Aggregator Business Model - A Complete Guide
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Aggregator Business Model- A Complete Guide

3410 Views | 7 min | Published On: October 7, 2021 Last Updated: July 26, 2022
aggregator business model

Have you ever wondered how companies like Uber and Ola created so much wealth in such a short period? Have you ever been interested in their business model? You must have been, given how these firms have become inspirational and aspirational brands for every individual seeking a successful career.

The model you have been looking for is the aggregator business model. Aggregator markets have appeared to be an ideal platform as they bring together many suppliers and alternatives to pick from. Aggregators are a popular eCommerce business concept in a variety of industries, including food, taxi booking, cosmetic goods, and fashion. Food aggregators and taxi aggregators are the most often utilized on-demand aggregator firms, such as Uber and Zomato when discussing aggregator markets.

This recent growth in this sector has sparked the interest of entrepreneurs who want to start an aggregation business. If you’re also interested in developing food aggregation apps or launching a taxi dispatch app like Uber, the first step is to understand the aggregator business model?

Read further to know more about the aggregator business model, it is working, and the revenue you could generate from this business model.

What Is an Aggregator Business Model?

The aggregator business model is simply a network concept that brings many unorganized vendors onto a single large platform with a single brand identity. This platform links service providers and their consumers, but it does it under a single brand. The actual clients of such aggregator-based firms are usually merchandise and/or specialty co-ops. As a result, the aggregator business model enables these specialized businesses to gain clients, usually for a fee or commission.

Typically, the B2C aggregator does not have its production unit, relying instead on its ability to build a domain that allows customers to compare costs and specs of competing manufacturers before purchasing a product after conducting extensive research.

The Aggregator Business Model is based on trust. If you’re a service provider, for example, an aggregator – that is, a brand – will sign a deal with you and sell your services to their consumers under their name. It is based on the concept of network marketing. Because the aggregator is a brand, each of the services it provides has its ecosystem. Even though the services are offered by multiple service providers, they are standardized and systemized.

Type Of Aggregators

Aggregators can be of many types but some of the famous aggregator’s types are:

Search Aggregator: 

Google is one of the biggest search aggregators. Google indexes data from a variety of sectors and then uses it to offer information to searchers and consumers who are seeking it. From hotel reservations to weather inquiries, Google indexes the web and then monetizes it by offering firms the opportunity to be on page one in return for a fee.

Travel Industry Aggregators:

A travel aggregator is a website or an app that searches numerous websites for discounts and displays the results in one location. Let us take an example, if you wanted to find a cheap ticket from Toronto to Vancouver, you might sit down and go through numerous airlines, which would take a long time. You may also use a service like Skyscanner, which searches hundreds of flights at once.

Taxi Booking Aggregators:

If we talk within the taxi sector, the Uber business model is an amazing example of an aggregator business model. In exchange for a commission, Uber takes over the services of the drivers and refers clients to them.

Uber is one of the most popular taxi booking apps. It deals in both personal as well as shared taxis. The company hires taxi drivers with their taxis. Uber does not have their cab drivers instead they just provide the other taxi drivers with a platform where they can easily increase their customer base. Uber uses a commission-based business model.  

These are just a few examples of aggregator business models apart from that there are hundreds of aggregators out there in the market that use aggregator business models and deals in industries like Social Media, Shopping, Real Estate, Food, etc. 

Getting curious about aggregators and their working? Read further to know the benefits of using an aggregator business model, their working, and more.

 

Benefits of an aggregator Business Model For Your Business

B2C aggregators have grown in popularity since COVID-19, as more customers have switched to internet buying. According to Statista, the worldwide aggregator’s industry would grow by $1 trillion by 2025.

Aggregator business models benefit both ways to their customers as well as to the aggregator itself. Because they save time and money and create a trust chain. This improves the Aggregator Business Model’s value proposition for its customers which helps aggregators in gaining popularity among the service providers.

Here we have listed down some of the benefits that an aggregator business model comes with;

  • Trust – Aggregators have a feedback system that includes product ratings and reviews. Also, because aggregators select product or service providers after extensive scrutiny to maintain their brand equity. This adds to the credibility of the Aggregator business model, making it a popular choice with consumers and marketers.
  • Easy Access – Nobody wants to spend time learning how to use complex mobile applications. A significant amount of time and work is required. Comparing costs, reading reviews, debating who the best is, and then using that service all this process seems a tedious task. When a consumer uses an aggregator model, they save all of this time and energy because everything is ready for them. The applications for booking services are simple to use and spare them from having to contact each service provider separately.
  • Time-Saving – Aggregator applications is very convenient and time-saving for example: 

If you are on vacation and want to book a hotel, simply log in to one of the aggregator programs, compare rates, and select the cheapest hotel that offers the greatest services. You have an easy life. The services provided here are prompt and efficient. You don’t have to wait long to hail a cab; simply book one using any app and the vehicle will arrive at your door. Simple living and deep thought.

If we look from an entrepreneurial point of the way there are some benefits too:

  • Entrepreneurs have to invest less since they do not have to make their production units.
  • There is almost no such workload on the aggregator as this model works in partnering with the service providers.
  • Aggregator business models can easily scale aggregators.

These are a few reasons that make the aggregator business model an excellent choice for you.

How Does An Aggregator Business Model Work?

To begin, the aggregator company establishes a network of relationships that provide data to the aggregator. The aggregator and the partner agree on conditions (commission fees) and then set up mechanisms (for example, data sharing).

Aggregator business model working
  • Aggregator visits the vendors or the service provider and offers a partnership plan which benefits them in increasing their sales because of the effective marketing and sales strategy of the aggregator.
  • After this(Signing the contract), the aggregator then implements various marketing strategies to attract the customer. Since aggregators are providing customers easy access to the services, they avail themselves of the services through the aggregator.
  • This increases the sale of the service provider’s products because of the aggregator for which the aggregator gets its commission.  

Now as you know the working of aggregator business models, you must be confused between the marketplace and aggregator business model, read this blog further to know the difference between these two business models and the revenue generated by the B2C aggregators.

Got confused between marketplace and aggregator business model? Don’t worry we got that covered. Read this blog further to know their difference and know how aggregators generate revenue from the market!!

Marketplace vs Aggregator Business Model

The most common mistake people make is comparing the marketplace business model with the aggregator business model.

Aggregator vs marketplace business model

The marketplace business model is essentially a website or mobile application that offers various items from many vendors and allows merchants to promote their businesses on a single large platform. The marketplace concept operates as a bridge, connecting vendors and consumers on a single platform, and does not own any items. For example, Amazon, Flipkart, eBay, and so on.

But if we talk about the aggregator business model, It is actually a network concept that connects similar unorganized service providers into a single large platform under a single brand name. This platform, too, links service providers and clients, but under a single brand. Cab aggregators and bus aggregators such as Uber, Ola, and redBus are examples.

These two platforms also have many similarities, but they also have many differences in how they serve customers. Let’s put some more light on the differences between the marketplace and aggregator business model:

  • Brand Name:

As in the aggregator business model, you must know by now that they sell the service providers’ products and services under their name but in the marketplace business model, they just connect these vendors to the customers.

  • Partnership model:

If we talk about the marketplace business model the admin doesn’t own anything and earns income by providing a platform to these vendors and earns a commission for this work. In this business model, the vendors are responsible for their goods and services.

But in the aggregator business model, service providers are not employees of the company, and they have complete right over whether to accept or reject a service request. Swiggy is an example of an aggregator business that links restaurants.

  • High Quality: 

Multiple sellers sell various items to various customers under the marketplace model. As a result, the quality will fluctuate. Because identical items are offered by many suppliers, the quality of the products may vary.

But, as the brand name is the identity in the aggregator business model, and the aggregator believes in creating standard quality. As a result, service providers must deliver excellent service to consumers while adhering to the terms and conditions agreed upon and signed throughout the contract.

Even though the aggregator and marketplace business models are distinct, both link sellers and consumers on a similar platform. Customer service is almost the same and excellent in both the marketplace and aggregator business models.

Revenue Model Of An B2C Aggregator

Revenue generation in an aggregator business model is very similar to that of the marketplace business model. The partners of the company are the source of income. The company generates income through commissions.

As previously stated, the aggregator’s income streams are commissions. Because the aggregator offers consumers to the partners, the partners pay a portion of their revenues to the aggregator. But the commission earned by the aggregator is in two ways:

  • In the first case, The firm adds a markup to the price of the partner. The partner sets the pricing, and the aggregator business provides the final price to clients after factoring in their mark-up. This strategy is widely used by companies like Oyo. 
  • The second is that in exchange for a predetermined commission, the aggregator assists merchants or service providers in reaching out to customers. This type of strategy is adopted by uber.

Conclusion

Because of shifting customer behavior, aggregator firms are in trend. To outwit your competitors in the aggregator industry, you must use cutting-edge technologies.

It’s a run that will leave you out of breath but will warm your heart. If you get in touch with the right aggregator app developer, you can get the best results. An aggregator business model is low-cost and may help your dream company compete with successful companies like Uber.

We here at Apptunix provide you with the best services and support in making your dream of becoming a successful aggregator come to life. We are one of the trusted aggregator app developers out there in the market. Our features and functionality will make you stand out in the market. So, don’t let your entrepreneurial passion die, Connect with us and blossom your aggregator business; go aggregate!!

 

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