Common Restrictive Covenants in Fixed Income Securities
It is important for investors investing in fixed-income securities to be aware of restrictive covenants. This is because restrictive covenants can have a huge negative impact on the valuation as well as the liquidity of the debt. Bond indentures are detailed legal documents that can have many covenants which prove to be restrictive. However, there […]
Notional Pooling – Meaning, Advantages and Disadvantages
Commercial banks provide various types of services to their customers. One such area of service is that of liquidity management. Commercial banks offer several liquidity management arrangements to their clients. Notional pooling is one such arrangement that is very popular amongst corporations that have many subsidiaries. In this article, we will have a closer look […]
Estimating Future Dividends
We have discussed various types of dividend payout models. We have discussed the Gordon growth model, the H model, one stage, two stage, multi-stage and even spreadsheet models. These models are varied in their approach towards calculating the value of a firm. Yet the common link amongst these models is the fact that they all […]
What is Single Entry System ? – Pros and Cons
What is Single Entry System ? Single entry accounting systems record only one side of every transaction. This happens because they use one entry to record every transaction. Therefore single entry system does not use nominal and real accounts. The emphasis is on cash and accounts receivable. Single entry accounting system can be described as […]
The Financial Benefits of Warehouse Automation
Retail organizations across the world face multiple challenges when it comes to managing their business operations. Managing retail warehouses is one such challenge. The task of effectively managing a warehouse can be quite complicated. This is because of the fact that retail warehouses typically contain several thousand SKUs. These SKUs can be stored in pallets […]
In the previous articles, we have already studied the aggregator as well as the marketplace business models. These two types of business models have taken the start-up community by storm in recent years. Many start-ups which have become successful and have gone on to become unicorns are using some variants of this model in different industries.
From a student’s point of view, it is very important to understand the difference between these two models as well. They may appear to be quite similar to the average person. However, there are some subtle differences that make these models markedly distinct from each other. These important distinctions have been explained in the article below:
An online marketplace can be considered to be a representation of a real-life marketplace. Hence, just like a real-life marketplace, there are lots of brands that sell their products on the website. Even if the marketplace is a vertical marketplace i.e. it deals with only one category of goods, the marketplace will generally provide multiple brand options to the customer. It has been observed that aggregator websites generally specialize in a single industry whereas on the other hand marketplaces sell goods and services which cut across several industries.
By definition, the marketplace provides different types of sellers to sell products on the site. Hence, the quality levels maintained by each of these sellers can be quite different. Customers are aware of the fact that the product quality can vary drastically if they choose to buy different products from the same website.
For instance, if a customer books a cab from Uber, they expect the terms and conditions to be seen regardless of which individual cab driver provides the service to them.
On the other hand, if the customer deals with a marketplace, they know that different types of sellers are selling products on the marketplace. Hence, the terms and conditions can be very different.
For example, the terms and conditions for sale may be different when the customer purchases a laptop from Amazon than when the same customer purchases a book from Amazon. In some cases, the terms can conditions can vary even if the customer chooses different brands.
The aggregator is the one that sets the price in an aggregator model. The prices set are binding upon the service providers in case they want to provide the service.
On the other hand, marketplaces allow the service providers to select their prices within a certain price range. For instance, if a person wants to buy a laptop from Amazon, they could get multiple price quotes from different sellers for the same product. They can then choose a service provider depending upon other factors.
However, in the case of an online marketplace, the marketplace may charge a listing fee to the seller. Once the seller posts the product on the website, the marketplace may charge a commission. This commission is generally a fixed percentage of the selling price. The service provider has complete freedom to choose their selling price. However, they have to pay a commission based on that selling price.
The bottom line is that even though both online marketplaces and aggregators appear to be quite similar, the business models are very different. The key factors which make an online aggregator successful are very different from the ones which make an online marketplace more successful.
Your email address will not be published. Required fields are marked *
