What is a horizontal marketplace?
Definition, examples, pros, and cons
Online marketplaces that adopt horizontal models serve a large audience with varying needs, becoming a sort of “one-stop shop.”
One of the best-known examples of B2B service marketplaces is Upwork, an online platform where companies can find service providers ranging from designers to writers and marketers.
Horizontal marketplaces have many obvious advantages: lower market fluctuation, fewer supply and demand discrepancies, and decreased risk of a dishonest service provider or customer.
However, horizontal marketplaces have a high attrition rate and solely concentrate on matching clients with service providers (or suppliers) for a one-off deal, resulting in low-value relationships.
For example, on Upwork, service providers face high competition from their peers, a high commission from the platform, and low project rates. Clients, on the other hand, deal with overburdened and underpaid hires that are not very motivated to invest in their projects.