What defines a marketplace model?

A marketplace model is fundamentally characterized by its function of connecting buyers and sellers in a single platform, facilitating transactions between the two parties. This model allows multiple sellers to offer their products or services to a wide pool of potential customers without the marketplace itself taking ownership of the goods. Platforms like eBay, Amazon Marketplace, and Etsy exemplify this concept, as they serve as intermediaries where various vendors can list their offerings while consumers can choose from a diverse selection in one convenient location.

The essence of the marketplace model lies in its ability to create an ecosystem where transactions are enabled without the marketplace needing to manage inventory or perform the sales directly. This creates opportunities for both parties: sellers gain access to a broader audience, and buyers benefit from a larger selection of products and potentially competitive pricing. Thus, connecting buyers and sellers is the hallmark of a marketplace model. Other options, such as offering products directly from manufacturers or selling through physical stores, do not encapsulate this direct intermediation role that defines marketplace dynamics.