A marketplace is where buyers meet sellers. Traditionally, these were physical places where different sellers used to take their offerings to showcase and sell to the buyers. But the internet has changed the way everything works. Today, many ecommerce giants like Amazon and eBay operate on the marketplace business model.\n\n\n\n
According to Lengow, 60% of sales happen through marketplaces. But what exactly is a marketplace business model? How does it operate? Is it similar to the aggregator business model?
Here is a guide answering all your questions about the marketplace business model.
What Is An Online Marketplace?
A marketplace is a platform where buyers and sellers interact and trade through a network.
The online marketplace doesn’t own any products or services. It simply acts as a mediator and connects buyers and sellers.
In other words, the marketplace business model is a platform that provides value to both buyers and sellers. Sellers get a place to sell their products and grow their brand while buyers are provided with multiple choices and high-quality products all in one place.
Examples Of Marketplace Business Model
Many of the largest companies online run on the marketplace business model. Here are a few examples:
- Amazon: Amazon is one of the most dominant marketplaces. The Amazon marketplace business model means it owns no products. Vendors sell under their own brands, and Amazon takes a commission on each sale. It also earns from seller advertising. Amazon states that more than 60% of its store sales come from independent sellers. Those sellers have generated $2.5 trillion in lifetime sales and employ over 2 million people in the US.
- Fiverr: Fiverr is an online freelancing marketplace. It began with $5 gigs. Today the platform centers on a flat 20% commission per completed order and a vetted tier called Fiverr Pro. Fiverr is not an employer of freelancers. It provides the platform and takes a commission in return.
- eBay: eBay is a leading marketplace for consumer-to-consumer and business-to-consumer sales. Listings run as auctions or fixed-price sales, and sellers list under their own brands. Most casual sellers get 250 free listings per month, then pay a $0.35 insertion fee per extra listing. When an item sells, eBay charges a final value fee of 2.5% to 15.3%, depending on the category. The per-order fee is $0.30 for orders of $10 or less and $0.40 for larger orders. eBay also earns from Promoted Listings ads that sellers pay for.
- AppSumo: AppSumo is a popular online marketplace for digital business tools. Partner companies list their products on the platform and pay AppSumo a commission on every sale.
How Marketplace Business Model Works?
Marketplaces have certain unique features that distinguish them from traditional online stores. Here’s how the marketplace business model works:
Who Are Marketplace’s Customers?
The buyers are the customers of a marketplace, and the platform lets them choose from multiple options in one place. Increasingly, some of those buyers are AI shopping agents making purchases on behalf of people.
Who Are Marketplace’s Key Partners?
The sellers are the key partners of the marketplace as they are the ones who supply products and services to the customers.
But the marketplace has to treat its sellers as another set of consumers. This is because, like the customers, the sellers have a choice to sell at some other platform. Hence the marketplace has to provide equal value to its customers as well as its sellers.
Besides the sellers, the marketplace partners with payment processors, digital computing programs, and sometimes even delivery companies to ensure its smooth functioning.
What Value Does A Marketplace Provide?
The sellers are the key partners of the marketplace as they are the ones who supply products and services to the customers.
But the marketplace has to treat its sellers as another set of consumers. This is because, like the customers, the sellers have a choice to sell at some other platform. Hence the marketplace has to provide equal value to its customers as well as its sellers.
Besides the sellers, the marketplace partners with payment processors, digital computing programs, and sometimes even delivery companies to ensure its smooth functioning.
How Does A Marketplace Operate?
The operating model of a marketplace depends on two basic strategies.
First, the marketplace brand attracts the buyers and the sellers to use its platform and develop a network effect. That is, each party attracts the other party to the platform.
Second, the marketplace provides a platform for buyers and sellers to interact and trade. For a direct purchase, the transaction still completes on the marketplace itself. If a buyer uses Amazon to buy a product, the transaction completes on Amazon itself.
AI shopping agents increasingly make purchases on the buyer’s behalf. A new protocol layer can sit between the agent and the marketplace.
Also, marketplace business model has certain characteristics that distinguish it from other business models:
- A marketplace doesn’t own any products or services. It provides a platform where the buyers and the sellers can interact and provide value to each other.
- There is no standard price in a marketplace. Since every seller is a marketplace partner, he is free to quote different prices for similar products.
- Every seller in the marketplace sells his products and services under their own brand and not the marketplace brand. Sellers use the platform just as a medium to reach the customers.
- The e commerce marketplace business model capitalises on the network effect. Network effect or network externality is a phenomenon where the value of a marketplace increases as its users increase.
What Is Agentic Commerce?
Agentic commerce is shopping done by AI agents. These agents search, compare, and buy products and services on behalf of people. The person sets the goal, and the agent finds the offer and completes the purchase. A Harvard Business Review analysis published on August 7, 2026 frames 2026 as the year AI becomes the customer.
Google is building around that shift with the Universal Commerce Protocol. The protocol is now endorsed by more than 20 companies. Endorsers include Visa, Mastercard, Stripe, American Express, Best Buy, and Home Depot. Google has also launched Business Agent in Search. It is live with Lowe’s, Michael’s, Poshmark, and Reebok. Google is also piloting Direct Offers ads in AI Mode.
Three competing ecosystems have formed. Google supplies a protocol layer, while OpenAI and Amazon run the agents themselves. OpenAI launched Instant Checkout in September 2025, running on the open Agentic Commerce Protocol. Amazon is running proprietary agents of its own. Buy for Me, launched in April 2025, completes purchases from other stores off Amazon, inside the Amazon app. Amazon also uses agents such as Rufus and Alexa+. Elsewhere, Microsoft launched Copilot Checkout, and Shopify enabled agent-readable storefronts by default.
The Gartner projection points to a large shift. It says 90% of B2B purchases will flow through AI agent exchanges by 2028. Those purchases will be worth more than $15 trillion.
What this means for marketplaces is a new traffic source. Agents choose offers from structured product data, not browsing or ad slots, so machine-readable product data is becoming that source. Intermediaries such as Google and payment networks are inserting themselves into the purchase flow. Making a catalog readable to agents is becoming as important as ranking in search or running ads.
How Does A Marketplace Make Money?
While there are many ways through which marketplaces can make money, the marketplace business model usually operates on the following four strategies:
- Commission: the most common way through which marketplaces earn money is by charging commission from the sellers who list their products on the marketplace platform. Some of the marketplaces that operate on this revenue model are Amazon, Appsumo, and Alibaba.
- Freemium: in this revenue model, the basic services of the platform are free for every customer. To access premium features, or to gain more exposure on the network, the user pays a fee. Those premium features might include featuring the seller at the top of the list, or personalised recommendations for buyers.
- Listing Fee: some marketplaces make money by charging the producers for every product or service they list on the platform. eBay uses this model too. Most sellers get free listings each month and pay an insertion fee only beyond that allowance. The bigger share of eBay’s take comes from the final value fee it charges on completed sales. Craigslist, meanwhile, keeps posting mostly free and charges fees only for listings in certain specified categories.
- Subscription: although this revenue model is not very common among marketplaces, some platforms such as Match.com charge a subscription fee from the customers to access the marketplace.
Marketplace business model vs Aggregator business model
An aggregator business model is a network model that aggregates unorganised and populated sectors and organises them under its own brand. The sellers are business partners, and they sell under the brand name of the aggregator.
While there is some commonality between the aggregator business model and marketplace business model, they have some significant differences as well:
Marketplace Business Model | Aggregator Business Model | |
|---|---|---|
Brand Name and Brand Image | The sellers sell their offerings under their own brand name. Thus, along with the marketplace, the sellers also need to maintain their brand image. | In an aggregator business model, all the partners work under the brand name of the aggregator itself. |
Standardised Price | In a marketplace, prices may vary for similar products. Sellers are free to choose the price for their products. | There is a standard price for every product which the aggregator decides. The partners provide their goods and services at the same price. |
Product Quality | Similar products on a marketplace may have different qualities as different sellers provide them. | An aggregator maintains standard quality for all the products and services offered. |
Industry Variation | A marketplace may offer goods and services from various industries. For example, Amazon offers clothing, jewellery, electronics, etc., in one place. | An aggregator offers goods and services from a single industry, for example, Uber for taxis. |
