The End of the Generic Marketplace

For a long time, building a marketplace followed a familiar script. Identify a large horizontal category, match supply and demand, subsidize early users, and scale fast enough for network effects to kick in. That approach produced iconic companies and shaped how founders and investors thought about marketplaces for more than a decade. Today, that playbook is breaking down.

Generic marketplaces are struggling not because the model no longer works, but because the easy versions of it have already been tried. In most horizontal categories, users have options. Switching costs are low, differentiation is thin, and pricing becomes the primary lever. When a marketplace competes mainly on price or availability, it becomes fragile. Growth slows, margins compress, and defensibility remains elusive.

Investors have learned this lesson the hard way. They now understand that liquidity alone is not a moat. A marketplace that simply connects buyers and sellers without owning anything else in the value chain is vulnerable to disintermediation, competition, and rising acquisition costs. As a result, the bar has moved. Vision and scale narratives are no longer enough. What matters is depth.

This is where focus and verticalization come in. The marketplaces that still excite investors tend to start narrow and go deep. They choose a specific industry, role, or use case and obsess over it. Instead of serving everyone, they serve someone extremely well. That focus allows them to design products that reflect the real workflows, constraints, and incentives of their users. Over time, this creates trust, habit, and switching costs that generic platforms cannot match.

Ownership of workflow has become the real edge. When a marketplace is embedded into how users operate day to day, it stops being just a place to transact. It becomes infrastructure. Scheduling, payments, compliance, analytics, fulfillment, or inventory management turn the marketplace into software that users rely on, not just visit. Once that happens, liquidity becomes a byproduct rather than the core value proposition.

This shift also changes the economics. Vertically focused marketplaces often monetize earlier, show clearer unit economics, and grow more efficiently. They may target smaller top-down markets, but they capture more value within them. For venture investors, this tradeoff increasingly makes sense. A smaller market with high ownership and pricing power can be more attractive than a massive one with weak control and constant churn.

The end of the generic marketplace does not mean the end of marketplaces. It marks a transition from breadth to depth, from matching to ownership, and from growth at all costs to durable advantage. The winners of the next generation will not look like copies of what came before. They will look more opinionated, more operational, and more embedded in the real work their users do.

In that sense, this is not a decline. It is a maturation. Marketplaces are no longer graded on how big they can become in theory, but on how indispensable they are in practice.

Written by Aldana Aldossari