I have never seen a marketplace fail because they had lots of demand but not enough supply...

You need to stock the shelves with products that your customers want to buy, but you don't need to create a Wal-mart size store right away. You are right to focus on one local market first. Figure out how many transactions you need to prove product/market fit and then work backwards. If you need 50 transactions, how many products or services or service providers do you need to get to 50? Be laser focused on who your early adopters are, and stock the shelves with what they are most likely to purchase first... good luck!