---
title: "Marketplace"
section: "Choosing a Business Model"
sectionId: "business-models"
date: "2026-05"
---

## What Is a Marketplace?

A marketplace is a two-sided platform whose two sides traditionally consist of **buyers** and **sellers**. These roles take different forms depending on the vertical:

| Company | Sellers | Buyers |
|---|---|---|
| Amazon | Third-party sellers | Buyers |
| Uber | Drivers | Riders |
| Airbnb | Hosts | Guests |
| Rover | Dog sitters | Dog owners |
| Hipcamp | Private landowners | Campers |

## How Marketplaces Make Money

Marketplace businesses take a **percentage of each transaction** — typically between 5–20% of the total transaction value. The total volume of all transactions on the platform is called **GMV (Gross Merchandise Volume)**.

Some companies use their own terminology for this metric:

- **Uber and Airbnb** call it "Gross Bookings"
- In Q2 2021, Uber had $21.9B in Gross Bookings and $3.9B in revenue (~18%)
- In Q2 2021, Airbnb had $13.4B in Gross Bookings and $1.3B in revenue (~10%)

## The Cold Start Problem

Marketplaces are **hard to get started** — you need buyers to attract sellers and sellers to attract buyers. This chicken-and-egg problem means you typically don't make meaningful revenue for a while until the platform has enough participants on both sides.

The flip side: once a marketplace hits scale, it becomes extremely hard to stop. Network effects make the platform increasingly valuable and difficult to displace. Craigslist, Amazon, and eBay are examples of self-sustaining marketplaces that have proven nearly impossible to unseat.