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Marketplace monetisation is something every e-commerce website needs to grasp from the very beginning. A tried-and-true revenue model is a pivotal part of every online marketplace.The most successful online marketplaces generate sustained profit through the following common revenue models:

Commission

This has been the most popular and common revenue model in the e-commerce industry, where sellers are charged a fixed commission rate.

Depending on the product, the online marketplace will charge vendors a commission – Amazon for instance, charges over 3%, according to the product category. Fees are deducted plus taxes and sellers keep the remainder.

Vendors do not have to pay anything until a sale is made and from a marketplaces standpoint, they get to keep a huge piece from each sale made on their e-commerce platform.

Membership/Subscription Fee

This revenue model happens to be the oldest most conventional one. Newspapers and gym memberships typically come under this category.

Website subscribers pay monthly for their chosen services. The New York Times and Financial Times have been incorporating this revenue model for quite a few years now.

The subscription/membership fee model is advantageous because an online marketplace can generate revenue upfront, with no need to depend on internal transactional volume. It is ideally used when an e-commerce business is just launching. Netflix operates on this model as well to generate online revenue from their marketplace.

Listing Fee

An online marketplace can generate revenue by charging shop owners a fee for posting their new listings, rather than charge per transaction. This online revenue model is common for classified ads businesses such as Craigslist.

Etsy also incorporates the listing fee revenue model as an additional income stream. It must be noted that if an online marketplace’s primary goal is to generate leads for other businesses, they should charge providers for gaining access to customers. Thumbtack does exactly that.

Freemium

Under this model, the online marketplace provides access to its e-commerce platform for free, while monetisation occurs through paid premium services. The chief idea here is to reel in users, get them hooked and then provide value-adding services for a nominal fee.

This may be challenging for some e-commerce websites as they must provide a service that users find interesting and worthwhile enough to pay for. If users are provided with just enough access to get hooked, they will have little issue committing to a paid plan in order to continue enjoying the value-driven features. Adobe Flash and Magento are standout examples.

Featured Listings & Ads

Vendors who want their products to stand out among thousands of other products on an e-commerce marketplace, pay to have them appear under the features section of the e-commerce website.

Online marketplaces can generate loads of profit in both the B2C and P2P sphere. In fact, online businesses like Zomato and yelp depend on features listings to keep their annual revenue steady.

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