How Do Marketplaces Make Money? Digital Marketplaces Business Models
Many virtual venues have reached the pinnacle of success. They used a certain business model to make their products or services popular. Look at Amazon, Airbnb or Uber. These marketplaces are incredibly in-demand, and their customer turnover is hundreds of thousands of people. But if you are starting your online business, then you should study business models in detail to find out how online marketplaces make money.
Top 5 Online Marketplace Business Models
The success of your business directly depends on your efforts. And internet marketing is no exception. Using these ways, you will be able to show customers that your product is unique so that they really want to buy it. One of the goals is to increase the traffic of your internet portal which results in better performance. Let’s take a closer look at the top 5 business models that will help you increase your income.
This model is one of the most popular. You know for sure the following brands are already using this type of model: Booking.com, Aliexpress, and so on. The commission model implies that the marketplace takes a commission for each transaction. For example, when you order food through a delivery app, the restaurant pays a commission on the amount of your order. The amount can be different: a fixed, a specific percentage, or a floating commission, which may depend on the size of the transaction. But many platforms charge a commission based on the size of the business or volume of sales to keep the pricing plan flexible and logical.
You have also seen such a model at some large virtual venues. The peculiarity lies in the fact that the seller or the buyer (or both) pay a certain commission for using the web resource. Of course, such a marketplace must be successful, popular and valuable enough that people agree to pay for it once a day, a month, or a year. The difficulty is to attract people to such a platform. It is best to offer them a demo so that they have enough time to get used to the marketplace.
Listing Fee Model
The bottom line is that you can display your products or ads on a specific marketplace. Such a service will be paid, but you will be able to advertise your products on platforms with good traffic and a flow of potential customers. The platform administration sets tariffs and receives excellent income. Your advantage is advertising your product.
The business model of pay-per-lead marketplaces is based on payments from sellers. They use the platform for free, but pay when they find buyers. The difference between the commission model is that usually the transaction does not go through on the marketplace: the platform simply provides customer contacts. Sometimes it happens that the seller pays the marketplace only after the transaction has been completed, but usually this is not a commission percentage, but a fixed price per lead. This is convenient, but it’s important to remember that when you’re selling leads, your biggest risk is losing clients.
This is Free + Premium, that is, free + premium access on definite resource. This is a model where the marketplace offers basic functionality for free, but there is also a paid premium plan with additional options. You have already seen such a model, for example, YouTube. That is, you have free access to the portal’s video library, but each video starts with annoying ads. If you want to remove it, then pay a certain tariff. Another example is Spotify, you can listen to music without a subscription, but for a monthly fee you get premium quality tracks, unlimited song skips, no ads, and more. The main difficulty of this business model is to motivate users to buy premium features, as well as determine what features people are willing to pay for.
Of course, any portal needs to be improved and promoted. But if the business model is chosen and applied correctly, then you will get the desired result. If you find it difficult to manage your business on your own, then it is better to find the help of a professional team, for example, Roobykon. Don’t worry, a business model is not chosen once and for all: you can change it or combine it with another one.