A peer-to-peer (P2P) marketplace is a business model structure where individual nodes (identified as peers) act as both consumers and suppliers of resources. It differs from the centralized customer-merchant model where a customer purchases products or services from a central merchant. This business model is being implemented in massive numbers, around the world. The growth of smartphones, the internet, urbanization, globalization, and the shared economy accelerated the growth of peer-to-peer marketplaces around the world. The key advantage of peer to peer marketplace is that a seller can act as a buyer and vice versa at the same time.
1.1 How it works
Peer to peer (here forth, p2p) marketplace connects a shopper and a buyer directly while removing the facilitator. It addresses the problem of product availability in the locality and proposes an online solution. The role of a buyer and a seller are loosely tied and they can switch their role whenever needed.
1.2 Application of P2P Marketplaces
There are a lot of applications of p2p marketplaces all over the globe. P2P has been a successful business model because of the rise of the sharing economy, and a few of them are listed as follows:
1.2.1 Properties and holdings:
Airbnb: Airbnb is the world’s largest hotel chain, yet it doesn’t own a single piece of property. Founded in 2007, Airbnb attempted to solve one problem, and that is a lack of hotel rooms for every budget. Airbnb allows users to put their houses/rooms for rent and other users can rent those if needed. Airbnb is now a billion-dollar startup. It has 4.5 million properties in 81000 cities across the world with 300 million guest check-ins over the last 10 years during this period the hosts earned over $41 billion.
Uber: Uber lets users share their rides (car and motorbike) in their free time and earn while they drive. Users can book a ride via their app. Uber now operates in 400 cities in 60 countries .
Lyft: Lyft is also a ridesharing service that solely operates in the USA. Lyft recently did IPO (Initial Public Offering) at $24 billion valuations .
Pathao: Pathao is a ridesharing startup from Bangladesh. They offer both car and motorbike services. They now operate in major cities in Bangladesh and Kathmandu in Nepal .
Shohoz: Shohoz is a multiservice startup from Bangladesh that offers ridesharing, ticketing service, relocation service, and food delivery service, etc.
1.2.3 Food Delivery:
Uber Eats: Uber Eats is a service from Uber Inc. It allows anyone to request foods from their nearest store and anyone in the Uber Eats network to deliver that food to their doorstep.
Pathao Foods: Pathao Foods works similarly to Uber Eats. Pathao Foods also has a group of its employees delivering the service as well.
Shohoz Foods: Shohoz Foods is a service from the super app Shohoz by Shohoz Limited. They offer food delivery services in Dhaka metropolitan area.
1.2.4 Skill Development:
Udemy: Udemy allows anyone to upload learning videos as long as they comply with their standard and earn money from that. Users can earn money from their uploaded videos.
SkillShare: Skillshare allows educators to upload videos and earn from these videos. Users can log in to their accounts and pay for a skilled video they want to watch.
1.2.5 Crowd Funding:
Kickstarter: Kickstarter allows producers to ask for funding for their products and users can pledge to pay. After the goal is fulfilled and the product is manufactured, people who pledge receive monetary rewards or incentives or free products from project creators. Kickstarter earns money by taking 5% of the total gathered amount . If the project does not reach the intended goal then no money is collected from the backers.
eBay: eBay is free for buyers to use while sellers are charged with a fee after the limited number of free listings finishes. eBay attracts sellers by offering these free listings to hook the sellers and then retain them.
Etsy: Etsy lets the seller sell their creative products on their platform while buyers can buy them.
1.3 Advantages and Disadvantages of P2P Marketplaces
There are lots of pros and cons to run a p2p marketplace. But the advantage trumps the disadvantages.
1.3.1 Advantages of P2P Marketplace:
- Low cost of the supply chain, thus it offers a low price to the buyer
- Cuts the intermediator between a buyer and a seller
- Faster delivery
- A shopper can buy a product from its location without the need to physically visiting a marketplace
- Both buyer and seller are aware of the entire process
- Shoppers can find their products quickly
- Efficient Transaction
- Easier to scale up or down based on business need
- The community of like-minded people
- Easier to switch role from a buyer to a seller and vice versa
1.3.2 Disadvantages of P2P Marketplace:
- Fraudulent sellers and shoppers
- No authority to look after the transactions directly
- No physical store
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