The global home and personal services market represents a £1.6 trillion opportunity, yet less than <2% of this spend currently flows through online marketplaces. With consumer behaviour shifting towards digital search and booking, there is significant untapped potential for home services marketplaces to disrupt this space, according to a recent Marketplaces report by OC&C Strategy Consultants.
Caitlin Bailey-Williams, Associate Partner at OC&C shares that home services marketplaces must prioritise trust building strategies to drive conversion. Further marketplaces should find ways to prevent platform leakage, whether that is sustainable monetisation models (e.g. subscription), and / or product functionality to incentivise consumer and service provider’s use of the platform.
The Scale of Opportunity
The report explains that spend in home services marketplace is substantial, with the United States accounting for £ 300- 340billion, the Euro Area for £139–£179 billion, and the United Kingdom for £24–£32 billion. However, there is still large headroom opportunity across all three geographies.
Breaking this down by category, hair and beauty (35–45%) and home care (25–35%) dominate spending, while property maintenance and home improvement (15–30%) and tutoring & removal services (1–4%) remain secondary but important segments. We can see that the US leads in total spend, while hair and beauty and home care see strong demand across all geographics.
However, to capture this opportunity, platforms must address key consumer behaviours, supplier challenges, that currently limit online adoption.
– Caitlin Bailey-Williams, Associate Partner, OC&C
Why Home Services Marketplaces Have High Growth Potential
Consumers are already searching for services online, with the majority turning to Google and online search engines when discovering service providers. The report further shares that there is strong demand from both consumers and suppliers for more efficient ways to connect.
We have seen in markets such as the UK, that the supplier landscape is highly fragmented and made up predominantly of small business (<5 FTEs). These businesses are hard for consumers to find and compare and often lack the money / skillset to promote themselves online effectively – driving demand for marketplace match-making on both sides.
– Caitlin Bailey-Williams, Associate Partner, OC&C
Many suppliers are looking to increase their customer base with 60% of those not currently using marketplace platforms stating that they would benefit from additional market share. Marketplaces can play a crucial role in increasing job availability, particularly for small-scale providers.
However, while these factors highlight the potential for scale in digital platforms, penetration currently remains low due to several key challenges.
Challenges Marketplaces Must Overcome to Scale
Before home services marketplaces can unlock the market opportunity, there are various barriers to overcome, the report reveals.
- It can be harder for marketplaces to stand out as consumers primarily find service providers through direct searches or offline recommendations.
- Equally, unlike e-commerce where product images drive engagement, the report demonstrates that to stay competitive, marketplace providers must create a tangible hook to attract users. Google Local Services Ads (LSA) are growing in influence, meaning platforms must differentiate with strong value propositions to keep up.
- Driving repeat business also presents a challenge because building trust is critical, particularly for ‘in home’ services, and can be hard to achieve in a purely online space. Further standardising the language for search with ‘bespoke’ services is difficult as often these are long-tail, complex asks – meaning consumers and suppliers can default to offline recommendations. Unlike retail, service outcomes are subjective making it harder to ensure post-service consumer satisfaction, and drive future on-platform transactions.
- Monetising the marketplace while retaining buyers and sellers on the platform is another challenge as platform leakage is common. The report explains that consumers often connect with providers off-platform, and high-take rates encourage off-platform transactions through suppliers offering direct discounts. Attracting and retaining high-quality suppliers is also critical for marketplace success.
Platforms rely on volume and quality supply, but highly skilled service providers may be reluctant to join (or stay). There is also the risk of attracting low-quality or inexperienced contractors, which can lead to churn among top providers.
– Caitlin Bailey-Williams, Associate Partner, OC&C
How Marketplaces Can Capture the Opportunity
OC&C’s report advises four ways in which home services marketplaces can overcome current barriers and capitalise on market spend.
- Firstly, to successfully scale, home services marketplaces must find a strong hook for buyers. This can be achieved by offering free tools or incentives to drive initial engagement, such as instant quotes or comparison features, and by developing personalised service recommendations to match users with providers.
- Investing in trust and credibility is also essential, according to the report. Vetting suppliers with clear credentials, verified reviews, and satisfaction guarantees will build confidence among consumers. Establishing brand authority and addressing concerns around reliability and service quality will further encourage platform adoption.
- Being pragmatic with monetisation is equally crucial. Varying pricing models by service type, such as subscription-based models for service providers, and commission-based pricing for one-off services, can help maintain platform loyalty.
- Monetising the initial interaction, then upselling additional features like premium listings or lead prioritisation, is an effective strategy.
Lastly, offering suppliers more than just leads will enhance retention. Caitlin shares that providing value beyond transactions, such as business support tools, marketing assistance, and freemium models where basic listings are free but premium tools come at a cost, will incentivise long-term engagement.
The home and personal services sector represents an almost £1.6 trillion global market, yet online marketplace penetration remains minimal. With consumer demand for digital discovery, a highly fragmented supplier base, and strong supplier appetite for additional work, there is a clear opportunity for marketplaces to scale rapidly. However, to succeed, platforms must overcome key adoption barriers, particularly around trust, monetisation, and supplier retention.
By focusing on innovative buyer engagement, trust-building strategies, flexible monetisation, and supplier support, home services marketplaces can capitalise on this high-growth, high-potential sector, transforming a traditionally offline industry into a digitally powered, scalable business model.
– Caitlin Bailey-Williams, Associate Partner, OC&C
