![]() ![]() įor example, Platforms generally drive less network effects, or demand, than Marketplaces. ![]() The overarching point is you are rewarded for the level of work you have to do, the risk you take on, and the network effects you generate. Boom.Īggregators typically charge between 0.5% and 5% Actually, hold my beer - I’ll do it for you: OnlyFans, a Platform, charges ~20%, while Etsy, a Marketplace, charges ~8%. I’m sure someone could find a Platform that charges more than a Marketplace. Take Rates: Marketplaces > Platforms > Aggregatorsīefore you scream - Yes, this is a generalization. In general, Marketplaces charge higher take rates than Platforms, which charge higher take rates than Aggregators. While intermediaries that facilitate infrequent, high-cost transactions, like RVshare, charge a lower take rate on a higher order value. In a vacuum void of competitive dynamics, intermediaries that facilitate frequent, lower-cost transactions tend to charge a higher take rate, like Uber. GOAT verifies all sneakers for authenticity before sending to buyer, allowing them to charge a premium to less secure marketplaces Substack builds specific publishing capabilities for newsletter creators, compared to Wordpress which is more of a blank canvas Stockx curates limited edition shoes, while Uber drivers are largely viewed as a commoditized supply Uber may be used 5x per month while Cargurus may be used 1x every 5 years Regardless, organizations going the direct sourcing route should actively focus on a range of electronic invoicing/low APR discounting models, trade finance and 3PL options to reduce the impact of increased working capital requirements that can come from cutting out the middleman.Grubhub’s average transaction is $300K, with a take rate of 1.5% - 2% In addition, organizations working directly with suppliers in a model that replaces previous intermediaries may offer to consolidate spend with fewer suppliers in exchange for vendor investment in warehousing facilities or virtual facilities (e.g., having suppliers pay the cost of working with 3PLs that can provide a program that looks just like a supplier-run JIT or VMI program). These include offering early payment discount programs, financed based on their own credit rating to allow suppliers to receive payment in 5-10 days (or FOB) based on a low APR (e.g., 3% or less). Organizations have a number of potential options at their disposal to counter the working capital hit from direct relationships with suppliers. Regardless, it's important to note that moving to a direct model does not necessarily have to increase working capital requirements. The same situation often holds true when companies move to a global export sourcing model when they're buying from suppliers halfway around the globe and more inventory must be warehoused or on the water to make up for the extended supply chain. In many cases, working capital takes a hit when companies cut out the middleman - as organizations must hold more inventory and/or commit to different payment terms with manufacturers when a distribution or trading company is not sitting in the middle of the trading partner relationship. According to the example emphasized by Procurement Leaders, "A concerted effort by British retailer Sainsbury's to increase the volume of direct global sourcing has contributed to a £104m increase in working capital during the first half of 2011.The retailer, which has increased direct sourcing from its three sourcing offices in Hong Kong, Dhaka and Shanghai by 23% during the period, has also doubled the volume of direct general merchandise sourcing following the opening of the Dhaka office." The combined procurement and supply chain audience could not have been more appropriate to discuss the following topic that Procurement Leaders highlights in a recent story: examining how the move to direct sourcing (i.e., cutting out the middleman) can impact working capital even in cases where such a move can reduce unit costs and provide greater overall supply chain control and risk reduction. Last week, Lisa Reisman and I lectured at a joint ISM/APICS dinner in Chicago. ![]()
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