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when is a marketplace disruptive?

Many markets don’t work well. The costs of accessing the market and/or identifying and communicating with potential transaction partners can limit who participates or make it hard for participants to transact with each other. Asymmetric information about sellers’ offerings or buyers’ needs, meanwhile, can make parties less willing to transact, lest they end up being taken advantage of. Under such market failures, there are opportunities for beneficial exchange that inevitably overlooked. Marketplaces address these problems by providing rules and infrastructure that facilitate and improve transactions, and mitigate market failures — creating value in the process.

But when is a marketplace disruptive?

So, A disruptive innovation underperforms on traditional measures that current market participants value, but is “good enough” for a different set of prospective consumers who value affordability, accessibility, and convenience. Disruptive innovations thus target those who previously left out of existing markets — people Christensen referred to as nonconsumers.

In the marketplace context, we have found it useful to

separate nonconsumers from what we call nonproducers, i.e.,

individuals or businesses that constrained in their ability to

offer supply in the market. For a marketplace to be disruptive,

it must identify either new supply, new demand, or both — targeting

individuals or businesses who were unable to profitably produce or

consume goods and services in incumbent channels. And the most

powerful disruptive marketplaces are often those that simultaneously

connect nonconsumers with nonproducers.