← Business Models: Industry Specific (Consumer, Services & Financial) (all topics)
Vertical marketplaces & category depth
What it is
A horizontal platform sells everything shallowly; a vertical one serves a single category - cars, property, jobs, machinery - with the tooling that category needs, such as inspection, financing, valuation and title transfer
The vertical can charge more per transaction because it does more of it
Impact on industries
- Category-specific tooling raises take rate several times over what a listing fee supports, because the platform solves the hard part of the transaction
- Depth is a defence - a horizontal player can add the category but not the inspection network, the pricing data or the financier relationships behind it
- The addressable market is bounded by the category, so growth eventually requires either adjacency or international expansion
- Owning more of the transaction means owning its risk, particularly where the platform takes inventory or guarantees condition