Peer-To-Peer Model: What It Is, Advantages And Examples Of Success
The Internet came to revolutionize all areas of our lives, especially the business world, bringing with it a large number of sales opportunities and promotion possibilities such as digital marketing. The peer-to-peer model is a type of business that, thanks to technological progress, has also managed to grow and establish itself in a large number of sectors, providing many benefits and opportunities.
In this article we explain what the peer-to-peer business model consists of and what advantages it presents so that you know if it could be a good idea for your project.
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What Is The Peer-To-Peer Business Model?
A peer-to-peer business model is based on the sale of products or services through a platform where consumers can buy what various brands or people offer without the existence of intermediaries.
The company that has developed the platform makes its technology available to brands (or individuals) and consumers to facilitate their connection, taking a commission (percentage) for each of the transactions that take place.
Some of the most common features of the peer-to-peer business model are:
- Wide supply and demand : they are intended for sectors where there is a large number of sellers and buyers. In this way, a high level of transactions is generated and the commissions obtained make this model a very profitable business.
- Good seller-buyer communication : the main function of this type of business model is to offer sellers and buyers a link that allows contact between them, thus ensuring that all parts of the sales process are simplified and streamlined.
- Easy and secure transactions – Peer-to-peer model platforms also offer a secure payment method as well as legal backing for both parties in the event of any fraud.
On the other hand, the peer-to-peer model is not only intended for companies that sell to individuals, but also for business that takes place between individuals and between the companies themselves.
Advantages Of The Peer-To-Peer Model
The peer-to-peer model can offer many benefits for both parties, among the most notable are:
- More competitive prices : by dispensing with intermediaries, prices can be lower, something that can be positive both for consumers, since they find cheaper prices, and for brands, which can stand out from the competition by offering more accessible prices on the platforms.
- Less risk : as we have mentioned, this type of business is characterized by presenting a specific regulation that allows offering secure transactions, thus reducing the possibilities of fraud for both parties.
- Varied offer : through this business model, consumers have access to a wide variety of products and services on the same platform. This gives them the possibility to compare prices more easily and to opt for the best option, thus producing a much more satisfactory purchase.
- Greater reach : Brands or individuals who sell through the peer-to-peer model of business have the possibility of reaching a larger audience, thus increasing their chances of sales.
Disadvantages Of The Peer-To-Peer Model
Although the peer-to-peer model offers a large number of advantages and is suitable for a wide variety of sectors, it also has some disadvantages that may mean that your project does not fit 100%:
- Quality risk : intermediaries are, many times, the ones in charge of offering the client minimum quality standards in the products and services that are offered. By dispensing with this figure, there is a risk that part of the offer does not meet the expected quality.
- Cold relationship between the parties : the peer-to-peer model depends entirely on technology, so the relationship between the seller and the client is not usually that close, making it more difficult to generate a certain trust.
- High response time – Again, intermediaries are often the ones dealing with efficient customer support. By not having your figure, the doubts sent by consumers may take longer to be resolved, jeopardizing the sale.
Examples Of Companies With A Peer-To-Peer Business Model
Surely, while you were reading the article, currently known businesses that meet the characteristics of the peer-to-peer model have come to your mind. Here are some popular examples to help you better understand how it works.
Amazon is among the largest peer-to-peer companies in the world. It started out as an online bookstore, but little by little it has been expanding to many sectors, offering products of all kinds and from different suppliers, from food to fashion to technology, among many others. Sellers have seen in Amazon a great opportunity to expand the borders of their business and customers, a way to find products at very competitive prices and enjoy fast shipping.
Vinted is one of the most famous second-hand clothing platforms. Its low prices have made many people prefer to use it. In addition, this business is fed by other individuals , as is the case with Wallapop, who have found on this platform a way to sell the clothes they no longer wear.
Individuals from anywhere in the world can promote their accommodation through this platform. The objective of this portal is to offer travelers stays that differ from typical hotels or vacation apartments, often offering cheaper prices (although there are all kinds).
The creators of the platform earn money through the commissions that they apply to the prices of the accommodations of the hosts. But, in return, these guests can have their stay seen by more tourists, who can find places that are more suited to their needs.
Uber has managed to unite under the same platform customers who are looking for a more modernized service than the taxi and individuals who offer their driving services. In this way, passengers can move in a much more flexible, cheap and comfortable way, while the individual can carry out his activity for a small commission.
The Uber platform, in fact, like the rest of the examples that we have highlighted here, has been a real revolution for its sector, offering a customer experience never seen before. This shows that the peer-to-peer business model is one of the most successful in the present and, possibly, also in the future.