So How are online marketplaces generating profit? There are multiple revenue generation channels in different online marketplaces. Here are a few common ones:
Commissions have been by far the most traditional method to generate revenue for marketplaces where they act as an intermediary between service seekers & service providers.
Implementing this pricing model works wonders when you have a lot of vendors or sellers in your portal.
Subscription based revenue model is also a popular concept, which surfaced with the evolution of eCommerce sector.
In the case of the subscription model, vendors get listed on your marketplace for a fixed period of time in exchange of a fixed fee (monthly or yearly). The benefit of this pricing model is – it doesn’t matter how vendors or sellers are performing on your marketplace, you’ve got your back covered with a fixed monthly/yearly source of revenue through a subscription fee.
The marketplace owner also can earn money by listing some sellers’ products at the top of the home page.
Advertisement is another traditional method to generate revenue in an online store. The marketplace owner can earn money through Google Adsense ads, banner ads, email marketing, etc.
In addition to above revenue generation channels, the marketplace owner also can earn money with the following ways:
- Selling their own products.
- Selling paid subscription services like Amazon Prime.
- Affiliate programs.
So there are many ways to earn money in an online marketplace.