attract early users — showing waitlist numbers, "coming soon" volume, or early interest. This is risky. There's a fine line between creating urgency and misleading people. Use this sparingly, honestly, and ethically.

Strategy 6: Find the Whales and Treat Them Like Kings

Identify the 3-5 most valuable potential sellers in your niche and give them the VIP treatment. Set up their profiles for them. Photograph their products. Feature them prominently. One high-quality seller with 50 great listings is worth more than 50 sellers with one listing each.

Strategy 7: Pay Them to Join

Offer financial incentives for early supply — guaranteed payouts, sign-up bonuses, reduced commissions, or free premium features. This costs money but solves the cold start fast. Many successful marketplaces subsidized one side early on.

Strategy 8: Build a Supplementary Product

Create a standalone tool that's useful to one side of your marketplace — even without the other side. A CRM for sellers. A comparison tool for buyers. A portfolio builder for service providers. Once they're using your tool, transition them into the marketplace. This is how many B2B marketplaces get started.

Strategy 9: The "WOOOW!" Strategy

Create an experience so remarkable that people can't help but talk about it. Robinhood offered free stock trading when everyone else charged $10/trade. That wasn't just a feature — it was a conversation starter. Find your "WOOOW" moment that makes people share your marketplace without being asked.

Strategy 10: Create FOMO

Use scarcity and exclusivity to drive urgency. Invite-only access, limited spots for sellers, waitlists, early-bird pricing — these create a sense that your marketplace is something people need to get into before it's too late. Clubhouse used this to explosive effect.

Strategy 11: Launch on Communities

Don't launch to the general public — launch to specific communities where your target users already hang out. Reddit, Facebook groups, Discord servers, industry forums, Slack communities. These are concentrated pools of potential users who already care about your niche.

Strategy 12: Leverage Influencers

Find influencers, bloggers, or content creators who already have the audience you need. This doesn't mean expensive sponsorships — a single relevant micro-influencer in your niche can drive more qualified users than a massive generic campaign.

Strategy 13: Offline Meetups

Especially for local or B2B marketplaces, real-world events and meetups can be incredibly effective. Meet potential sellers face-to-face, explain the value, and onboard them on the spot. The personal touch builds trust that digital marketing can't replicate.

Strategy 14: Time Your Launch Perfectly

Every market has a season, a cycle, or a moment of peak demand. Launching a rental marketplace before summer? A gifting marketplace before the holidays? A B2B marketplace at the start of a fiscal year? Timing your launch to match peak demand gives you a natural tailwind.

Strategy 15: Build a Market Where the Chicken Is Also the Egg

Some marketplaces avoid the chicken and egg problem entirely by designing a model where users are both buyers and sellers. Think classified marketplaces, peer-to-peer trading platforms, or skill-swap communities. If every user can be on both sides, you only need to attract one type of user.

What I Learned From My Own Marketplaces

I've launched three marketplaces — Nordic Mugs (a niche marketplace for Moomin mugs), NinjaBuzz, and My Spare Desk. Each one taught me something different about solving the cold start.

The biggest lesson? You don't need to solve the chicken and egg problem perfectly. You just need to solve it enough to get your first 10 transactions. After that, momentum starts working for you — reviews appear, trust builds, and the flywheel begins to turn.

Don't overthink it. Pick 2-3 strategies from this list, execute them aggressively for 30 days, and see what sticks. The worst thing you can do is wait for a perfect plan.

Build Your Marketplace and Start Testing

The best way to solve the chicken and egg problem is to have a live marketplace you can actually test with. Prometora lets you go from idea to a live marketplace in minutes — so you can focus on user acquisition instead of infrastructure.

Before you launch, understand the math. How much will you earn per transaction? How many orders do you need to break even? Use the calculator below to model your marketplace revenue at different commission rates and volumes.

Frequently Asked Questions