Take a look inside the online marketplace business model. We use the online marketplace business model canvas to explain how it works.
A business model canvas is a way to easily break down a business idea or concept onto a one-page plan. So, its a useful tool for any online business looking to start or grow online.
There’s a variety of business model canvas designs. The two most commonly referred two one’s are:
- Lean Startup Busines Model Canvas by Ash Maurya and
- Business Model Canvas by Strategyzer which is designed to work with the Value Proposition Canvas.
Both are good.
As this website and blog is dedicated to financial independence and includes looking at ethical online business models, I’ll also drop in a reference to the Mission Model Canvas – for mission driven organisations (not for profit).
What is an online marketplace?
It is a website that brings together many different sellers in one place. Think of your old-fashioned village market.
An online marketplace can be based on:
- A place (i.e. a buy local, support local marketplace)
- A particular type or style of product (i.e. artisan, jewellery, software, secondhand, services)
- A common audience (i.e. business, startup, artists)
Famous examples (the big ones) include: Etsy, AirBnB, Amazon, Gumtree, Ebay.
There are also less famous ones like:
- Flippa where you can buy and sell websites online.
- Fiverr where you can buy ‘gigs’ (services).
Buy and sell ‘group’ marketplaces on Facebook are another example. Although not often monetised to make a profit.
Online marketplaces as an online business model
According to ShareTribe there are six different marketplace business models that most online marketplaces use:
- Commission – for example Etsy, Fiverr and some of the most well-known online marketplaces.
- Membership/subscription fee – think of dating sites as an example, they value they offer is a targeted audience.
- Listing fee – Gumtree has free and paid listings for example.
- Lead fee
- Featured listings and ads – classified sites often do this.
The online marketplace business model canvas is a good way to look at which is the right option for your business. It will also help you plan and set your business goals and value proposition for your online business.
Choosing one of the above will be key for the ‘Revenue Streams’ section of the business model canvas.
Business Plan versus Business Model Canvas
The business model canvas is a great ‘plan on a page’. It doesn’t replace the detail in a traditional business plan. But when you are doing:
- rapid ideation and innovation,
- testing and validating new business ideas quickly
- brainstorming business ideas
Its a very useful tool, and can be used collaboratively.
Why you need a business model canvas for any online business
There is no business in your business model without revenue. Revenue is like oxygen. While you don’t live for oxygen, you need oxygen to live. Your world-changing idea is the same.
Before rushing to build, make sure that the underlying problems you identified in the previous step represent a monetizable problem worth solving… Time is your scarcest resource. Spend it wisely. – LeanStack
You can download Ash Maurya’s business model canvas here. It’s been reviewed, refined and modified over the years. The template from live plan is simple for any online business.
What does an online marketplace business model canvas look like?
There are already some great examples that have been done. So, I’ll focus on building on how you can adapt these for your online marketplace business.
Check out the examples here:
- The Etsy online marketplace business model canvas. – thanks to the Business Model Analyst.
- Air BnB business model canvas – thanks to Juggernaut.
- Amazon business model canvas
We’re in the process of setting up our own marketplace website, so that we can do a quick test and validate (or not) a business idea. The website is Mornington Peninsula Makers.
We look forward to building out this post, and sharing the online journey with you.