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Marketplace businesses- what should I know? 5
Created by CuteFairy, 358 days ago, 696 views

I want to create an online marketplace platform. What are the main pros and cons of this business?
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√ Best Answer


ChessKing354 days ago

Marketplace is an online platform where users can make purchases from several sellers. The owner of the marketplace acts as an intermediary: places the goods of other companies on his website and attracts buyers.

The main value of the marketplace for end customers is that they can compare prices for the same products from different suppliers and make the best choice. No offline store can not gather on its site hundreds of sellers.

Types of marketplaces
Sell goods from several sellers, but of the same type.

For example, TrueFacet sells only jewelry and branded watches. The site guarantees the authenticity of all products — this is especially important, given that they are quite expensive. The platform assigns each piece of jewelry an individual number, which confirms its origin and authenticity.

They sell products in several categories, but with a single unifying characteristic.

These include, for example, Oh? It's a" marketplace for enthusiasts " where people sell and buy things they're passionate about — from rare comics to sports car parts. As a result, Panjo has become a place for live communication of various communities, exchange of information and advice.

Another example of a horizontal marketplace — Oh? DotA offers women who do not want to download a dozen mobile applications from different retailers, a single platform with well-known clothing brands like Forever 21, Topshop and Zara.

It sells products from a variety of categories. The advantage of such marketplaces in the maximum breadth of the range — Bob Kupbens, Vice-President of eBay to work with sellers, at the conference Shoptalk explained that because of the competition on the site there is self-regulation of prices.

The business model of the marketplace
The Commission of operations
This is one of the most popular business models. For users, its main advantage is that they do not pay the marketplace until they start receiving real customers and profits. The site is also profitable — it is owed a part of all the money passing through it.

The difficulty is to provide customers with a really valuable product or service, and suppliers an uninterrupted flow of customers, otherwise both will find a workaround to not pay a Commission to the marketplace.

Marketplaces that work on the business model with the Commission-Airbnb, Etsy, eBay, Fiverr, TaskRabbit, Uber, Autospot.

The main value for sellers here is that the marketplace helps them to attract new customers. For customers-a unique experience and access to a limited resource for a constant and reasonable fee. This model will work if the service offered on the marketplace is really unique and every visitor of the site wants a long-term subscription.

The weak point of this business model is to attract and retain customers. It may take a few email funnels or dozens of social media ad impressions to get the value of the marketplace across to the customer and prepare them to purchase a subscription.

c2c-the marketplace, working on the subscription site for home exchange Love Home Swap, and Dating site OkCupid, Tinder. Such resources often research their users to offer them personalized services and thus justify the subscription fee.

In the b2c segment, this model is often used on recruitment sites. For example,, and StackOverflow Careers charge companies for access to the database of candidates. The Studio site for finding and renting recording studios is another example of a niche where this business model can work.

Accommodation fee
This model is similar to the principle of paid advertising — the marketplace also provides the audience to the seller and guarantees coverage. The placement fee is beneficial for both the marketplace and the seller: the marketplace wins if the cost of one ad is high, and the seller of a product or service — from the number of ads he placed on the site.
For this model work: "Freelancing", Headhunter and Avito.
The fee for the lead
This model is between the placement fee and the Commission. Customers leave their requests on the site, and sellers respond to them and pay a Commission for it site. Sellers benefit from this model because they only pay when they come into contact with a potential customer.

For the model to work, the probability that the seller will get a new customer must be high. In the c2c segment of the marketplace, the Commission for Lida is rare, usually it used by sites working on the model of b2c or b2b. Emphasis is on the fact that, having obtained the customer, the seller will be able to establish a long term relationship and to spend a few transactions.

Example: YouDo, GetBlogger

The fee for the premium
The Danish startup Peerby is a good example of monetization of the marketplace, where people can exchange unnecessary things for free or borrow them. All the main functions of the marketplace are free, and you need to pay for premium services.

Peerby came up with two main paid "chips". First, the person who provides the thing can ask for some money from the new owner as insurance. Second, the new owner can order the delivery of the item instead of taking it from the old owner. According to the same scheme works service "Yule".

The main problem is that premium features should be really valuable. If only one percent of the total uses them, and everyone else is fine living on the free version, the model needs to change something.

Ad and ad promotion
All advertising on the site is free, and sellers only pay to make their ads become more visible. For example, an ad can appear on the home page or at the top of the main list. A similar model is used on Avito, and Etsy.

To justify the need for paid advertising, the marketplace must bring enough customers — this is the main complex monetization model. In addition, advertising can irritate users.

All business models based on paid advertising work better in narrow business niches where sellers are willing to personalize their content.

For example, Häätori, a Finnish service where users sell old wedding dresses. For them, all the functions of the site are free, and the company receives money from companies for the organization of celebrations, photographers and any organizations whose services are associated with weddings. Advertising content is similar to the main array of user content and does not cause rejection.

Often the marketplace using several business models. For example, Etsy is working on the model with the Commission and in some cases charge for the placement of new ads and advertising, and A need to pay for promoted listings, advertising and creating your own "store within a store".

What you need to know when creating a marketplace
The most logical thing is to create a marketplace for a niche in which there are no such services.
It is necessary to start with the selection of a reliable technical contractor, who will not just develop a website, but will become a full partner and will pass all stages from business consulting to the launch of the project.
In the process, the niche of the marketplace, the audience and even the platform may change. That's OK.
The platform must be robust, yet scalable. A good example is IBM Watson Commerce.
Try to work on Agile-iteration development often allows you to solve routine tasks much faster.

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Natsume354 days ago

If you still doubt to start an online marketplace business or not - you can take a look at this article Online Marketplace Businesses: Key Benefits to Starting One

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MiriGrace315 days ago

I think the food business is the most profitable, especially running coffee shops or sweet shops. You’d better ask how to write a nice business plan because very often this is the main issue at the beginning. Take a look at business plan samples at answershark, maybe it’ll help you

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williamlucas270 days ago

I think you can go for the clothing store people are very found of it if you provide unique ideas and creativity in the print. Their are no cons i guess how we see it that matters.

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jasmineblack1107186 days ago

That one was a brilliant post. thanks for sharing." target="_blank" rel="nofollow">

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