Marketplace eCommerce

The Marketplace Business Model: Online Marketplace Advice for 2024

Published April 18, 2024  |  12 min read
Key Takeaways
  • An online marketplace is a website or app platform that allows buyers and sellers to come together and conduct business transactions. The marketplace usually takes a commission from each transaction, providing a central location and an easy way to buy and sell goods, services, digital products, or other items.
  • There are six primary marketplace business models and revenue strategies: commission, freemium, listing fee, featured listing fee, lead fee, and subscription.
  • The online marketplace business model offers many advantages, including excellent profit margins (without keeping inventory), the ability put resources into improved marketing and customers' needs, data collection, and easy scalability.
  • Most marketplaces are consumer-to-consumer (C2C), but they can also be business-to-business (B2B) to meet the needs of industries.
Marketplace model advantages list illustration.

The marketplace business model continues to grow in almost every sector, especially in the service industry and in niche markets. More and more businesses have seen just how lucrative this online marketplace business model can be, and just how many ways there are to make money with very little risk.

In this article, we explain how you can make money in an online marketplace without keeping stock, hiring shipping staff, or dealing with many of the other expenses associated with a traditional online retail business model. We'll also let you know what you can do to bring your marketplace idea into reality.

Online marketplace developer.

The Marketplace Business Model: A Definition

A marketplace business model is a type of eCommerce platform in which multiple parties—buyers and sellers—interact with each other. This model has become increasingly popular over the years due to its ability to offer products and services from many different providers at once. Sellers compete with each other, and buyers get a better deal.

With a marketplace business model, consumers can find a variety of items without having to go to multiple online stores. The company providing the platform earns money through fees charged on transactions, commission fees, and offering premium features to buyers and sellers. Let's talk about what the right business model is for you and how you can take advantage of more than one at a time.

Using a marketplace business model illustration.

Types of Marketplace Business Models

One reason creating marketplaces is so popular is that there are many ways that the platform facilitates growth and profit. A marketplace website can start with one primary revenue model and then add more as it grows and addresses user demands. This could mean starting out with free listings and then offering other free and premium features as the website grows.

Let's take a look at the most common revenue models: the commission model, the listing fee model, the featured listings model, the subscription model (membership fee model), the lead fee model, and the freemium model. You'll get to choose which revenue models are best for you; mix and match to the needs of your particular business model.

The Commission Model: The Most Common Way to Make Money

While Amazon is a huge retailer, they're also one of the largest online marketplaces in the world. The company houses less than half of the products it sells in its own warehouses; the other half is sold and shipped by its marketplace partners, and Amazon takes a cut as the middleman—a commission. Other companies that utilize this include Etsy, Alibaba, eBay, Uber, Airbnb, and Angi (formerly Angie's List).

A commission revenue model is a system in which an organization receives payment for the goods and services it provides by taking a percentage of sales or commissions. This monetization model is often used by companies that offer products or services through third-party providers, such as affiliates or agents.

This type of model allows companies to save on overhead costs while still making money from the sales they generate. The commission rate is usually a percentage of each sale made.

Listing Model: Paying a Listing Fee Per Offering

A listing model often accompanies the commission model. Sellers agree to pay a listing fee for every item they upload to the platform.

The listing model is an attractive option for sellers offering high-ticket items; vehicle marketplaces and real estate marketplaces, for example. With scarce resources, this method allows them to maximize profitability by having multiple product listings.

Listing marketplaces are an attractive option for providers seeking greater visibility. However, pricing the listing fee appropriately is critical to ensure sellers will list on their platform.

Buyers and sellers on an online store that's charging listing fees.

Featured Listings: Put a Spotlight on Items

In addition to basic listing fees, sellers have the option of paying extra to feature their listings in various marketplaces as a way to stand out from similar products and services. Featured listings could be in banner ads on the marketplace platform, ads placed off-site, "customers also purchased" links on other product pages, and even in emails that the marketplace business sends out.

Featured listings are an excellent add-on to the marketplace model and can easily be incorporated at launch of the online marketplace. Clarity Ventures can help you make it happen.

Subscription/Membership Fee: Regular Income

With the subscription model—also known as a membership fee model—businesses can provide users with an enduring value proposition. Not only does their monthly subscription fee get them access to tools that help draw in new clients, but they also offer an opportunity for cost savings and unique experiences.

The subscription model can also offer a free trial period as part of their business model. The customer pays only if they continue using the services and loses it if they fail to renew. Of course, there's also the monetization model requiring a credit card on file so they can be charged automatically if they don't cancel.

Subscription model premium features available to users.

Freemium Model: Only Give Some of It Away

A marketplace freemium model is a pricing strategy used by companies to entice users to use their products and services. This model allows basic versions of their products and services to be offered for free, while more advanced features are available for a fee. Many users pay because they see the value proposition of the software/services you offer.

By offering this type of pricing, companies can acquire new customers quickly and easily, as well as generate revenue from those who want access to more advanced features. The freemium model can then turn into a subscription model and offer premium features.

Lead Fee: Finding Others What They Need

A lead fee business model is a type of commission-based business where the marketplaces generate revenue by charging third parties for leads. This can include paying per-click rates or paying a one-time flat fee for each sale they refer to the third party.

Third parties can also be charged fees for extra services such as analytics and customer support. In some cases, marketplace platforms may even offer deals and discounts with third parties to incentivize them to join their platform.

Lead fee model pay per click illustration.

What Are Examples of the Marketplace Business Model?

The most successful examples of this model are Amazon, eBay, Etsy, and Alibaba. All four platforms allow users to create an account, list products or services for sale, and search for what they want to buy. Each transaction is subject to a commission fee charged by the marketplace platform.

The same is true for service marketplaces such as Uber and Airbnb. A service marketplace will bring sellers and buyers of services together. This could be home services that offer plumbers, roofers, and electricians. It could also be medical services that bring doctors together with patients. In the case of Uber and Airbnb, each makes use of the gig economy to bring people with resources—a car or an extra room—together with those who need to use them for a limited amount of time.

Marketplace businesses selling physical items or services.

The Advantages of the Marketplace Business Model

For entrepreneurs looking to start a business, the online marketplace model offers advantages far beyond those of traditional retail stores. By cutting out overhead costs associated with physical storefronts, the potential for profits increases dramatically. Having several revenue streams is another advantage that many eCommerce platforms can't deliver.

Customers also gain access to an expansive selection from around the world and can compare price points in a secure environment. Merchants also benefit by reaching new audiences while establishing brand recognition and fostering customer loyalty.

Let's take a closer look at each revenue model and why successful marketplaces are becoming more common.

A Marketplace Business Doesn't Keep Inventory

A business that has no inventory but still makes money? Sounds pretty good to us.

With the traditional eCommerce business model, the business must have inventory on hand to sell to customers and have a CRM/ERP that can deal with intake and warehousing.

There's also the cost of the warehouse itself to keep this inventory, whether it's a rented space or purchased outright. Dealing with overstock or expired products (whether expired food products or items that have gone out of fashion) is also eliminated.

Shipping is another aspect the online marketplace business model doesn't have to deal with. No inventory means no shipping, no shipping staff, and no returns. The only aspect of shipping a marketplace business has to deal with is the shipping software that helps your users ship to each other.

Excellent (and Safe) Profit Margins

Would you rather buy something for $90 and sell it for $100, or let someone else sell something for $100 and take $10 as your commission?

The answer is obvious. If you are buying and selling items yourself, you have to deal with all of those inventory and shipping issues we mentioned above. But if someone is on your marketplace and (essentially) selling for you, you don't assume the risk.

Business models like the commission model make profit margins safe, and when you add additional selling fees like listing fees and other paid services, it's a better value proposition than many traditional eCommerce website businesses.

Focus on the Customers

When you don't have to deal with inventory and shipping, those resources can be focused on other important aspects of running the online marketplace. A primary goal of any marketplace is to improve customer satisfaction at every opportunity.

When developing online marketplaces, owners put considerable effort into researching the needs of the customers they will serve—both buyers and sellers. But no amount of research will give you the information that you'll have once you launch and start dealing with users in real-world situations.

Once you have this information, the marketplace business model lets you put your resources into changing the platform to meet these needs. Many traditional B2C and B2B eCommerce platforms stumble because they can't re-invest in their platform; so much money is tied up in inventory.

Make Good Use of Data

Your marketplace platform will generate a lot of data, and that data is valuable and can help you remain competitive. You'll learn about customer purchases, what makes them repeat purchases from a buyer, which sellers are selling the most, how buyers navigate your site, and hundreds more metrics that can be customized to your needs

You can make good use of this data by using artificial intelligence (AI) and machine learning to make your marketplace app and website better. You can even anonymize customer data and charge sellers a small fee to help them sell better.

More Money Into Marketing

Speaking of having money to improve the business, marketplace business models allow a marketplace to spend its money on marketing the platform. After all, the two primary jobs of such a marketplace are to a) provide the platform, and b) bring users to the platform.

In other words, you can't just launch a consumer-to-consumer site like a marketplace and expect people to show up. The main challenge of a successful marketplace is to bring customers to the site, both sellers and buyers. It's a business plan that works, but it must be followed so that the site doesn't flounder.

Marketplace Business Models Scale Easily

Plan for future growth when selecting your marketplace software platform. An investment in the right platform can make it easy to scale your business as it takes off, allowing you to quickly add thousands or even millions of listings with additional Cloud servers. When doing your research on marketplace eCommerce platforms, make sure you choose a platform that can scale with your needs.

With no money tied up in inventory, incoming funds can be reinvested back into the business and used to grow instead of renting more warehouse space and hiring more shipping staff. You'll be able to plan for 10X growth if your business takes off quickly, without outgrowing your platform before you know it.

Business Grows Business

You'll have to market throughout the life of the platform, but once you get going, some of the marketing takes care of itself: word of mouth.

A marketplace can reach its full potential through the power of increased user numbers. When users are satisfied with a platform and feel they are saving money, they will naturally spread the word to their network and draw fresh customers in.

By providing engaging content and relevant benefits, sellers on your platform can tap into an exponential growth cycle that brings new faces in droves!

If You're the First...

...people tend to stick with you.

Once a network is in place, it’s hard for competitors to make an impact and steal your business. They'll need to offer a superior business model or platform that draws your buyers and sellers away, and they'll have to spend money to outdo your marketing and branding as well. Achieving similar success requires immense resources and considerable time investment.

It's true, your new competition has the advantage of seeing what you've done, but you have the advantage of watching their mistakes—and drawing on your own—and addressing the needs of the community before they do.

Alternative models for online marketplace.

The Disadvantages of Marketplace Business Models

We are huge proponents of the marketplace business model and consider it just about the best revenue model available. But every business model has its challenges, and we think it's important that you know more about some disadvantages in addition to all the benefits.

Online Marketplaces Capital Costs

A main challenge in creating a marketplace are the start-up costs. These costs are common to most new eCommerce websites, but you can't ignore them all the same.

  • Investing in the Platform — Getting the right marketplace platform is vital and will be a big part in determining your success. Do your research to ensure you find the one that meets your needs.
  • Finding Sellers — You don't want to launch without a large selection of buyers and they items they sell, because you don't want buyers getting to your site and not finding anything that interests them. This will require research, marketing, and onboarding costs before you can even launch.
  • Hiring Staff — While you don't have to worry about hiring anyone to manage or work a warehouse, you'll most likely need staff to manage the website, address problems with buyer/customer transactions, and market your marketplace.

An excellent way to alleviate some of this cost is to launch as soon as possible with a minimum viable product (MVP). So long as the core features are in place and you have many sellers on your site to satisfy buyers, you can launch and start making money. After that, you can add additional revenue strategies and several monetization channels.

Sustaining revenue with trusted buyers.

Seller Problems

As we mentioned above, finding sellers can be difficult...which means that finding quality sellers is even more difficult.

The sellers on your website will be of varying quality; there's not much you can do about that. But you can put steps in place, such as a vetting process, before they're allowed to sell.

Another common method is to create a rating system, often a five-star system where buyers can rate sellers and vice-versa. Sellers that don't perform well or deliver lesser merchandise will often be weeded out by such a system.

Competition Grows With You

The more successful you are, the greater the competition will be. That's just a fact of business and affects business models like marketplaces as much as it does any company in the world.

How do you combat this? Be better than your competition. Be sure to address your customers' needs, constantly improve your marketplace platform, and innovate in every possible way.

Payment Processing Can Be Tricky

As the owner of the platform, you'll want a robust payment processing system in place to make sure every purchase is a successful transaction. Having one in place not only makes users confident in your platform, but also ensures that you get your cut.

When looking for a payment hub, be sure that it can handle the following:

Accept Multiple Payments

Customers may want to pay with a credit card, e-checks, crypto, or via invoicing. The payment system should also offer PCI DSS compliance to protect funds at every step.

Calculate Taxes/Duties

You'll need to collect taxes no matter what, and international buyers will be more likely to buy if they have a good idea of the duties that may be incurred.

Calculate Shipping Fees with Different Carriers

Whether shipping domestically or internationally, APIs can be added to your marketplace platform so that anyone—buyer or seller—can calculate what shipping will be. You can include as many shippers as you want, including UPS, USPS, DHL, FedEx, or freight.


How to Start an Online Marketplace

If you have a marketplace idea—whether it's a B2B, C2C, or B2C marketplace—and want to know if it's viable, we'd like to talk to you about multi-vendor marketplace development. What industry isn't being served? What customers have been ignored by existing business models? Will your marketplace use listing fees, the subscription model, the commission revenue model...or a mix of all of them?

Clarity Ventures wants to hear your idea, and we'll help you create a business plan during a one-on-one, completely complimentary discovery session. We've helped businesses like yours analyze their chosen revenue model and help them find the marketplace eCommerce platform that works best for them. It's a free service, and we're ready to help you succeed. Get in touch today!



A marketplace business model is a type of eCommerce platform where buyers and sellers can interact and transact with one another. This type of business allows for the efficient exchange of goods and services, as well as a wide range of pricing options. It also enables businesses to scale their operations quickly without needing to hire additional personnel or invest in expensive infrastructure.

Marketplace platforms tend to be relatively inexpensive compared to traditional methods of buying and selling, and they can provide customers with access to a greater variety of products from multiple vendors.


Marketplace businesses make money by charging a fee for each transaction that takes place on their platform. This type of business model is typically referred to as a "take rate" model, where the marketplace charges a small percentage of each sale in order to cover its costs and generate revenue.

Some marketplaces may also charge additional fees, such as listing or subscription fees. Additionally, some marketplaces offer value-added services such as advertising or analytics reports, which can also increase their income.


Yes, marketplaces can be extremely profitable when done right. Businesses that successfully leverage their platform to connect buyers and sellers can generate revenue from both sides of the transaction and benefit from the economy of scale in their services.

Many marketplaces find success by offering exclusive products or services that cannot be found elsewhere, which allows them to capture more market share and increase profitability even more.


Here are the most basic steps for starting a marketplace business:

  • Conduct market research to understand customer needs.
  • Establish a reliable payment processing system.
  • Develop relationships with vendors.
  • Ensure your platform is secure.
  • Create marketing strategies to attract buyers and sellers.
  • Build an online presence to make people aware of your business.

Marketplace business models in 2024 is witnessing several emerging trends that are shaping the future of online commerce:

  • Social Commerce Integration: Marketplaces are increasingly integrating social media features to enable direct shopping experiences within social platforms, blurring the lines between social networking and e-commerce.
  • Subscription Services: Many online marketplaces are adopting subscription-based models, offering consumers recurring access to products or services, which ensures regular revenue streams and customer loyalty
  • Niche Marketplaces: Specialized platforms catering to specific interests or industries (such as sustainable fashion, health & wellness, or vintage collectibles) are gaining popularity, targeting niche audiences with unique offerings and solid revenue streams.
  • AI-driven Personalization: Artificial Intelligence (AI) is being leveraged to enhance user experiences by providing personalized product recommendations, tailored content, and efficient customer support.
  • Sustainable Marketplaces: With increasing consumer awareness of sustainability, marketplaces focused on eco-friendly products and practices are on the rise, promoting ethical consumption and responsible business practices.
  • Blockchain in Supply Chain: Blockchain technology is being explored to improve transparency and security in supply chains within marketplaces, ensuring traceability and authenticity of products.

These trends in the online marketplace business model reflects a shift towards more personalized, specialized, and sustainable marketplaces driven by advanced technologies and changing consumer preferences.


The marketplace business model offers numerous advantages, making it a popular choice for both sellers and buyers:

  • Increased Reach: Sellers gain access to a vast and diverse customer base, expanding their market presence and potential sales.
  • Efficiency: The marketplace model streamlines transactions, simplifying the buying and selling process for both parties and fostering a more efficient marketplace ecosystem.
  • Trust and Safety: Many platforms incorporate user reviews and ratings, establishing a sense of trust and safety within the community. This transparency benefits both buyers and sellers.
  • Diverse Offerings: Buyers benefit from a wide array of products or services available on a single platform, providing them with more choices and convenience.
  • Cost-Effective: Sellers can leverage an existing platform, avoiding the costs associated with creating and maintaining an independent online store.
  • Easy Comparison: Buyers can easily compare products, prices, and reviews, aiding them in making informed purchasing decisions.
  • Community Engagement: Online marketplaces often foster a sense of community, allowing buyers and sellers to interact, share insights, and contribute to the overall marketplace experience.

The marketplace business model's advantages lie in its ability to create a dynamic, efficient, and trustworthy environment for commerce, benefitting both sides of the transaction.


The online marketplace business model differs from traditional eCommerce in several key ways. In traditional eCommerce, a single business sells its own products or services directly to consumers through its website. In contrast, a marketplace business model acts as a platform where multiple third-party sellers can list and sell their products or services to consumers. The marketplace facilitates transactions between buyers and sellers, often providing tools for product listings, payments, and sometimes logistics.

This model offers a broader range of products or services from various sellers, providing consumers with more choices and competitive pricing. Marketplaces typically do not own inventory themselves, instead earning revenue through commissions or fees from transactions. This setup allows marketplaces to scale rapidly by attracting more sellers and buyers, fostering a dynamic ecosystem of commerce.

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Stephen Beer is a Content Writer at Clarity Ventures and has written about various tech industries for nearly a decade. He is determined to demystify HIPAA, integration, and eCommerce with easy-to-read, easy-to-understand articles to help businesses make the best decisions.