So, hey everyone, in this video, we will talk about Peer to Peer business model.
Let's say you have two different people, and if they are able to buy or sell something directly with
each other with the help of technology, that's the example of P2P business model.
So whether they are able to lend and borrow money with each other.
That's the example of P2P lending business model.
Let's say if they're able to buy or sell things to each other,
well, that's the example of peer to peer marketplace business model.
And same goes with banking, with transaction.
That means with the help of these peer to peer business model, two people are able to interact with
each other with the help of technology.
Let's start our video by understanding peer to peer Lending business model.
So all of these platforms or app that are using peer to peer lending business model, they will match
these lenders with the potential borrowers without a official financial institution.
So normally a small business or a small borrowers will go to different banks and then he will do all
of these legal compliances, loan agreements and then he will get money.
So-called disbursement of loan.
But with the help of all of these platforms or mobile application, he can easily get these small loans
or microfinancing by doing some very basic legal compliances.
And these platforms will use artificial intelligence and machine learning by tracking all of their past
history or transaction, and then they will assign a risk score to that specific business or individual.
On the basis of that specific risk score,
they will give a interest bracket and then you can take small loan from that specific platform with the
help of these different individual or investor.
So your P2P lending offers you both secured loans and unsecured loan, and because you have so many legal
compliances and so much of hassle taking a small loan from all of these traditional bank.
That's why P2P platforms are considered as a alternative source of financing.
So let's understand if you wanted to start your own peer to peer lending business, or let's say you
wanted to build a app or a web application where all of these small businesses can come to your platform
and they can take all of these small micro loans from different investor or individual who wanted to
lend their own money.
Now, the first step is obviously the application.
All of these small businesses or investors have to fill a application because they are applying for
a loan and then the platform assess the risk of that specific individual based on their past transaction
or credit rating or credit history.
And then they will assign a interest rate, and after that, they will show them all of these different
investor.
Or I would say the list of investor who wanted to give a very small loan on a specific amount of
interest.
So they will have, let's say, maybe 5 or 10 different option, that this investor can give you $10,000
of loan at an interest rate of five percent, another can individual can give you a $15,000
dollar loan at a interest rate of six percent, so you will see different types of investor with different
interest rate and different amount, and it will also have terms and condition.
So obviously, if you are taking a loan from some investor or individual, you have to repay them some
form of interest every single month or, let's say, every single quarter.
So it will also have some terms and condition or some amount that you have to pay periodically every
single month or every single quarter so-called interest payment.
And it will also highlight the time duration in which you have to repay the principal amount at maturity.
So let's say you have to pay a specific amount every single month or every single quarter in the form
of interest rate.
So let's say you have to pay a specific amount every single month or quarter in the form of interest.
And after four year or, let's say, five year, you can pay the whole amount at maturity.
And that's how these P2P lending businesses work. And the way by which these platform or mobile application
makes money is that they take a very small cut, both from the investor side and the small or medium
business who want loan.
So let's say if the investor is getting seven percent of interest from all of these small and medium
business who is borrowing money from them.
They will take maybe 0.1% cut from these investor and maybe 0.1% cut from
these small and medium business who is borrowing the money.
And that's how these platform makes money.
Well their main purpose is to match both of these lenders and borrowers.
And just to make money on both the side, that's how these peer to peer lending businesses work.
Apart from lending businesses, you also have peer to peer transaction business or customer to customer
or C2C kind of business.
Let's understand that.
And the best two example for these peer to peer transaction business or discovery business or platform business
is your Olx
and Quicker. Let's understand that.
So you have two different customer and you have a website or mobile application which connects both
of these customer together.
Let's say if you have a used item and you wanted to sell that item to different people.
Well, you can list that specific product or item on this specific platform.
Let's say I wanted to sell.
So let's say I have this wristband or a smart water bottle that I wanted to sell on this specific platform.
So let's say I end up listing my product on that specific platform like Olx and different customer
can now see this product on that platform.
And as soon as they hit a purchase request of this specific product, I will ship this product with
the help of some logistic partner, and that person will get this product.
And this is a old product, so obviously I have to sell this product at a cheaper price.
And that's how these platform makes money.
Obviously, facilitating the transaction is one way to make money, and showing ads to different people
is the other way by which these platform makes money.
We will understand that in the next slide.
But apart from facilitating the transaction, you also have peer to peer job portal.
So if you look at platforms like Indeed or Glassdoor, you have your company on one side and your workforce
or employees who wanted to work for some company on other side.
Well, that's the example of peer to peer transaction based business model.
Now, all of these people will never ask for money from all of these different customer or employees.
They always ask for money from these companies because obviously these companies have money to pay for
this specific job posting, so they will allow you to list maybe three or four job posting.
And after that, they will always ask for money that pay us $9, and you can list additional for job
posting or maybe pay us $20, and you can list unlimited job posting.
So all of these job portal will ask from all of these different companies to take a specific plan so
that they can list unlimited amount of jobs in their specific job portal.
Apart from facilitating the transaction one more way by which P2P marketplace business model make money
is by showing them these different types of ads, and let's understand that with the help of one example.
Let me take the laser pointer.
So if you have used Olx app, you can see that you have these feature product.
Now, the main purpose of these feature product is to allow someone to prioritize their product in the
marketplace.
Well, let's say you have a old used car that you wanted to sell urgently. Your car will be one among
other 5,000 car that other people also wanted to sell in this specific platform.
So to make sure your car have more visibility, just take $5 or $10 and show my product to as many
people as you can.
Well, that's the example of feature product or sponsored product, and that is also one of the ways
by which these P2P marketplace or peer-to-peer marketplace business model makes money.
Another way is by using Google AdSense.
So we all know that Google AdSense is the largest, or I would say one of the largest advertisement
product from Google.
So with the help of Google AdSense, you can use their Pixel.
And you can embed Google ads on your website and Olx is using Google AdSense on their website,
and they're using Google AdMob ads on their mobile application.
And that's how they also make money.
They show these ads to different people who are using their web application and mobile application.
So if you look at the way P2P transaction or P2P marketplace business model work is by facilitating
the transaction.
Also, they have these sponsored or featured post that you will see on Olx app or even in Amazon.
So let's say you have 20,000 different seller who wanted to sell their product on Amazon, and
if one seller wanted to get more visibility on their specific product, they normally pay 5, 10,
20 dollar and they normally bid a specific amount to make sure that their product have more visibility
on that specific platform.
And all of these companies use Google ads.
And when I'm saying Google ads, that means they use AdSense in their website and Ad Mob ads in their
mobile application.
Well, these are two different types of product, which is the part of Google ad product. Then you have
sponsored or banner area.
So I'm sure you have seen in some website that at the top you have a small banner, and the main purpose
of that banner is to earn money because obviously you are putting the banner of some other brand to
do some basic marketing and advertisement stuff.
And then you have in-app installation.
So inside these different apps, they will also allow you to install some other apps.
So let's say if it is a gaming app.
Then they will also list other gaming app inside the app so that you can also install them.
And that's the
typical example of in-app installation.