Building trust within online marketplaces

By Lacey Riddick, Marketplace Support Specialist

June 22, 2022

Want to earn some passive income on that extra bedroom? You can list your place on Airbnb from the comfort of your couch. Want to book a trip to Amsterdam but can’t afford a typical hotel? You can find a rental that is fine-tuned to your preferences and budget within seconds.

These alternatives did not exist 50 years ago. How did we get here? How did we establish so much community trust that we felt comfortable to go pay to stay in a stranger’s home? Or jump into a stranger’s car for a ride?


To some, Airbnb is spectacular because it entirely redefined the short-term housing rental industry and generated billions of dollars immediately after going public. Airbnb isn’t the only marketplace that redefined its industry. Consumers and venture capitalists alike can tip their hats to the incredible financial successes of companies like Uber, DoorDash, and Rover. Online marketplaces are dominating the hospitality, transportation, and food delivery industries only a few years after their emergence.

However, I am coming from a different approach. While the financial success of online marketplaces is impressive, I find the sociological implications both exceptional and fascinating. My goal is to understand the success of marketplace leaders from a societal standpoint. After all, these companies depend on the cooperation of the community that is using their platform. Airbnb does not own any of its supply. Uber has no stake in your Uber driver’s car. These marketplaces are simply facilitating transactions. They are operating on trust.

Online marketplaces operate best when the seller and buyer work together with as little oversight from the host platform as possible. As a consumer, why message Airbnb’s customer support team when I can message the host directly? Trust benefits the buyer, seller, and marketplace operators alike.

What is an online marketplace?

Before I dig any deeper, let’s quickly define what constitutes an online marketplace. An online marketplace is comprised of three unique parts.

  1. The seller (i.e. the supply, the person who is providing their product or service).
  2. The buyer (i.e. the demand, the person who is using the product or service).
  3. The platform (i.e. the system/operators that facilitates the transactions Airbnb, Uber).

These parts come together to form an online marketplace where users can act as the seller and/or the buyer. For example, I could use Airbnb to book a stay as a buyer or list my own home as a seller. Users can choose to use the platform to make money or spend it-or do both!

How trust is created in online marketplaces

Trust lies at the core of successful marketplace transactions. So, where did this trust come from? And how do marketplaces maintain it? When an online marketplace makes its first debut, trust is at its lowest. Nobody wants to be the first person to use a product or service. Trust manifests as more of the community signs on, leaves reviews, and advocates for the product/service within their circles. From here, the cycle continues until the online marketplace becomes a household name.

The product of these organic interactions can be referred to as network effects. Network effects are the outcome of value being added to the product or service as more people join in. Consider the evolution of the telephone. No matter how technologically sophisticated a phone can become, it only has value if other people have one too. The success of the telephone as a product relied on network effects for its success.

If network effects are the outcomes that propel online marketplaces into success, community trust is the initial cause. Without a vested interest between the buyer and seller, the initial transaction will not occur, and progress is halted. The buyer must trust that the item or service will be as described, and the seller must deliver on its promises.

How trust is maintained in online marketplaces

As shown by the success of online marketplaces in the last decade, community trust can grow when the platforms that connect the users are safe and efficient to use. Online marketplaces can protect and maintain community trust by minimizing the perceived risk for their users. Marketplace platforms operate and provide value by making it easier for users to trust each other.

Leading online marketplaces provide identification and insurance functionality that minimize risk from the beginning to the end of the user experience. Identity verification can be carried out in-house or by a third-party service, such as Checkr or even through merchant onboarding on Stripe. Airbnb, for example, requires ID verification for account creation for both the host and the guests and Bellhop vets each of their movers through multiple channels before letting a Bellhop into a home. Insurance protects marketplace users with higher liability risks. Airbnb, Turo, and Outdoorsy all offer protection plans that can be catered to match the user’s confidence levels, or they can be included at no additional cost. Tint is another example of a third-party service that controls inherent risk by offering embedded protection plans.

Review systems are also a powerful tool that can vary in depth and detail. To me, there is no greater comfort than scrolling through pages of positive reviews before entering my credit card information. Many marketplaces like eBay and Esty have a feedback system that lets buyers and sellers take a deep dive into user reviews by displaying the role of the user (buyer/seller), rating type (positive/negative), the review itself, and the order that the review is referring to. This level of granularity provides the user with both a value rating and its context. Airbnb uses blind reviews (the host and guest can’t view each other’s reviews until both reviews have been submitted) that minimize emotional responses and helps to eliminate bias. Both feedback systems help users make informed and confident financial decisions.

Trust levels can also be maximized by offering timely customer support, secure payment processing options, satisfaction guarantees, a defense against bots and scams, and arguably most importantly, a secure way (ie. a messenger tool) for buyers and sellers to connect and work together.

Final thoughts

Community trust is hard to quantify, but that doesn’t negate its inherent value to online marketplaces. Trust is the fuel that drives online marketplace success. The importance of trust exists regardless of its recognition. Sociological insights can be applied to better understand into how trust forms and spreads in the absence of quantifiable variables like retention rate or profit margins. Instead, trust levels can be deduced from reference points like community engagement levels, referrals, and customer feedback. Online marketplaces that prioritize user networks will be rewarded with self-sustaining communities of buyers and sellers that are committed to creating value throughout their marketplace.

Read more articles like this on our Marketplace Insights blog.

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