How to Monetize a C2C Marketplace
Nowadays the E-commerce market is booming and people are making millions from it.
The rise of the digital market has seen the advent of C2C marketplaces.
In this post, we will talk about how to monetize a C2C marketplace and top tips for startup founders who want to start their own marketplace.
Let’s discuss how to monetize a C2C marketplace by breaking down each of the points mentioned below:
Charge commissions on every transaction
If you want to make money from your C2C marketplace, then you have to charge commission on every transaction that takes place in your platform.
In fact, if you want to make huge money, then you have to charge high commission for every transaction that takes place in your platform.
There are many websites which offer commission rates starting from 0% and going up to 5%. If you have a big volume of traffic coming into your website, then even 0% commission rate can help you make a lot of money.
For example, Facebook is one such website which offers 0% commission rate for transactions happening on its platform.
However, this is because Facebook earns money from advertisements and not from commissions charged on transactions taking place in its platform.
As per recent reports, Facebook makes around $3 billion dollars per year just from advertisements alone (source).
So if you want to monetize your website with low commissions or even without any commissions at all, then you need a lot of traffic coming into your website or else it’s going to be very difficult for you to make money.
Make money from advertisements
In addition to charging commissions on every transaction, you can also make money from advertisements.
There are many platforms like Facebook and Instagram which charge money from companies who want to advertise their products on their platform.
As a C2C marketplace owner, you can charge commission on every transaction and also make money from advertisements.
This is a very common practice amongst e-commerce websites and the bigger your traffic is, the more will be the number of companies who will want to advertise their products on your website.
For example, eBay charges 1% commission for every transaction that takes place in its platform but it also makes money from advertising fees charged by Google.
You can even sell space for advertisement on your website and if your website has good traffic coming into it then this can be a very lucrative business model for you.
Just like in any other business model, if you want to monetize your C2C marketplace with advertisement then you need a lot of traffic coming into your website otherwise it’s going to be difficult for you to make good money out of it.
Charge for subscription
Another way to monetize your C2C marketplace is by charging subscription fees. Many C2C marketplaces charge subscription fees for the use of their platform. This is usually done for two reasons:
- To maintain the quality of the platform. If a website charges subscription fees, then it will be able to pay its staff better and thus provide better services to its customers. For example, you can charge subscription fees from your users and then use those subscription fees to hire more employees who can monitor the content posted on your website and remove anything that is not up to your standards. In fact, you can even go a step further and start charging money from companies who want to advertise on your website. If you have a good number of subscribers on your website, then it will be easier for you to sell advertising space on your website. You can even make money from advertisements by charging high amount for advertisements or by giving advertisement slots only to companies who are willing to pay higher amounts for advertisements on your website.
- To increase revenue from subscriptions. Many websites offer discounted subscriptions if they are paid upfront for a longer period of time rather than paying them month-to-month or week-to-week basis as this helps them earn more money in the long run. For example, if you charge $10 per month but offer 3 months discount if the user pays upfront, then it will be beneficial for both parties as the user will save $10 per month while you will earn $30 per month instead of $10 per month which is what you would have earned had you offered no discount at all (assuming that 10% of users would have cancelled their subscriptions). As an owner of a C2C marketplace, this gives you an option to either make money with subscriptions or earn money from advertisements or both (by selling advertisement slots).
How much money can I make with my C2C Marketplace?
Now that we know how we can monetize our C2C marketplace business model, let’s talk about how much money we can make with our C2C marketplace business model?
It’s difficult to give exact figures because there are so many factors which determine how much money one can make out of their C2C marketplace business model but let’s try and find out how much money one can make from their own C2C marketplace business model by taking help from some real life examples:
First Example — Ebay
As mentioned above in the article, eBay makes around $3 billion dollars per year just from advertisements alone.
In addition to that, it also charges commission on every transaction that takes place in its platform. eBay’s commission rates start from 0% and go up to 5%.
This means that if you are able to attract a huge number of visitors on your website then you can even make $3 billion dollars per year just from commissions alone (this is obviously an exaggeration but I wanted to give you an idea of how much money one can make with their C2C marketplace business model).
Second Example — Amazon
Another example is Amazon which makes around $15 billion dollars per year in profits and charges subscription fees for the use of its platform.
This means that Amazon has around 100 million subscribers who pay a total of $15 billion dollars every year just for the use of its platform.
Third Example — Instagram
Now let’s talk about Instagram which charges advertisement fees for every advertisement posted on its platform.
According to a recent report, Instagram earns around $1 billion dollars per year from advertisements alone (source).
As you can see, there are many ways in which one can monetize their C2C marketplace business model and as long as you have a good number of subscribers or users coming into your website then it will be very easy for you to make good money out of it.
About the Author
I am the Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students teach and learn better. I am also a mentor and angel investor in other Startups of my other interests (Proptech, Fintech, HRtech, Ride-hailing, C2C marketplaces and SaaS). You can also find me on Cudy for early-stage Startup Founder mentorship and advice.
You can connect with me on Linkedin (https://www.linkedin.com/in/alexanderlhk) and let me know that you are a reader of my Medium posts in your invitation message.