24 Marketplace Business Models
Some of the most valued companies nowadays are Marketplaces.
On these platforms, three subjects interact between themselves: the Buyer, the Seller, and the Marketplace.
The Buyer wants to buy a specific good or service. The Seller is able to produce such goods or services. The Marketplace acts multiply to facilitate the transaction between the Buyer and the Seller.
Depending on the industry or vertical that the Marketplace serves, you can apply different business models, i.e., ways to make money.
Here below, you can find 24 business models applicable to marketplaces.
1. Seller One-Time Access Fee
Make the Seller pay a fee to access the Marketplace as a one-off payment fee.
In this case, the Seller pays the price to be able to access the platform forever.
2. Buyer One Time Access Fee
Make the Buyer pay a fee to access the Marketplace as a one-off payment fee.
In this case, the Buyer pays the price to be able to access the platform forever.
3. Seller Subscription Fee
Make the Seller pay a fee to access the Marketplace as a recurring payment fee.
The Apple App Store is an example. In order to publish their application, developers must pay an annual fee to Apple.
4. Buyer Subscription Fee
Make the Buyer pay a fee to access the Marketplace as a recurring payment fee.
Netflix is an example of this model. It may seem strange, but Netflix is a marketplace where the exchanged product is the video content. Those who want access to this "merchandise" have to pay Netflix a monthly subscription.
5. Seller Transaction Variable Fee
Make the Seller pay a variable fee for each transaction.
On Fiverr, a marketplace for technology services, the Seller pays a fee of 5% of the service sold if it exceeds $40.
6. Buyer Transaction Variable Fee
Make the Buyer pay a variable fee for each transaction.
On Deliveroo, a food delivery service, the Buyer pays a shipping fee that generally varies depending on the restaurant's distance from which he is ordering.
7. Seller Transaction Fixed Fee
Make the Seller pay a fixed fee for each transaction.
On Fiverr, the Seller pays a fee of $2 for the service sold if it does not exceed $40.
8. Buyer Transaction Fixed Fee
Make the Buyer pay a fixed fee for each transaction.
The Marketplace can charge a fixed fee for each successful transaction to the Buyer.
9. Seller Offer Fee
Make the Seller pay for each offer send on the platform.
Home Advisor, an home services platform, charges for each leads sent to the contractors, usually between $15 and $60+ per lead.
10. Buyer Request Fee
Make the Buyer pay for each offer send on the platform.
Dribbble, a platform for web designers, charges a fee for every job proposal posted in the jobs section.
11. Seller Featured Listing Fee
Make the Seller pay to feature their offerings above other sellers.
Booking, a booking platform of Hotels, allows hotels to activate the Genius discount for customers, which gives them the status "Genius."
12. Buyer Request Featured Fee
Make the Buyer pay to show their request above the other requests.
On Upwork, a technology services marketplace, buyers can "boost" their job application after creation.
13. Seller Elevated Status Fee
Make the Seller pay a fee to get a specific status to be recognized on the platform.
It is generally in your Marketplace's interest to minimize any friction between the Buyer and the Seller. Still, you could charge a fee to the Seller to obtain a specific status. Such statuses could give more trust to the Seller, such as "Verified," "Pro," "Fast Delivery," or others.
14. Buyer Elevated Status Fee
Make the Buyer pay a fee to get a specific status to be recognized on the platform.
As in the Seller's case, the Marketplace can charge a fee to the Buyer to obtain a specific status. This status can give him preference or precedence over other buyers.
15. Seller Management Fee
Make the Seller pay a fee to get a management service to optimize their performance on the platform.
The Marketplace can charge a fee to the Seller to organize the sale of the service or product he wants to sell from the Marketplace.
16. Buyer Management Fee
Make the Buyer pay a fee to get a management service to optimize their performance on the platform.
On Upwork, a technology services marketplace, the Buyer paying a fee may have someone looking for the most appropriate sellers for the request made.
17. Data resale
Sell the data of the buyers and/or sellers to third parties.
18. Advertising
Sell advertising spaces in the Marketplace to third party advertisers.
Facebook Marketplace is an example of a Marketplace in which third-party advertisements are also displayed.
19. Buyer Revenue Share
In case the transacted asset is an investment, charge to the Buyer a percentage of the returns.
This case is different from the Buyer Transaction Variable Fee case, because here the Marketplace has no immediate income, but only futures in case of positive return on investment.
20. Seller Revenue Share
In case the transacted asset is an investment, charge to the Seller a percentage of the returns.
As written just above, the Marketplace has no immediate income, but only futures in case of positive return on investment.
21. Leasing
Give financial support in terms of leasing to the Buyer to afford the goods or services of the Seller.
In this case the Marketplace also acts in some way as a Bank. There could be licenses to be obtained in order to carry out this type of Business Model. A solution to circumvent regulatory restrictions is to work with technology partners specialized in these services.
22. Lending
Give financial support in terms of lending to the Buyer to afford the goods or services of the Seller.
As written above, licenses may be required.
23. Licensing
In case the goods are licensed from the Seller to the Buyer, charge a licensing fee.
24. Mixed
A mix of any of the Business Models previously described.
Most of the above examples use a mixed business model.
How to choose the business model to use for your Marketplace is not the purpose of this article. However, a good starting point is to apply the microeconomic model of price discrimination.
