Demand Side: Enhancing the Buyer Experience

AI's impact on buyers (the demand side) is expected to be largely positive across marketplaces, leading to improvements such as:

• New search modalities: Buyers can use natural language, images, or even vibes to describe what they're looking for, reducing scrolling fatigue and increasing the likelihood of finding the desired item.
• Custom supply creation: Marketplaces can match buyers with suppliers who can bring their vision to life, even for products that don't yet exist.
• Negotiation and customer service: AI assistants trained on supplier data can negotiate prices, answer questions, and provide customer service, benefiting both buyers and sellers.

Supply Side: Transforming How Products and Services are Made

The impact of AI on sellers (the supply side) varies based on two main factors:

• Digital vs. IRL (in-real-life) products/services: AI can entirely replace digital goods and services but may only assist with efficiency for physical products/services.
• Personal vs. commoditized supply: AI is more likely to replace commoditized suppliers, while personalized suppliers may be "supercharged" by AI to create more efficiently.

Based on these factors, the article predicts the level of disruption for different types of marketplaces:

• Digital, commodity products (e.g., Upwork, Fiverr): Most disrupted, with AI potentially replacing suppliers or entire marketplaces.
• Digital, personalized products (e.g., Cameo, Patreon): AI can "supercharge" suppliers, but may also lead to competition from deepfakes or AI-generated content.
• Physical, commodity products (e.g., Instacart, Uber): Least disrupted, with AI streamlining seller operations.
• Physical, personalized products (e.g., Etsy, eBay): AI can help existing sellers and new sellers list more items efficiently, driving liquidity and growth.

The Future of AI-Powered Marketplaces

The article envisions a bright future for marketplaces in the AI era:

• Buyers will have more options and a delightful user experience through natural language search, automated customer service, and more.
• Sellers can use AI assistants to streamline non-core tasks, focus on their "special touch," and drive more volume.
• The result will be more liquid and stable marketplaces with more listings, higher conversions, and more repeat purchases.