How to Solve Chicken and Egg Problem


You must have heard about an exciting yet thought-provoking statement which is whether the egg came first or the chicken.

However; this is not just a mythical statement anymore and this term has rather intervened in the digital marketplace as a common issue. Let us talk about what is chicken and egg problem for an online marketplace.

Online marketplaces especially e-commerce stores always depend on both the sellers and buyers. Removing either of these is going to result in a catastrophic outcome for your online business. Online marketplaces greatly rely on their producers or in other words the sellers. 

Reсommended reading: Ecommerce Vs Marketplace

Discussing Chicken and Egg Problem

Imagine people coming to your E-Commerce website as buyers and different buyers might be searching for different products.

Now on the other hand if your seller does not have the specific item your buyer required, would it leave a positive impact on your website’s rating or the overall experience?

Definitely not! Or take this in another way, you start an online marketplace, but since it is just the beginning, you cannot expect a lot of buyers. But this thing is not much liked to buy the sellers. Of course, they are signing up with your website to sell their products.

And not finding a sufficient number of buyers would surely demotivate them and they will not join you. And since they will not join you, if buyers show up they cannot find products, as your sellers did not join you.

Not having enough products

Another possibility is your sellers even join you. But you do not offer them proper listing options. Or they do not list their products for some reason.

Buyers also do not like the sites which do not offer a wide variety of products. People require variety. Options and several items through which they can select their favorite items. It is not like you are only going to offer them 2 items and they must buy from you when there are many other marketplaces they can buy from.

Another factor of chicken and egg problem is your sellers do not have to run out of stock.

Let us assume your website has a good number of buyers, and also your sellers are happy and have listed all possible products.

Still, if they keep running out of stock now and then. Your buyers will not like it, as they will not get a good experience from it. This creates a rather difficult situation which is called the Chicken and Egg problem and it is quite common in the online marketplace.

Let us talk about how we can tackle the situation. We are presenting the 7 best strategies and techniques through which you can totally avoid this harsh chicken and Egg problem for your online marketplace or small business.

First, take care of the difficult part

There are things that you have to plan for the future, and then there are things that you have to deal with right away. Also as an entrepreneur in the online marketplace, you have to take care of hard and difficult aspects first.

Usually, the most impenetrable part of the online marketplace that strikes us is meeting the supply and demand requirements. It is nearly difficult to balance both.

And at time point comes where sales get to its peak and things get more complex if not taken care of properly. So, you as an entrepreneur have to think about which aspect is difficult for you.

Whether it is meeting supply requirements or the demand requirements. Once you take care of the difficult one. The second one will automatically fall in place for you and your online marketplace business.

You can also conduct a sales test and the process of onboarding. definitely a good aspect for the Chicken and Egg Problem.

Be niche-specific

Running an Online E-commerce store successfully is directly proportional to providing value to your customers. And more you get niche-specific better the value you have in your business.

Some people at the start make this mistake by offering several variations and options in the niche type. And this does not affect the customers as much as being specific to the niche.

If you narrow it a bit down. It becomes easier for you to sort out the Chicken and Egg Problem, you can figure out how to maintain the quality, and later on, you can even expend your products.

You can take Amazon as a good example; it started as a booking selling platform and gradually shifted to the biggest e-commerce website.

Invest in fruitful market

If you find a particular niche more favorable to your business, or after a while. You start to realize that people are more inclined to a specific niche type of your online marketplace.

Then do not be reluctant to invest in that niche. Pay cash and then it will pay you back after some time, even some of the biggest online marketplaces initiated with monetary investment.

It was a great way to get recognized and then everyone eventually gets used to the idea and takes more interest in the products.

Some best examples in front of us are Facebook and Uber; so do not be hesitant of spending money to market your online business.

Online events and gathering

Although managing or hosting the online events is not as easy as it might seem to some people, yet they are almost mandatory and you cannot shake off their importance in an online world.

You might feel it difficult to host such events to promote your brand presence.You as an entrepreneur need to figure the solution to their problems.

Nobody is going to attend your online webinars, or meetups if you do not offer them a solution. And vice versa everyone will be interested if you have something.

Get benefit from some powerful social media channels such as Twitter and Facebook, etc. Learn from your competitors, analyze the market, and host closely related events.

This is probably one of the best methods in which you can attract your customers with a great impact while eliminating the Chicken and Egg Problem.

Work with influencers

People who are social media celebrities can be of real help if you consider this option carefully.

You can always build a connection with people who already have been working on social media as influencers. They drive massive people on the daily basis, which can uplift the brand impression for your business.

Some of the influencers with a huge fan following would surely be attracted to your business and eventually offer you a good conversion rate if you play the cards wisely.

If you want to work in long term with them you can make them brand ambassadors, many big brands still take help from the influencers, and people who come from the social media influencer’s side tend to have a higher conversion rate, as they already buy trust from their celebrities.

If we take a look at some big examples, you will see Airbnb had also taken help from many celebrities, thus becoming a powerful brand.

The story goes like when one of the most celebrities Mariah Carey once decided to go to Israel, Airbnb played smart and discussed with Mariah Carey to offer her a return reservation with 0% cost in exchange for a social media sponsored post.

Offer people sign-up discount

Most people have no interest in online stores unless you hit them with a proper reason to join. There are several techniques and methods to attract users.

One of the best methods that still large platforms use is signing up for a discount. If people are joining as buyers, you can offer them a discount in the form of tokens which they can save in their account and utilize when they have to buy something.

This technique is very powerful which compels people to sign-up as buyers. Of course who does not love a discount.

Make use of this technique and increase the number of buyers, once they are interested enough to look into the product list, give them something they need and they would actually end up buying from you.

Time and Demand limitation

Another most important aspect to factor in is to set time and demand limitations in your online marketplace; you can boost your sales or create engagement in your business.

You should introduce time-bound offers that should drive people to click and avail the opportunity. There always should be things that should drive people and keep them engaged.

Along with the time-bound offers, demand limitation or constraint is another important thing, you can set demand limitation on some hot products, and people will surely check the product before it runs out.

If you take a look at some biggest e-commerce websites such as Amazon,, etc. you will find out they use the very same technique and it does have its psychological impacts.


These were some of the best methods that can help you eliminate and overcome the chicken and egg problem eventually, make sure you apply all of these techniques.

Identify your problem first, whether it is the seller side or the buyer’s side, and then you will be able to narrow down the chicken and egg problem for an online marketplace.


Most frequent questions and answers

The chicken and egg strategy problem is how to get this “network effect” started when you have neither buyers or sellers. The creation of every “platform” business or two-sided marketplace requires a Chicken and Egg strategy problem to be overcome.

Chicken and Egg strategy problems occur whenever the value proposition to two separate groups is dependent on penetration in the other. An example is an auction site like eBay, with the number of buyers driving attractiveness to sellers, and likewise the number of sellers driving attractiveness to buyers.

Chicken and Egg strategy problems occur whenever the value proposition to two separate groups is dependent on penetration in the other. An example is an auction site like eBay, with the number of buyers driving attractiveness to sellers, and likewise the number of sellers driving attractiveness to buyers.

A marketplace business cannot acquire customers if there are no or only a few sellers on it, and would not be able to convince a seller to sign up if there are no customers on the site. That’s the chicken and egg problem of a marketplace where you get stuck between whom to bring first- sellers or the customers.

Ripul Chhabra

With over two decades of hands-on experience in the realm of Information Technology, I've been dedicated to crafting exceptional websites, web applications, and mobile apps for both industry giants and innovative startups alike. My professional journey has been enriched with a deep focus on cutting-edge technologies such as AI development, Online Marketplace & e-commerce solutions, NFT marketplace development, Learning Management Systems (LMS), MVP creation, robust API development, SaaS solutions, and a myriad of other tech-driven domains. As a passionate observer of the ever-evolving digital landscape, I am committed to staying at the forefront of industry trends and innovations. My goal is to share these insights with you, our valued readers. Join me on this exciting voyage through the blogosphere, where we'll embark on a journey of exploration, learning, and mutual growth.

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