- You browse through the selection of products and place an order.
- The vendors bring their share of your order to a local online marketplace and combine them to create your complete order
- You collect your order, or:
- You have it delivered for an extra fee to your home.
- When everything has been completed and you are happy, the funds are transferred to the vendors.
Running an online platform costs time and money that needs to be recouped.
There are two standard models for this: commission and subscription.
Commission works by charging a vendor (supplier) a percentage of their revenue for a sale. This ensures low upfront costs and encourages vendors to sign up. However, it can lead to higher prices as vendors seek to pass their commission costs onto the customer. This is especially the case for those with products that have slim margins.
Subscription works by paying a monthly fee to use the platform. A classic example of this is amazon. This can lead to lower costs. However, the vendor has to pay an upfront fee and this added risk can act as a deterrent to joining.
We have decided to develop a third option; the delivery fee. This is where the customer pays a flat fee for collecting their order, regardless of its size. This removes the incentive for vendors to increase prices to compensate for commission or risk. Provided that there is adequate competition, the customer’s overall cost will be lower than the commission or subscription models.