Сhoosing the Best Marketplace Business Model for Your Online Store
An online marketplace business model is the starting point of every online marketplace. As obvious as it sounds, choosing a proper business model might be challenging.
The key element of every marketplace is the connection that will be established between the seller and the buyer. Based on that decision one can create and implement a suitable marketplace business model.
And without a well thought out marketplace monetization strategy, it is very unlikely your business is going to last long.
Marketplace Business Model Formats
Image source: Synergy Way
By saying “Marketplace Business Model Format” we mean the format of market relationship your marketplace is going to offer. Here are some of the most popular business connections between sellers and buyers.
- B2B (Business-to-Business). B2B marketplace business model format is used strictly for buying/selling goods between different businesses. Usually, transactions include high volumes of products and involve manufacturers and wholesalers.
- B2C (Business-to-Consumer). B2C business model format is aimed to sell the product directly to the customer omitting the “middleman”. It makes the product cheaper and the customer happier.
- P2P (Peer-to-Peer). P2P business model format is based on exchanging services and goods where the seller is not required to be an official supplier of the product. One of the best examples would be Craigslist and eBay.
- C2B (Consumer-to-Business). C2B business model format works in reverse to B2C format. In C2B examples clients list the product they are searching for and businesses fight for the client by making suitable offers.
- Crowdsourcing. In most cases, the crowdsourcing business model format is used when a customer needs to outsource employee duties to a large network of people.
- On-Demand. The on-demand business model format works great when the platform needs to pair sellers and buyers on-demand and in a timely manner. The best example would be Uber.
Choosing a suitable business model format depends on determining a relationship that will be formed inside the platform between:
- Buyer and Seller
- Buyer and Platform Owner
- Seller and Platform Owner
By understanding the interaction between these players, you will be able to determine the most suitable type of business model for your marketplace since these relationships determine who initiates the first move and who has to respond.
Types of Marketplace Business Models
Image source: Synergy Way
When a format of your marketplace is determined and you already have a picture of the business interaction between the seller, the buyer, and the owner, you can start thinking about monetizing and getting profit from the marketplace business model you base your platform on. The best thing about building up your strategy is that you can make it flexible and adjust according to the market, customer needs, or competitor offers.
Subscription Business Model is based on periodic charges, usually from the seller, for the services offered by the marketplace.
Commission Based Business Model is built on charging a certain percentage from every transaction made between sellers and buyers. The commission is usually paid by the seller.
Selling Fees Business Model has a lot in common with the commission-based one but includes the platform fee in the item price listed.
Listing Fees Business Model requires paying a listing fee for every item shared on the platform. It can be a fixed price or a certain listing percentage fee.
Advertising Business Model allows third-party sellers to list and offer their services or goods on your site via advertising charges. The feed can depend on the type of ads requested.
Lead generation business model is the best option for dating sites where either the seller or buyer or both pay a certain fee to get access to information or services provided by the marketplace.
Transaction Fee Revenue Model brings profit from every transaction made on the marketplace and usually charges are made from services like promotions, advertising, membership payments, premium features.
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When choosing a marketplace business model, make sure it suits your business idea, your target audience, the number of products you plan to work with, and, of course, your income expectations. Different business models can be either used independently or combined with other options.
However, it is also possible to implement one business model at the beginning and then, considering the market and personal interests, change it to a different, more suitable one.
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