Marketplace: How to Define Your Business Model and Generate Revenue?

Marketplaces are everywhere. In BtoC, BtoB or even CtoC, they concern all sectors of activity and all types of products and services.

 

Despite their own specific aspects, the vast majority of marketplaces share “best practices” in terms of revenue generation, which are today perfectly understood and accepted by users who buy and sell on the marketplaces.

 

We propose, through this article, to share with you different areas of monetization allowing you to establish your economic model in a pragmatic and effective manner.

 

Why should I define a business model and how to do it?

 

Defining your economic model will be more than a remuneration plan, but a real strategic tool that will allow you to optimize your growth and development by making the right decisions.

 

 

How to define your business model?

 

You will mainly need:

 

Analyze your market: On this point, it is important to focus on three essential points.

 

• Your priority, your users! It is essential to understand them, to understand why and how they consume, and especially what they are used to paying to access services. A misunderstanding of this last point will ruin your efforts.
• Work on your value proposition in order to get your compensation model accepted. If you don't have the ability to legitimize your marketplace, you won't be able to get people to accept paying to take advantage of what it has to offer.
  
• Study your competitors, and take the time to dissect their business models, by establishing comparative tables for example. Your future customers are already on these platforms, and getting them to switch to yours requires not changing their habits too much, particularly in terms of costs.

 

Analyze the cost structure: If you don't know how much your activity costs you, then how do you propose fair prices so that everyone can understand? You must consider all of your costs, whether they are HR (development, sales, marketing, support, etc.), advertising (campaigns, SEO, SEA, SEM, etc.), technical (hosting, certificates, infrastructure, etc.), commercial ( CRM, telephony…) …. In short, all your costs must be identified.

 

Analyze your sources of income: By fully understanding the two previous points, you will have a much better vision of what is possible or not possible to do. Commissions, transport, subscriptions… You will then know how to choose your monetization axes.

 

Your business model is the basis of the trust your users have in your marketplace

 

The business model is the backbone of your activity, and will allow you to have a clear, concise vision that is easily understandable by your users. Defining your business model also means avoiding creating friction with your buyers and sellers, while minimizing the frustrations that they will undoubtedly feel if they do not have the ability to understand your organization of usage costs. .

 

A good business model is mandatory for the economic viability of your marketplace

 

Even if it seems logical, your business model must allow you to cover the charges and other costs incurred by the activity. If you don't take the time to list your costs and consider the levers for monetizing the services you offer and study their ability to cover them and generate profits, you will inevitably start to lose money. blind in your activity.

 

In addition, this consideration of financial viability will allow you to align your different objectives (commercial, marketing, technical, etc.) in order to focus on actions with high added value. Remember that being distracted is the best way to achieve nothing.

 

Take your business model as a management tool

 

As mentioned above, your economic model is a guide, a decision-making aid. By taking its impact into consideration when you define your objectives, you optimize your ability to make the right decisions, in the short, medium and long term. This will allow you to allocate the right resources to the right projects, to decide on your decision-making, and to direct your investments.

 

 

What are the different remuneration levers that a marketplace can put in place?

 

There is a wide variety of services through which to generate income. Keep in mind, however, that your business model is not set in stone. It is important to carry out regular tests, in order to always optimize it and find the best compromises between your income and the costs incurred by your users.

 

Commissions

 

Commission charging concerns almost all marketplaces, regardless of size or sector.

Commissions can be taken from different types of users, and on different services offered:

 

• Commissions on purchases: The buyer will pay an additional commission when validating their basket, at the time of payment.
• Commissions on sales: The seller will reward the marketplace with a share of the sales price of the item or service that he sold on the marketplace.
• Freight Fees: Additional fees are applied to freight, and are paid by the buyer and/or seller.

 

 

The subscriptions

 

Marketplaces can earn money on a recurring basis by offering subscriptions to both buyers and sellers, which combine several services:

 

• Subscriptions to sellers: For example to be able to sell on the marketplace, unlock additional features, highlight their products, access advanced customization options, etc.
• Subscriptions to buyers: For example, access to discounts, have early or priority access to certain sales, access to additional services, “satisfied or refunded” offers, reduction or free of certain commissions or costs (payment, return delivery, etc.)...

 

What the subscription contains is linked to the value we want to give it and the ROI we want to apply to it. However, this subscription logic makes it possible to create recurring income which allows you to have greater visibility on future income.

 

 

Services for sellers

 

There is a wide variety of services that can be marketed to sellers in order to optimize their user experience, but also and above all that of their customers.

 

Here are some examples:

 

• Promotion / Sponsorship: Sellers benefit from the fact that the items they sell are more visible to buyers.
• Personalization: Sellers access personalized displays, for example with unique product pages, “mini-stores” in their image, or even unique payment interfaces.
• Lead generation: Sellers see qualified traffic redirected to them, through campaigns, advertisements, or user journey optimization.
• Transport offer: Sellers can access more logistics solutions to get their buyers delivered.
• Payment offer: Sellers can offer various payment methods, capable of increasing the basket amount and the number of sales, such as payment in installments or deferred payment.
• Withdrawal offer: Sellers can recover the proceeds of their sales in an optimized way, such as with instant withdrawals.
• Promotional campaigns: Sellers can offer campaigns (email, SMS, display on the marketplace, etc.) with personalized promotional codes.
• Priority Support: Sellers gain access to special resources and benefit from faster processing of their requests.

 

Services for buyers

 

Buyers can also be monetized via several axes, which allow them to benefit from an exclusive experience and services that provide greater flexibility.

 

Here are some examples:

 

• Payment offer: Buyers have access to various payment methods, capable of simplifying their ability to complete purchases, such as payment in installments by bank card (3X, 4X, 10X, etc.) or deferred payment. In general, this involves the application of administrative fees.
  
• Loyalty program: Buyers pay monthly or annually to benefit from loyalty benefits which are decided by the marketplace.
  
• Insurance: Buyers can access various insurance solutions (transport, loss, breakage, theft, etc.).
  
• Delivery and return fees: Buyers can see these fees offered from a certain order amount.
  

 

 

Imagine original services

Despite the fact that a certain number of remuneration models have already been proven and proven, nothing prevents you from being creative and finding new areas.

 

The different sources of remuneration mentioned above can be enhanced with new features, as long as the price/value perception is good for your users, whether they are buyers or sellers.

 

Once again, it is better to test and adapt than to remain immobile.

 

 

With Obvy, easily create your business model and monetize numerous services to boost your marketplace revenue

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Obvy is an all-in-one solution allowing you to equip yourself with the best features for your marketplace, in a simple and economical way.

 

Transport, payment, customer service, user interfaces… Everything is already ready to be integrated, and the configuration tools are turnkey.

 

Obvy allows you to access numerous monetizable services, such as setting up promotional campaigns, personalizing interfaces, setting up subscriptions, a wide choice of payment methods and carriers, support tools and dispute management, as well as dozens of other services.

 

The solution also offers you the possibility of creating commission levels on payments and deliveries in an extremely detailed and flexible manner, to apply different fees depending on your choices, whether this concerns your cohorts of users, your categories of products etc.

 

With Obvy, you easily establish a solid and sustainable business model, constantly enhanced with new features on which you can rely to generate new revenue.