Business models
The marketplace business model
The marketplace business model: you connect buyers and sellers, and take a cut when they trade. The company usually takes a commission on each sale, a listing fee, or both.
How it makes money
The company usually takes a commission on each sale, a listing fee, or both. It holds no stock, but it must solve the problem of having enough sellers and buyers at the same time.
Real examples
- Airbnb connects hosts and guests.
- Etsy connects makers and buyers.
- Uber connects drivers and passengers.
The numbers to watch
- Gross merchandise value: the total traded
- Take rate: your share of each sale
- Share of listings that actually sell
Who it fits
Fragmented markets with many small sellers and buyers who struggle to find each other.
What goes wrong
The chicken and egg problem: no buyers without sellers, and no sellers without buyers. Start small, in one city or one niche.
Try it this week
Pick one very small market and find 10 sellers by hand, before you build anything.
Then give it a time: one block of 90 minutes this week, in your calendar. Our playbooks have the next steps for finding your first customers.
Questions
What is an example of the marketplace model?
Airbnb connects hosts and guests.
What is the biggest risk with the marketplace model?
The chicken and egg problem: no buyers without sellers, and no sellers without buyers.
Plan your first week of building it
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