11 January 2022
The opportunities offered by the marketplace model are no longer in question. In addition to increasing the visibility of sellers, the marketplace is favoured by consumers, who are looking for a wider choice of products at the best price. As a result, the growth potential of the model is attracting an increasing number of entrepreneurs. But beware: anyone who wants to take on this new challenge must first make sure that their marketplace is financially viable. Here are 5 tips on how to do this.
The financial profitability of your marketplace depends largely on your business model. Therefore, make sure you adopt a remuneration model adapted to your sector of activity. Depending on whether you offer goods or services, the financial model will not be the same. Different business models are possible, among the most common:
While the commission is the most common practice, financial models can be combined. To create a profitable business plan, consider the specifics of your project while keeping in mind that your goal is to attract as many sellers as possible to your marketplace.
To ensure the profitability of your marketplace, one thing is essential: recruiting sellers who offer a consistent, high-quality, and attractive offer, to generate demand. In this respect, the onboarding of merchants is a fundamental step: your suppliers must become full members of your marketplace. To do this, you need to:
Liquidity is an excellent indicator to ensure the profitability of your marketplace. There are two types of liquidity to measure:
The second indicator that is worth measuring is the buyers/sellers ratio, in other words: the number of buyers that a seller can serve over a defined period. If a marketplace has to offer a wide range of products to attract consumers, its profitability requires harmony between supply and demand. This ratio allows maintaining an optimal balance between the number of sellers present in the marketplace and the number of customers.
As long as customers have not validated the payment, they can change their minds. By the way, you should know that 20% of buyers abandon their shopping carts because they don’t have enough confidence in the security of the payments. For your marketplace to be profitable, make sure you optimise the conversion rate of your payment page. It is essential to reassure your buyers about the security of your platform to encourage transactions. To do this, there are several tips:
In particular, you can reassure your buyers by communicating about the 3DSV2. Mandatory since April 2021, the 3D-Secure Version 2 system requires strong authentication of buyers, thanks to the combination of at least two authentication factors. If this secure procedure allows you to limit the risks of fraud and to protect your customers’ banking information, it implies a change in the payment path for your end-users, which can result in an interruption in the payment process...It is therefore essential to inform and enlighten the end-users about this secure payment process to reduce the risks of abandonment.
Read also: 3D-Secure v2: What changes for you?
To prevent your customers from abandoning their shopping carts, it is essential to deploy appropriate payment solutions. For example, adapt your payment methods to the specificities of your sector and offer different currencies to facilitate the European shopping experience.
If your payment solution must be fluid and reassuring for buyers, it must also allow you to monitor and report on your activity. So, make sure you adopt a tool that allows you to manage the payment flows of your marketplace, within a regulatory framework that complies with the standards in force.
The best way to ensure the profitability of your marketplace is to create a business on your platform and simplify transactions. To help you in this process, Lemonway will manage your payment flows. A project? Any questions? Tell us about your needs!
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