A marketplace is a platform that connects buyers and sellers and manages how they find each other, transact, and build confidence. They power a huge share of global commerce. Online marketplaces accounted for 62% of global retail ecommerce sales, about $2.4 trillion, in 2024. Anyone who wants to build, operate, or invest in a platform business must understand how marketplaces work, how they make money, and how they differ from ecommerce stores.

Below, we’ll explain what a marketplace is, how marketplace models function, and what it takes to build one that lasts.

What’s in this article?

• What is a marketplace?
  
• How does a marketplace work?
  
• What are the main types of marketplaces?
  
• What is a marketplace business model?
  
• How is a marketplace different from an ecommerce store?
  
• What makes a marketplace successful?
  
• How Stripe Connect can help
  

What is a marketplace?

A marketplace brings together multiple independent sellers and buyers on a single platform. It provides a structure that allows transactions to happen more easily, safely, and at scale.

How does a marketplace work?

A marketplace works by coordinating activity between buyers and sellers. It makes it easier for these independent parties to do business with each other.

Here’s how a marketplace facilitates transactions:

• Seller participation: To join the platform, a seller creates an account, agrees to the marketplace’s rules, and sets up a profile or storefront. Many marketplaces review sellers to maintain quality.

• Listings: Sellers publish what they’re offering (e.g., products, services, time slots, access), along with prices and any conditions. The marketplace often standardizes listings so buyers can easily compare the available options.

• Buyer discovery: Buyers use the marketplace to browse, search, and filter available offerings in one place. The marketplace quickly shows relevant options and connects demand with supply.

• Transactions: When a buyer makes a purchase, the marketplace manages the transaction from start to finish. The marketplace captures order details, confirms availability, and ensures both sides understand the terms before money changes hands.

• Payments: The marketplace receives funds from the buyer, collects any fees, and then allocates them to the seller. Payment processing can also involve holding funds temporarily, deducting commissions, and paying sellers on a defined schedule.

• Reviews and feedback: After a transaction is complete, buyers and sellers are often asked to rate or review each other. Marketplaces collect this feedback to reward good behavior, discourage low-quality participation, and help future users assess risk.

• Dispute handling and support: When something goes wrong, the marketplace often steps in as a neutral third party. Marketplace terms usually include clear processes for refunds, chargebacks, and conflicts, which helps maintain buyer and seller confidence.

What are the main types of marketplaces?

Marketplaces fit into different groups depending on who’s transacting and what’s being exchanged. This influences what the marketplace prioritizes. These groups can also overlap.

These are the main categories:

• Business-to-consumer (B2C) marketplaces: Businesses sell directly to individual customers. These marketplaces emphasize selection, price transparency, and convenience since buyers often compare similar products across sellers.

• Business-to-business (B2B) marketplaces: Companies sell to other companies, often in higher volumes or with more complicated pricing and contracts. These marketplaces tend to prioritize reliability and provide workflows that support procurement, invoicing, and longer-term relationships.

• Consumer-to-consumer (C2C) marketplaces: Individuals sell to other individuals, usually without operating as formal businesses. Identity verification and reputation systems are important here.

• Product marketplaces: Sellers list physical or digital goods that buyers purchase outright. These marketplaces focus on catalog structure, fulfillment clarity, and post-purchase support.

• Service marketplaces: Vendors offer time-based or outcome-based services rather than physical goods. Availability, scheduling, and performance quality are key.

• Rental marketplaces: Sellers provide temporary access rather than permanent ownership. The platform typically helps manage availability windows, usage terms, and condition tracking.

• Vertical marketplaces: Vendors specialize in a single industry or category. This type rewards strong expertise and personalized workflows.

• Horizontal marketplaces: Sellers span many categories and use cases. These marketplaces prioritize scale and reach and rely on strong discovery tools to help users navigate them.

What is a marketplace business model?

The business model for marketplaces prioritizes good mechanics and communication. These platforms create value by making exchanges easier, safer, and more efficient.

Here’s what’s important:

• Intermediation rather than ownership: In typical marketplace models, the marketplace doesn’t buy, hold, or resell inventory. Sellers typically retain control over what they sell and how they price it, while the marketplace focuses on operating the system that connects them to buyers.

• Transaction-based revenue: Marketplaces typically earn money by taking a percentage of each completed transaction. This commission model grows naturally and aligns the platform’s incentives with transaction volume.

• Additional fees: Some marketplaces layer in listing fees, subscriptions, or paid visibility. These work best when they reinforce value rather than gate access.

• Low margins: Adding new vendors or categories doesn’t often require proportional increases in cost. This structure with few assets allows marketplaces to expand quickly.

• Network effects: More sellers increase selection and competition for buyers, while more buyers increase demand and earning potential for sellers. This feedback loop strengthens the platform over time. The marketplace works to balance supply and demand so it remains useful to both sides.

How is a marketplace different from an ecommerce store?

Marketplaces and ecommerce stores can look similar on the surface. But they differ in terms of who sells, who bears the risk, and how value is created.

Here’s how they differ:

• Number of sellers: An ecommerce store sells products from a single business (even if those products come from many suppliers). A marketplace hosts many independent sellers at once, all of whom present goods or services to the same pool of buyers.

• Inventory ownership: Ecommerce businesses typically own or control the inventory they sell. In marketplaces, sellers retain ownership of and responsibility for what’s listed, which changes how risk and cost are distributed.

• Revenue model: Ecommerce stores earn money through product margins. Marketplaces earn money by charging fees for transactions.

• Logistical complexity: Running a marketplace means managing relationships, payments, and expectations across many sellers at once. Ecommerce operations are simpler in structure but more complex in terms of inventory, logistics, and capital requirements.

• Customer relationship: In ecommerce, the store owns the full customer relationship. In marketplaces, the relationship is shared between the platform and the seller, which makes the marketplace’s policies especially important.

• Growth potential: In ecommerce stores, growth depends on sourcing, storing, and fulfilling more products and tends to happen linearly. Marketplaces are able to grow more quickly because they can onboard new sellers without investing in inventory.

What makes a marketplace successful?

From the seller side, successful marketplaces reduce the administrative burden, expand their reach, and help them predictably convert demand into revenue. From the buyer side, marketplaces succeed when discovery is easy, pricing is fair, and outcomes match expectations. As marketplaces grow, small problems can compound. The best operators invest early in moderation, payments infrastructure, support processes, and internal tooling.

Trust is another important factor in retaining sellers and buyers. Straightforward rules, visible standards, clear enforcement, and significant consequences for bad behavior help create a marketplace that both sides can trust.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts, and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster, and avoid the up-front costs and development time usually required for payment facilitation.

• Manage payments at scale: Use tooling and services from Stripe so you don’t have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods, or onboarding compliance.

• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, value-added tax (VAT), and goods and services tax (GST).

• Build new lines of revenue: Optimize payment revenue by collecting fees on each transaction. Monetize Stripe’s capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards, and more on your platform.

Learn more about Stripe Connect, or get started today.