Questions

What are some of the different marketplace monetization models for selling second-hand collectibles?

I'm building a marketplace to sell second-hand collectibles (like miniaturas, cards, etc...) and i'm exploring the different monetizing models to approach. Charging a % per item sold seems like ebay and they already sell this kind of stuff, i need a more freemium approach... Could you point me to some more models and information? Thanks!

4answers

Your pricing model should hinge on the fact that the perceived value of services should outweigh the cost associated with it. You can consider looking at online marketplaces like Craiglist, Kijiji, Airbnb, etc to understand various types of business models. However, the approach shouldn't be based on what others are doing. Rather, you should understand your niche, values associated with the niche, and adopt appropriate pricing model.

Invest your time in designing the business model for your startup, followed with reviewing it vis-a-vis other models.

Need help with business model? Feel free to reach out.


Answered 6 years ago

Here are a few:

Shopify: First 14 days free, then a transaction fee
StoreEnvy: Completely free for your own private shop, but anything that is sold from their marketplace, they get 10%.
Etsy: $0.20 to list an item, 3.5% transaction fee.

When Etsy started, listing an items was free (just a very small transaction fee when an item sold). You want to get a big enough marketplace to attract buyers, so this is a good idea.

Perhaps you can think about adding optional features for buyers and sellers as an alternative revenue stream.


Answered 6 years ago

Services like Ebay and Amazon steal so much of your revenue in listing fees and selling fees that it can make it very difficult for your business to succeed. However there is a reason that they can charge you, and that is because of the marketing of users they have. Unless you have the traffic it can be difficult to get your products out there.

In your case of second hand collectiables - I would look at sites like WIX or Bandzoogle - that for a monthly set fee $20 you an use their templates to create your site. The massive bonus being that you can upload as many products for sale as you want and they wont even take a cent of your sales.

But this doesn't resolve your problem of traffic - there a number of strategies you could implement, the first I think would be using social media to connect with very targeted users. Directing your marketing to your target market is a key to success.


Answered 6 years ago

Some of the different marketplace monetization models for selling second-hand collectibles are as follows. You can apply some if not all of them
1. Commission
If a marketplace enables commercial transactions to happen directly on the platform, then a commission, a %-age cut of the transaction, is the most straight-forward and popular way to monetise. Some of the most successful marketplace companies in the world, like Booking.com, Ebay, Etsy, Delivery Hero or Uber make an extensive use of this business model. Commission on physical product sales will typically be much lower than commission on services, where inventory is lost entirely if not sold, or on digital products with no marginal costs to serve, like photo stock. Boris of VersionOne and others recommend marketplaces to start with a commission-based model and only pivot into other strategies if straight commission does not work at all or well enough.

2. Listing Fees
In addition to charging a transaction-based commission fee, many marketplaces also charge listing fees. A listing fee is a simple fee for making your product / service available on the marketplace. To be able to successfully charge listing fees, a marketplace needs to have a size that is significant, and the suppliers have a hard time ignoring it. In addition to charging 3.5% of the selling price and $0.20 listing fee, they also monetise through several other services.

3. Premium listings
Some marketplaces charge fees for making vendors’ offerings more visible, most often through ranking them higher in search results. Another example of a business for which premium listings are the key business model, are ‘yellow pages.’ In general, premium listings are effective for marketplaces on which no transactions happen on the platform. Like listing fees, the ability to charge for premium listing increases with scale. Premium listings probably only make sense as the main element of a business model for large, horizontal marketplaces. Premium listings in the search results of Pizza.de.

4. Variable commission and variable premium listing fees
It might be smart for a commission or premium listing fees on a marketplace to not be a fixed %-tage. For example, a seller might want to opt to pay a higher commission or higher premium listing fees for an increased chance to make a transaction happen. In this case, a platform could list the seller higher or conduct additional marketing activities for the seller. Booking.com lets the suppliers override the regular commission and thus get a stronger presence on the platform. Google was probably the first company to perfect the variable premium listing fees model. At scale, variable commission is probably the smartest and most optimal way of monetising a marketplace. First results on google are paid premium listings, provided they have a minimum quality score.

5. Subscription/SaaS fees
SaaS enabled marketplaces are a relatively recent phenomenon. Docplanner offers an international review, search and booking platform for doctors. Docplanner monetises primarily by charging doctors a monthly fee for using the software solutions integrated with the platform. Larger transactional marketplaces, like Ebay, can be able to charge sellers subscription fees for the mere fact of being present on the marketplace. This seems very rare to me, and only works well for marketplaces commanding very large market power.

6. Charging the demand side
Fees on marketplaces are typically applied to the supply side, i.e. the merchant is charged for offering and selling his or her products and services. However, sometimes the opposite strategy can make sense too. The gravity of ‘which transaction side has the money’ dictates how monetisation works best. This is how Care.com summarises its mission and business model. Another example of charging the demand side would be Takeaway.com charging an extra fee to its users for online payments. This is rare, as most marketplaces see value in having users pay online and, not to discourage the demand side, push the costs of payment onto suppliers. Takeaway.com charging EUR 1.22 for credit card payments. However, it might make a huge difference in perception and thus in conversion rates, whether you ask the seller to pay you from the money they receive, or the buyer to pay you in addition to what they pay to the seller.

7. Payments
Enabling payments between parties to happen on a transactional marketplace is a great way to increase stickiness and offer a smooth experience. This is especially the case when the marketplace becomes a net payer, i.e. the pay-outs from the marketplace to the supplier are higher than the fees that need to be paid by the supplier or, put differently, when the %-age of payments processed is higher than the effective take-rate. However, offering payments can also be a good monetisation strategy.

8. Pay-per-lead
If transactions happen outside of the platform, the pay-per-lead model might sometimes be the right one, as outlined in the post by Boris about Thumbtack. The most effective way in which I have seen it executed was when vendors can browse a list of potential customer job requests on a marketplace for free, but if they want to access the contact details of customers, they have to pay a fee per contact or introduction. If individual transactions are relatively small it might make sense for the platform to offer a credits system to its users in which they pre-pay usage and then spend the credits on specific services within the platform.

9. Additional products and services
Once a marketplace have a large pool of participants, it might be wise to offer them further products. These further services do not only offer additional monetisation opportunities, but also increase the perception of the breadth of the value a marketplace can provide and thus improve customer experience and increase loyalty. For other marketplaces, ads can be a nice additional revenue stream and even Amazon is experimenting with ads.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath


Answered 3 months ago

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