What business model should you choose for your B2B marketplace?

B2B marketplaces act as intermediaries between sellers and buyers. This delicate position of intermediary offers only a few possibilities in order to become a profitable business. Here are the two main business models for B2B marketplaces.

Commission based model

The first business model is probably the most popular one as it adapts to almost all industries. This model consists of charging commissions on all transactions happening on the marketplace. The operators defines a percentage that he will withdraw on the amount of each order.

This model is used by many famous B2B marketplaces such as Alibaba or Fiverr.

As mentioned earlier, this model can be adapted to almost all industries. Nevertheless, it will be risky to apply this model to industries with very low margins. The choice of the percentage is highly important in order to attract enough sellers on your platform. Sellers will only be attracted by your platform if they are sure that it will be profitable for them.

Subscription based model

Charging subscription fees (either monthly, yearly, or any other duration) is the second option for B2B marketplaces. This option will be highly appreciated by sellers planning on making a high business volume on the platform and will motivate them to add more products and animate the platform.

In addition, this model allows the operator to define several offers in order to give a wider choice to sellers. For example, the operator could define three offers: a free offer allowing only ten products on the marketplace, a basic offer at $50/month to add 100 products and a premium offer more expensive with unlimited access to the features. That way, sellers can choose how they want to use the platform and pay the right amount.

Labelcorner is an example of a fashion B2B marketplace based on this model.

Finally, as you can see on the example below, it is obviously possible to design a model using both commissions and subscriptions. The mixed model will allow the operator to define a wide range of offers (from high subscription fees with low commissions to low subscription with high commissions) in order to satisfy all the sellers.

Here, for example, the three options have been defined to satisfy all the types of vendors. A large wholesaler planning on making a lot of volume on the platform will choose the Premium option, whereas a small seller with low budget will prefer the Commission offer.

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