Platform businesses

Platform businesses are businesses that connect two or more groups and this connection is mutually beneficial. While both online marketplaces and platforms connect users, they serve distinct purposes and operate under different models. Here's a breakdown of the key differences.

Core Function

• Marketplace: Primarily focused on facilitating transactions between buyers and sellers. Think of it as a virtual shopping mall where different shops (sellers) offer their products/services to customers. Examples: Amazon, eBay, Etsy.

• Platform: Enables a wider range of interactions and value exchange between users. This could include transactions, but also content sharing, communication, collaboration, and more. Examples: Uber (connects riders and drivers), Airbnb (connects hosts and guests), Facebook (connects people and information).

Value creation

• Marketplace: Creates value by bringing buyers and sellers together, simplifying the buying process, and offering a wider selection than individual stores.

• Platform: Creates value by facilitating diverse interactions, fostering connections, and enabling users to create, share, or exchange value in various ways.

Revenue model

• Marketplace: Typically earns revenue through transaction fees or commissions on sales conducted on the platform.

• Platform: May have more diverse revenue streams, including subscriptions, advertising, premium services, or data licensing.

Examples

• Marketplace vs. Platform: Uber Marketplace (connecting riders and delivery couriers) vs. Uber Ridesharing platform.

• Marketplace vs. Ecommerce platform: Etsy (marketplace for handmade goods) vs. Shopify (ecommerce platform for building online stores).

Complexity 

• Marketplace: Often requires less complex technology and infrastructure compared to platforms due to their transactional focus.

• Platform: Building and managing a platform can be more complex due to the wider range of interactions and functionalities involved.

Remember, these are general distinctions and some models might have overlapping elements. Ultimately, the best choice for your needs depends on your specific goals and the type of interactions you want to facilitate.

Is there anything specific you're curious about regarding online marketplaces or platforms?

I can provide more details if you have a particular use case in mind - contact me.