Marketplace Model
Definition
Marketplace Model: A marketplace model connects buyers and sellers, facilitating transactions between them rather than owning inventory or delivering services directly. Marketplaces face the chicken-and-egg problemāneeding both supply and demand simultaneously. Revenue typically comes from transaction fees, subscriptions, or advertising.
Example Usage
āOur marketplace takes 10% of each transaction. We focused on building supply firstāonce we had great sellers, buyers followed.ā
Common Misconceptions
Related Terms
Platform Business
A platform business creates value by facilitating interactions between two or more user groupsārather than producing goods or services directly. Platf...
Network Effects
Network effects occur when a product becomes more valuable as more people use it. Direct network effects mean users benefit from other users (social n...
Transaction Fee Model
A transaction fee model charges a percentage or flat fee on each transaction processed through a platform. Common in marketplaces, payments, and finan...
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