Top 10 Marketplace Financial Metrics (+ Company Benchmark)

If you’re running a marketplace, you might wonder how your company’s financial performance compares vs. competitors. Luckily, there are a few financial metrics marketplaces use against benchmarks to understand whether they are under or over performing.

Take rate, Buyer:Seller ratio, CAC Payback, repeat rates, etc. here are the 10 most important metrics you should track for your marketplace. For each of these metrics, we’re also giving you a benchmark with 10 publicly-listed marketplace companies, both B2B and B2C marketplaces.

Note that we calculated all the financial metrics we present below. As such, all numbers come from the relevant companies’ latest financial reports (either 10K or 10Q as of December 2021 or March 2022).

Let’s dive in!

1. Gross Merchandise Value (GMV)

GMV is the total value of transactions made on your marketplace. 

As such, GMV is the biggest driver of any marketplace business. Whether you charge a percentage of GMV or a fixed fee per transaction, GMV impacts your revenue, and consequently your profits.

GMV = # transactions x Average Order Value 

Why do we use it?

Unfortunately, GMV itself doesn’t give much detail on the type of marketplace you’re running. The more the better, yet a higher GMV doesn’t necessarily high revenues and profits.

Instead, whenever you look at GMV you should also consider Average Order Value (AOV – more on that in the next section).

For example, let’s consider 2 marketplaces with the following data:

MarketplaceB2B hardware2nd hand clothes B2C
Average order value (AOV)$20,000$20
Transactions1010,000
GMV$200,000$200,000

Whilst both marketplaces have the same GMV, they have very different business models, profitability profile and risks (customer concentration in the B2B marketplace for example).

2. Average Order Value

AOV is the average price of the goods or services which transact on your marketplace.

GMV = # transactions x Average Order Value 

Why do we use it?

AOV gives a pretty good idea of the type of the products or services that transact on your marketplace.

As explained earlier, AOV should be read in conjunction with GMV, to understand the business model: is your business a high-volume marketplace with low AOV, or vice versa? Each comes with its pros and cons.

AOV also tells us how much we can spend per order to “generate: that order. In other words, how much can you realistically spend in marketing & sales to acquire your sellers and buyers? We will come back to this when looking at CAC later below.

Marketplace metrics benchmark: AOV & GMV

CompanyIndustryLTM GMV (millions)Transactions ('000s)AOV ($)
Auto7,90056114,082
Travel46,877327,811143
Ecommerce28,3361,012,00028
Crafts13,491385,45735
Delivery41,9441,398,13330
Mobility90,4156,458,21414
Job Listing1,0574,596230
Travel76,586654,581117
Events2,43967,75036
Job Listing3,54721316,646

3. Buyer:Seller Ratio

Buyer:Seller ratio is one of the most important financial metrics to track for marketplaces.

The ratio can be as low as 1 (when there is a one seller and one buyer for each transaction, think stock market) and as high as 1:1,000 (one seller can serve 1,000 customers, think refurbished smartphones where demand far outweigh supply).

Buyer:Seller Ratio = # Buyers / # Sellers

Why do we use it?

This metric gives an idea of the relationship between supply (sellers) and demand (buyers) which is one of the most important growth drivers for marketplaces.

Usually a good ratio is anywhere between 1:6 to 1:8 for early-stage marketplaces. It might vary significantly in the early months as you acquire your first sellers & buyers.

It’s important to keep track of it as any significant variations may cause issues down the line. One common example is bargaining power: a ratio too skewed for sellers or buyers may cause unfair bargaining power, which eventually lead to one or the other fleeing that marketplace to look for better deals elsewhere.

Marketplace metrics benchmark: Buyer:Seller ratio

CompanyIndustryBuyersSellersBuyer:Seller Ratio
Auto53,72033,2911.61
Travel54,000,0004,000,00013.50
Ecommerce154,484,741n.a.n.a.
Crafts90,000,0005,300,00016.98
Delivery25,000,000550,00045.45
Mobility118,000,000n.a.n.a.
Job Listing4,598,343n.a.n.a.
Traveln.a.n.a.n.a.
Eventsn.a.141,000n.a.
Job Listing213,090n.a.n.a.

4. Seller:Buyer Overlap

Seller / buyer overlap is the ratio of sellers who are also acting as buyers on the marketplace.

This metric is not relevant for all marketplaces though. Let’s consider 2 examples:

  • UberEats: restaurants aren’t buying from each other
  • Etsy: sellers are also sometimes buying from each other (for personal needs or reselling)

Seller:Buyer Overlap = # Sellers who are also Buyers / # Sellers

Why do we use it?

We use Seller:Buyer overlap to assess the engagement of users (buyers or sellers) to a marketplace. Of course, as we just said, this is only relevant for some marketplaces.

In general, the higher the overlap the better: the more sellers and buyers are engaging and transacting from each other.

Another great example is the freelance platform Upwork: freelancers (sellers) are also sometimes acting as clients (buyers) when they need services in domains where they aren’t experts.

5. Transactions per Buyer/Seller (TPB, TPS)

TPB and TPS simply are the average number of transactions made by a buyer, or a seller, over a certain time period.

Transactions per Buyer = # transactions / # buyers

and

Transactions per Seller = # transactions / # sellers

Why do we use it?

TPB and TPS ratios are very helpful to get an idea of the level of engagement of a user on your marketplace.

Another interesting metric is the TPB / TPS ratio. It’s similar to the Buyer:Seller ratio, yet it also takes into account the number of transactions (for example Airbnb has a 1/70 TPB/TPS ratio, Uber 1/50 and eBay 1/5.

Marketplace metrics benchmark: TPB, TPS

CompanyIndustryBuyersSellersTransactions ('000s)TPBTPS
Auto53,72033,2915611017
Travel54,000,0004,000,000327,811682
Ecommerce154,484,741n.a.1,012,0007n.a
Crafts90,000,0005,300,000385,457473
Delivery25,000,000550,0001,398,133562,542
Mobility118,000,000n.a.6,458,21455n.a
Job Listing4,598,343n.a.4,5961n.a
Traveln.a.n.a.654,581n.a.n.a
Eventsn.a.141,00067,750n.a.480
Job Listing213,090n.a.2131n.a

6. Repeat Rate

The Repeat Rate (or “Repeat Orders Rate”) is the number of orders made by repeat buyers, divided by the total number of orders over a certain period. By definition, repeat buyers are buyers who have made at least 1 transaction in the past.

Repeat Rate = # Orders from Repeat Buyers / # Orders

Why do we use it?

Repeat rate is another of the most important metrics to track for your marketplace. Indeed, it’s the best metric to assess retention: how often are buyers transacting from your marketplace?

So what’s a good repeat rate? Well, it really depends of your products.

Some marketplaces have very low ratios (e.g. second-hand car marketplaces where buyers renew their cars every 10 to 15 years). Instead, other marketplaces have fairly high repeat rates (for example Airbnb historically each year consistently retained ~45-55% of its customers)

Unfortunately, it’s very difficult, if not virtually impossible, to get our hands on repeat rates even for publicly-listed companies. This is one of the most important metric that companies choose not to disclose, for obvious confidentiality reasons.

7. Take Rate (or “Rake”)

Rake is the percentage commission rate the marketplace charges for each transaction (either to the buyer, the seller, or both).

The take rate can have up to 3 components: a fixed fee, a variable fee (a % of the order value), a subscription fee, or a combination of them. For example, Amazon may charge individual sellers a combination of $0.99 fixed fee per transaction as well as a variable fee ranging from $0.45 to $1.35 as a percentage of the AOV.

In short, take rate can be calculated by dividing revenues by GMV:

Take Rate = Revenues / GMV

Why do we use it?

With GMV and AOV, take rate gives us a pretty clear idea of a marketplace’s revenue model. Therefore, take rate is one of the most important driver of revenue and profits: the higher the take rate, the more profitable a marketplace is (all other things being equal).

Also, when compared vs. competitors, take rate is very helpful to assess the pricing strategy or a marketplace. What’s great with take rate is that it takes all revenue streams into account: whether your competitors charge a subscription fee or a fee per transactions, in the end we compare apples to apples by dividing revenue by GMV.

Marketplace metrics benchmark: Take rate

IndustryLTM GMV ($ millions)Revenue ($ millions)Take rate
Auto7,9003584.5%
Travel46,8775,99212.8%
Ecommerce28,3367,06924.9%
Crafts13,4912,32917.3%
Delivery41,9444,88811.7%
Mobility90,41517,45519.3%
Job Listing1,05729828.2%
Travel76,58610,95814.3%
Events2,4391877.7%
Job Listing3,54750314.2%

8. Customer Acquisition Costs (CAC)

CAC are all the costs associated with the acquisition of your sellers and buyers. Therefore, CAC includes all sales & marketing costs:

  • Sales: salaries and commissions of your sales team (usually only for Sellers or Buyers for B2B marketplaces)
  • Marketing: paid ads campaigns, agencies retainer fees, offline advertising, discounts, etc (for B2B and B2C marketplaces)

CAC = Total acquisition costs / new customers

Why do we use it?

We use CAC to understand the profitability of a marketplace’s customer acquisition strategy.

Yet, because CAC only tells us how much money a marketplace spends to acquire a user, we must always compare to something else: customer lifetime value or Gross profit per user.

That way, CAC allows us to understand whether a marketplace spends too much, or too little on customer acquisition.

Marketplace metrics benchmark: CAC

IndustrySales & Marketing as % of revenueCAC
Auton.a.2,957
Travel20%22
Ecommerce21%n.a.
Crafts28%12
Delivery33%17
Mobility27%15
Job Listing54%n.a.
Travel43%59
Events19%n.a.
Job Listing36%n.a.
Note: to calculate CAC, we divided sales & marketing expenses by the number of new customers acquired over a year. Unfortunately, the number of new customers is not available. We instead used the number of net new customers (excluding churn). Therefore, CAC is likely higher.

9. Customer Lifetime Value (LTV)

Customer lifetime value (also referred to as “Lifetime Value”, “CLV” or “LTV”) is the total amount of value you generate from one user on average over her/his lifetime. By value, we often refer to Gross Profit per user.

Calculating TLV can be tricky, especially for startups, as it depends on how long can you retain your customers (Customer Lifetime), how many repeat purchases will they make (Purchase Frequency), and the Gross Profit per Customer.

All in all, the more data you have (the longer you’ve been in business tracking your data) the more relevant and accurate is LTV.

Customer Lifetime Value = Gross Profit per Customer x Customer Lifetime x Purchase Frequency

where

Customer Lifetime (in months) = 1 / monthly churn

Purchase Frequency = Orders per customer per month

Let’s use an example:

  • Assume a B2B marketplace with $1,500 AOV and 50% Gross Margin
  • Buyers churn after 3 years in average and make 2 purchases a year

Then LTV is:

Customer Lifetime Value = $750 x 36 months x 0.16 = $4,500

Why do we use it?

As explained earlier, we use LTV in conjunction with CAC to understand the profitability of a marketplace’s customer acquisition strategy. That’s what we call the LTV:CAC ratio.

In our example here, as we “earn” $4,500 per user on average, we know that we cannot spend more than this amount to “acquire” a user, right?

This is partly true: in reality, LTV misses all expenses below gross profit (salaries, etc.). So in this example, you’d be running into losses if you were to spend $4,500 per user in reality. The actual maximum amount you can spend is lower: whether it’s $4,000 or $2,000 depends on your cost structure below Gross profit.

Why do we use Gross profit to calculate LTV?

Well, because sales & marketing aren’t included in gross profit.

The way to look at it is as follows: if we have $100 Gross Profit per user, then we know that we have $100 on hand to spend for sales & marketing and all other operating costs.

The amount we should spend is much lower than $100, but $100 is the limit for our customer acquisition strategy to be profitable.

Some people use Revenue per User to calculate LTV, is this correct?

Not really. Revenue per user is often used because it’s much easier to calculate. Think again about what we just said. If we were to earn $200 per user (revenue) and $100 in gross profit, which number would you use as a maximum amount to spend on CAC? $100 naturally.

10. CAC Payback

CAC Payback represents the number of months it takes for a company to recoup its original CAC investment. As for LTV, CAC is often calculated using Gross Profit per User.

CAC Payback = CAC / Gross Profit per User

Using the same example above, assuming CAC is $1,000 and Gross Profit per user is $100, then CAC Payback is 10 months. In other words, it takes you 10 months to repay sales & marketing costs incurred to acquire a customer.

Only after that period can you repay other operating expenses (salaries, etc.) and after that turn a profit.

Why do we use it?

As for the LTV:CAC ratio, CAC payback is a metric marketplaces and other businesses use to assess whether their customer acquisition strategy is profitable.

There is no good or bad number. Yet, in general the lower the better: your business is more profitable if you can repay CAC within 3 months vs. 12 months for example.

But the latter is only partly true (again..). For example, a low LTV:CAC ratio can also mean you’re spending too little in CAC. Whilst it may be great today (as it’s very profitable), it might not be good in the long term (as you may not acquire enough customers to support growth especially vs. competition).

Marketplace metrics benchmark: CAC payback

IndustryCACCAC Payback (months)
Auto2,9571.0
Travel221.8
Ecommercen.a.n.a.
Crafts122.0
Delivery179.4
Mobility159.7
Job Listingn.a.n.a.
Travel593.3
Eventsn.a.2.4
Job Listingn.a.7.1