Peer2Peer Business Models

We’re intrigued by a relatively new business model. Referred to as Peer-2-Peer, Peers Inc., or Platforms for Participation, these are match-making businesses in which consumers are both the providers of the service being sold and the customers for the service being sold. To build such a business you need to:

• spot the need for the service
• identify the trend (usually informal) that individuals are already providing the service
• facilitate the matchmaking between people who can provide the service and those who need the service
• provide the infrastructure for providers and consumers to strut their stuff and find one another
• offer risk mitigation
• provide a legal framework
• supply dispute resolution services
• receive a commission

There are now enough examples of these types of businesses that they are becoming quite common.

The good news about this business model is that these are invariably highly customer-centric businesses—since customers are both your providers and your consumers. These businesses typically evolve pretty quickly from start-up to relative maturity because all of the hiccups are very public and the customer community helps to identify issues and to provide reasonable work-arounds quickly.

The bad news about these kinds of businesses is that once you’ve started one in an industry or vertical market, you will be quickly copied. Your business model and your processes are transparent to all. You may work really hard to do an outstanding job of risk mitigation, for example (this is often the secret sauce). But once you have figured it out, it’s much easier for an imitator to benefit from your hours of trial and error.

This week, Ronni Marshak looks at one peer-to-peer business, Lyft, a ridesharing/chauffeuring program where individuals who have a car and want to earn some bucks in their spare time pick up other individuals who need to get somewhere, but don’t have a car. She also identifies some other peer-to-peer businesses and raises the question of whether existing organizations might be able to create new business opportunities by making matches among their customers who have something to offer and other customers who might need what they have.

~ Patty

Peer-to-Peer Business Models
Facilitating “Matchmaking” between Individuals for Fun and Profit
By Ronni T. Marshak, EVP & Sr. Consultant/Analyst, Patricia Seybold Group, July 12, 2013

(Read the short sample and download the full article in PDF.)