# What Is a Marketplace Business Model? Bringing Buyers and Sellers Together

- URL: https://girisimcikafasi.com/en/blog/what-is-a-marketplace-business-model/
- Published: 2026-11-15
- Updated: 2026-11-15
- Category: Finance and business models
- Publisher: Girişimci Kafası

On 21 February 1688 a small advertisement appeared in the London Gazette. Five watches had been stolen; anyone with information could leave word at Edward Lloyd's coffee house in Great Tower Street and collect a reward of one guinea. It is one of the earliest known records of the coffee house. Even then, his shop had become the kind of place where news gathered, so much so that a stolen watch might be traced through it.

Lloyd sold neither ships nor insurance. His customers were merchants, ship owners and sailors, and he kept one corner for captains only. He gathered news of which ships had arrived, which had been lost and what goods were fetching, and passed it to his customers. Reliable news brought the captains, the captains brought the merchants, and the merchants brought those willing to insure their cargo. The coffee house soon became known as the place to find marine insurance. Goods were sold there too, often at auctions that lasted as long as a candle burned.

In 1696 he launched a paper listing shipping movements: Lloyd's News. It did not last. It reported debates in the House of Lords inaccurately, which was held to be a breach of parliamentary privilege, and it closed. The coffee house's whole value lay in accurate information; one wrong report had cost it its paper. Lloyd died on 15 February 1713, but his name lived on: Lloyd's List appeared in 1734 and is still published today, online only these days.

What Lloyd built is exactly what we now call a marketplace: without making anything himself, he brought buyers and sellers into the same room and gave them ground both sides could trust.

## What does a marketplace actually sell?

A marketplace does not sell products; it sells the meeting. The seller pays because they found a buyer, the buyer because they got what they wanted safely. So you have to do two hard things at once. The first is getting both sides into the room. The second is making sure nobody in the room is cheated. If either fails, the other collapses too: buyers will not come to a market with no sellers, and good sellers flee a market nobody trusts.

## Chicken or egg: which side first?

This is the first knot every marketplace has to untie. How do you win sellers with no buyers, or buyers with no sellers? The story of Empire Flippers, which brings together people buying and selling websites, as told on Starter Story by its director of marketing Gregory Elfrink in 2019, shows a plain way through.

### First, offer something useful on its own

The team started out as an outsourcing company in the Philippines. When they lost a major client, they began building small niche websites to fill their staff's hours, and they wrote about the journey on a blog. There was no marketplace yet, but there were readers. Their blog played the role of Lloyd's shipping news: something of value that brought people to the door before anyone had met anyone.

### Supply the first side yourself

Empire Flippers built the first sites it sold. It gathered buyers without having to hunt for sellers. Then something unexpected happened: readers with sites of their own started asking, "Could you sell mine for a commission?" The second side arrived on its own once it saw the first. In Elfrink's words, they went from being a blog that happened to have a marketplace to a marketplace that happens to have a blog.

### Make trust part of the product

Buying a second-hand website is a bit like insuring a ship you have never seen. Empire Flippers reduced the risk in layers. Sellers paid USD 297 for a first listing; the point was not profit but to weed out those who were not serious and to cover the work of checking. Their own analysts verified that every business on the marketplace really earned the revenue and traffic its seller claimed. After a sale, buyers had a revenue verification period, and a separate team moved the business over to its new owner.

### Tie your fee to the moment value is created

Their main income was a commission of 8% to 15%, depending on the size of the business, charged only if the sale went through. No sale, no commission. That lines the marketplace's interest up with both sides: it only earns when the match is a good one.

### Use transparency as a moat

While rival brokers often kept their numbers to themselves, Empire Flippers published a scoreboard. By February 2019 it had sold 949 businesses worth a total of USD 61 million and had more than 105,000 registered buyers. One smaller detail solved the race between buyers' bank transfers: buyers could leave funds on file in advance, so when a good listing appeared, the first buyer with money ready could buy at once.

## Lemons and brokers

In Turkish, the person who did this work was once called a simsar. The word came into Ottoman Turkish from the Arabic simsār, which goes back to the Classical Persian sipsār; it means what Turks now call a commission agent. A simsar's real stock in trade is knowing what the buyer does not.

The economist George Akerlof gave that not-knowing a name. In "The Market for 'Lemons'", published in the Quarterly Journal of Economics in 1970, he argued that if a buyer of second-hand cars cannot tell a good car from a bad one, they will offer a price based on the average. Owners of good cars find that price too low and withdraw, leaving worse cars behind, and the price falls again. In the end the market shrinks, or even collapses. The paper had been rejected by three journals first: two found it trivial, and the referees of the third said that if it were correct, no goods could be traded at all. Akerlof won the Nobel Prize for this work in 2001.

A good marketplace is the cure for a market for lemons. Verification, guarantees, ratings and refunds all show buyers what they cannot see and keep good sellers in the market. That is why the wrong report that closed Lloyd's paper mattered: if the information is wrong, the broker is wrong too.

## Who builds the room?

On 19 May 1711, describing in The Spectator how merchants from every corner of the world met at the Royal Exchange in London, Joseph Addison wrote:

> "Factors in the Trading World are what Ambassadors are in the Politick World."

Brokers are to trade what ambassadors are to politics. But a good ambassador is the one both sides trust. In your marketplace, which side could learn from you today something it does not yet know about the other?

*If you want to know why a marketplace grows stronger as it grows, [the piece on network effects](https://girisimcikafasi.com/en/blog/what-is-a-network-effect/) is worth a read.*