Unlocking the Potential of Home and Personal Services Marketplaces

The Future of Online Marketplaces In Home and Personal Services

The home and personal services sector represents a multi-trillion-dollar global opportunity, yet its digital penetration remains extremely low, at less than 2%. Unlike other product-based e-commerce verticals such as fashion or electronics, services industries still rely heavily on offline channels – an experience which is painful and daunting for consumers. The question remains: how can digital marketplaces crack the code to unlock growth and transform the consumer experience?

A Vast Yet Untapped Market

The total addressable market for home and personal services is estimated at $800 billion across the US and Europe alone, with categories such as beauty, tutoring and home improvement services showing strong growth. The market is ripe for aggregation by marketplaces given a high degree of fragmentation on both the buyer and supplier side, as well as a good degree of standardisation in services – as a result, home services marketplaces have been growing strongly by developing targeted propositions

However, there are several challenges that marketplaces need to overcome to kickstart the flywheel of growth and drive penetration; solving these will be an important unlock for growth.

Challenges and Solutions for Marketplace Success

We have identified some challenges and key solutions for marketplace providers to thrive in the home and personal services sector:

1. Creating a “Hook” to Attract Buyers – Many consumers find searching for service providers cumbersome, often relying on Google searches or word-of-mouth recommendations. Marketplaces that are able to offer a “hook” to attract buyers can attract a broader audience; many offer seamless discovery tools, AI-driven recommendations, and frictionless booking processes to improve user adoption.
2. Driving Repeat Purchases – Unlike product-based marketplaces, where reviews and ratings provide clear indicators of quality, services often require in-person interactions. This makes trust verification essential. Features such as background checks, verified credentials, and secure payment mechanisms can help establish credibility and drive repeat purchase.
3. Sustainable Monetisation Models – Striking a balance between lead generation fees, commission-based structures, and subscription services is critical for long-term profitability. Platforms such as Bark have successfully differentiated themselves by automating lead management and ensuring high-quality customer acquisition for suppliers.
4. Ensuring Supplier Retention – High take rates can incentivise suppliers to move off-platform, leading to churn and revenue loss. Successful platforms, such as Mittanbud, have countered this with subscription-based models and value-added services that provide long-term benefits to service providers.
   

The Path Forward

With consumer preferences shifting towards convenience and digital-first solutions, home and personal services marketplaces have an opportunity to redefine the industry. Platforms that can build trust, improve service discovery, and create sustainable monetisation strategies will be well-positioned to capture a $100-150 billion future market opportunity (based on achieving the penetration of least mature product-based marketplaces).

For investors and marketplace leaders, now is the time to focus on fragmented service sectors, recurring service needs, and niches with strong value-add potential. The winners in this space will be those who successfully navigate the flywheel effect—attracting both high-quality suppliers and engaged consumers, ensuring long-term platform loyalty.

At OC&C we have successfully supported major global corporations and local champions across a range of projects in the consumer internet space. If you would like to discuss any of the themes presented in this insight, or are seeking strategic advice, please contact our experts below.