Marketplaces

Platform economies
Background

A marketplace connects buyers and sellers through a centralized platform with the purpose of helping both parties to facilitate transactions. This can take shape as the local shopping mall but is also available through the phone in your pocket.

Resilient when reaching large scale

The marketplace's business model has proven to be resilient to competition while reaching large scale since marketplaces are built on the premise of buyers and sellers transacting with each other. When a marketplace is launched, it has neither buyers nor sellers, making it difficult for new entrants to compete against such a business while already established.

The Network Effect

Since the core of a marketplace is supply and demand, it is also getting stronger when both sides grow - also called The Network Effect. Amazon, Alibaba, Airbnb, and Uber are a few examples of companies operating as online marketplaces. All of these are some of the world's most valuable companies - which clarifies the strength of the marketplace business model.