A marketplace is a business model where the company’s core value comes from matching two sides of a transaction — buyers and sellers, riders and drivers, employers and job seekers — rather than from selling its own inventory. The company typically takes a small cut, called a take rate, of each transaction that happens through it, rather than earning a subscription fee or selling a product it manufactures itself.

What makes marketplaces distinct — and difficult — is that they depend on network effects on both sides at once: a marketplace with plenty of buyers but no sellers, or vice versa, has nothing to offer anyone. This is often called the “chicken-and-egg problem,” and it’s why marketplace startups frequently spend their early years manually recruiting one side, often sellers, before the other side arrives naturally. Trust and safety — verifying listings, handling disputes, preventing fraud — also become core product responsibilities, not an afterthought, since the company is vouching for transactions between strangers.

A nuance worth understanding: once a marketplace reaches scale, buyers and sellers sometimes try to bypass it — meeting once through the platform, then transacting directly afterward to avoid the fee. Well-run marketplaces design their product, including payments, reviews, and ongoing convenience, specifically to make staying on-platform worth the fee.

🇵🇭 Philippine Example

Carousell Philippines (formerly OLX Philippines, which merged into Carousell in 2019 after a Naspers-backed deal) is a real, active Philippine marketplace connecting individual buyers and sellers of secondhand goods, vehicles, and more — Carousell itself never owns any of the items listed on it.

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