If you’re a teen or internet-savvy, then you’ve heard of “TikTok”. For sure you might have downloaded the application on your mobile phone. Many teens are having fun and entertaining by creating and sharing short videos on TikTok. Within a short period, people are creating their own videos and becoming more and more popular.

The application blows up the internet. Millions of people are spending time on this application. Also, they’re creating a short video and sharing with their friends. Did you know that there are few schools in the United States of America that have TikTok Clubs? Yes!!! Teachers are using the application for better student engagement. Also, businesses are making use of this platform and promoting their products and services effectively.

What is TikTok?

TikTok is rewriting the world!!!

Is there anybody who has never heard of “TikTok”? Of Course nobody right. TikTok is a popular and leading application available on the internet. It is an amazing video-sharing application that enables users to create or share 15-second videos with the world. The social network is used by almost everyone. The teen at the street or women at work, everyone will get the freedom to express and get noticed on this platform.

Currently, the application is the fastest-growing application with more than 2 billion downloads. TikTok has more than 800 million active users worldwide. The application is available on Google Play and the App Store for free. According to an analysis, users spend almost 52 minutes on TikTok every day. The majority of the users are 14 to 30 age groups. Users are making the application powerful for learning and education.

Let’s discuss the origin of TikTok and how the company is making a good income.

Origin of TikTok

Alex Zhu and Luyu Yang are the best friends. At initial days, they’ve planned to launch a learning application for children. With the app, students can easily gain knowledge which popular universities cannot provide. The other motivation was, people can teach to students without any educational qualification or interview. This way, Alex Zhu and Luyu Yang decided to make money through the app.

Eventually, they both spent 6 months developing the application with lots of hard work and dedication. When they launched the application, the result was the opposite. Initially, they’ve planned to create an application for educational purposes but all the traffic is generated through entertainment. They’ve decided to shift the application from learning to entertainment application.

At those days, there was no application that provided entertainment through watching, creating and sharing short videos. Finally, the application was launched in 2014. They named the application as Musical.ly. The application became more popular in China and America. In 2016, Musical.ly had more than 70 million downloads and 10 million videos were uploaded everyday. On 9 November 2017, Musical.ly was acquired by ByteDance for 1 billion dollars. The company has merged Musical.ly and Douyin application and designed TikTok.

TikTok Business Model

TikTok is the leading and creative social media application available on the internet. The Chinese app is primarily driven by video content i.e short (15 seconds). People can create or watch infinite short videos. TikTok is generating good income through advertising and in-app purchases. According to TikTok reports, the company has earned more than $5.6 billion in Q1 of 2020. 

How does TikTok make money?

Many people know TikTok as an entertainment and fun application. But few people know how TikTok is earning billions of dollars every day. If you’re curious about how TikTok is making money, continue reading…

In-app Purchases

This could be the best source of income for TikTok. In-app purchases are probably the most effective way to generate money. Whenever you purchase a mobile there will be few in-build applications available. Though these applications are available on Google play store and Appstore. TikTok is making good revenue through in-app purchases. But how? TikTok is promoting other applications on its platform. Since there are millions of users on the platform, users can easily subscribe, download or buy the product or service.

TikTok is playing its game wisely by offering coins to its users for in-app purchases. Here the coins might be ranging from 100-10000. Whenever users get enough coins they can present it to their favourite creators. Also, users can buy these coins and get digital gifts. As per the analysis, TikTok has earned more profits through in-app purchases.

Advertisement

Popular companies such as Google and Facebook are earning good income through advertising. Even TikTok has implemented an advertising strategy to make revenue. The business strategy was introduced in 2019. Startups and large businesses are promoting their products and services on TikTok. As there are millions of users available on the platform, businesses are earning a good income by promotion on TikTok. Here the advertisement doesn’t affect the user experience. Therefore TikTok displays the ads in between the short videos.

On the other hand, TikTok is presenting brand takeovers. Sounds excellent right!!! The platform is presenting various payment models such as cost per view, cost per clock, cost per action and more. However, businesses need to pay more and more money to run their ads on TikTok to enjoy better user engagement.

TikTok has not yet developed any advertising strategy. But leading companies have already become successful by promoting their products or services. Sponsored hashtag on TikTok is the best way to get their message. Many people are showing interest in ads displayed on TikTok due to its popularity.

TikTok’s Revenue

The numbers are wandering. TikTok has earned $176.9 million in 2019. Currently, TikTok has earned over $5.6 billion in 2020. However, before the advertisement strategy, the platform has earned money through in-app purchases. The app has over $3.5 million around the globe in 2018, this is represented as an increase over revenue when compared in 2017.

Funding

It’s no surprise that ByteDance is the bigger investor of TikTok. The Soft Bank has invested more than $3 billion in Oct 2018. After a year, ByteDance provided a loan of around 1.3 billion dollars in April 2019. For big leading organizations such as TikTok funding is the best source as the platform will help them to improve their application.

Conclusion

TikTok application is the talk of the day. As you already know TikTok is popular for creating and sharing short videos. People can create dancing, lip-syncing, comedy, educational videos and upload them on TikTok. Whenever people watch and like your videos, they start following you. Ultimately, when you get a good number of followers, you will become a celebrity. TikTok has more than 2 billion downloads across the world in 2020. The company is earning revenue through two ways such as in-app purchases and advertisements. TikTok has in-app purchases of coins. These are ranging from 100 to 10,000. Users can collect or purchase the coins and give them to their favourite creator. These creators can exchange coins for gifts. Businesses are advertising their products or services in between the video. This way TikTok is making a major source of income through advertisements. Looking at the users and revenue digits, TikTok will sustain as the smart revenue model in the upcoming years.

Everything is digitalized!!!

People can connect with their dear one the move. Capture the beautiful moments and store them forever on the cloud. The advancement in technology is making wanders. Let’s discuss the new invention “digital wallets”. The digital wallets are known as e-Wallets. These are financial or economic accounts that allow people to store their funds. On the other hand, within a few simple clicks, they can make payments and track their payment histories without any hassles.

Raise your hand if you’re the one who sends and receive payments regularly. You might be probably looking for the convenient, safe and faster way to transfer money. Since there are thousands of payment applications available online. But finding the right one can be a pretty daunting task for you. People need to be careful while sharing their sensitive information on the application. You just cannot trust every payment application available in the market. If you’re the looking for the best payment application to make your transaction, look no further than “VENMO”.

What is Venmo?

Venmo – Share Payments

Venmo is the leading transfer application available around the world. The application originally operated by “Braintree”, it was acquired by “PayPal” in 2013. It is the fast, safe, secure and social payment. There are over 60 million users are using the Venmo application. The net worth of Venmo is $38 billion in 2020.

Venmo is a popular social media app that simplifies the transaction between individual and business with the twist of social media networking. Venmo is the perfect combination of Facebook and Paytm i.e social media app and prepaid wallet. The application is pretty popular and safe application among the US millennials.

• Mobile-oriented design
• Transfer funds
• Split bills
• Send payments to more than 2 million merchants around the world
• Request payment from person or business
• People who are connected can look at your comments and reactions.

History

Venmo was started by two close friends “Andrew Kortina and Iqram Magdon-Ismail”. Their ultimate goal was to design an application to send money via mobile. The original prototype of Venmo is included transferring the funds via text messages. Later the application has transformed into an excellent mobile app. As mentioned earlier the company was acquired by “Braintree” in 2012 for 26.2 million dollars. Then after one year, the company was acquired along with “Vemo” for $800 million in 2013.

Venmo Business Model

Did you know, Venmo has the smart business model that is dedicated to millennials. On the other hand, the company is helping its users by offering excellent services and making their awkward task easier. The task can be splitting of bills, transferring the funds, commenting and more. The best part of Venmo is presenting social media newsfeed on its platform. Here users can share and view the transactions history of their dear ones in the most existing manner.

Let’s discuss the reasons why Venmo is running in success. The primary reason is that the Venmo application split the bills. During olden days, people need to deal with late or delay transactions and tracking history is the most difficult task. Also, sending money requires two or three business days. This was an awkward moment. Therefore users are switching to Venmo and transferring their funds in no time.

How Does Venmo Work?

Sending payments is fun with Venmo. With the application, you can connect with dear ones right from your mobile. Transfer funds the one who resides at the corner of the globe.

• Split the necessities
• Send a gift
• Split your bills by sending half of your rent to your roommate
• Send payments of your cab fare to your friend
• Venmo debit cards are accepted in the United States.
• Make payments local or online. More than one million merchants are accepting Venmo
• Venmo application is offering tricks and tips to enable high-level up settings
• Manage your money effectively with Venmo
• No hidden fees are encouraged

Impressed right!!! Creating the account and transferring the funds is simple at Venmo.

Create an account on Venmo and link your mobile number and registered email if. Once you get successfully registered, you can use Venmo to make payments through several sources such as Venmo balance, credit or debit card and U.S. bank account.

Venmo is not just a money transferring application but it also makes its users a part of a social channel. It means users can see, react, like or comment on their newsfeed.

How Does Venmo Make Money?

Downloading the Venmo application is free. Then you might be wondering how does Venmo has earned $38 billion in 2020. There are various sources for Venmo to generate income. Venmo is making good money via transaction charges. As already mentioned earlier, users can transfer money through debit card or net banking, there is no transaction fee is applicable. But users who are transferring money through a credit card are charged 3% on the total amount. This way Venmo is making money through credit card transactions. Whenever a uses pay via Venmo API, the business needs to pay a 2.9% fee.

As per the analysis, Venmo has processed with more than $14 billion payments in 2016. And the Venmo net worth was $200 million in 2018. Currently, the annual revenue of Venmo is $38 billion in 2020.

• The instant fund transfer is 50%
• Pay via Venmo money is 25%
• Venmo cards have almost 26% of transactions

Venmo was acquired by PayPal, the company is earning a good income from several sources such as credit card fees and merchant fees. Nevertheless, unlike PayPal application, Venmo has not implemented the concept of collecting interest on the funds that are kept as Venmo money.

Venmo business model has been divided into 2 parts such as

• Credit card fees
• Merchant fees

Credit Card Fees

Let’s discuss primary source i.e credit card fees. Venmo is offering its users its account system, whenever user choose to send payments using Venmo balance, there are no charges are applicable. Besides people who are processing their payments through debit card or won linked bank accounts can make them call lucky. Because no charges are applicable to your transactions. But if you’re a credit card holder and processing your payments through Venmo, you need to pay 3% of your total amount of the payment.

Merchant Fees

PayPal was acquired Venmo in 2013. This is the biggest move for the company in tapping their revenue source. There are millions of merchants are accepting the payments through Venmo. The merchants can be both online and offline. All the merchants that are willing to accept their payments via PayPal are now accepting Venmo as their payment option. Sounds amazing right!!!

The merchants need to pay a 2.9% + fixed charges on every transaction made through Venmo.

Here the integration of Venmo application has been benefited for both users and merchants. Users can pay their payments within few simple clicks through their mobile payment application i.e Venmo. Businesses can acquire more customers through social networking.

To increase the net worth in the upcoming years, the company is planning to make a partnership with the popular food business. Venmo has partnered with popular application i.e Uber. This helped Venmo to increase their net worth. Well, this is how Venmo is earning a good income.

Is Venmo Safe?

This question might be hitting you right from the beginning. Here is the answer for you.

Venmo uses high bank-level security and safety on their application. The data encryption is implanted to secure sensitive information and transactions from third party resources. Ultimately, the application will guard you against the unauthorised users. However, users cannot make transactions to unknown people. The additional security is also provided by setting a pin or touch password to access the Venmo.

Wrapping Up

Want to make payment at a coffee shop? Yes!!! Take your mobile and process payment without hassles through Venmo. As already mentioned, Venmo is the leading mobile payment app available online. Users can split their bills, send gifts, send money and more. In this article, hope you understand what is Venmo and how it’s generating its revenue. The application is available for free. The transactions processed through debit card and Venmo money doesn’t be charged. The company has earned $38 billion in 2020. The primary sources of income are credit card and merchant fees. In the upcoming years, Venmo is planning to acquire food business and make their revenue double in the upcoming years.

Where is the first place you go to find any information you want? Google, right? Yup, you’re right. Every single person goes to Google whenever they need information. It is a directory that holds all the important information that you’re looking for. For suppose you want to know information about Netflix, not about the app, but about the company. Where do you go too? Although there are hundreds of results that appear when you search on Google. You would check about this company on Wikipedia, right? 

Wikipedia has become the world’s largest encyclopedia. From business to cryptocurrencies it consists of information about all the details. And it is not an exaggeration to say that you will find everything you’re looking for. Students to businesses everybody use it to gain the information. Yup, it is a saviour when you have to make presentations or research projects. You can find all the information necessary for you at one place about a particular topic, place or person. 

There are two types of opinions about Wikipedia, one, it provides users with all the information they’re looking for. Two, it is unreliable as the source for the information is not revealed. No matter what your opinion is out of these two. One thing you cannot deny is the popularity of Wikipedia. Yup, it is popular across the globe. 

Wikipedia was launched back in 2001 by Jimmy Wales and Larry Sanger. Since its launch, it has come a long way. Now it has a registered user base of 33 Million. As you know everyone on the internet would have used Wikipedia at least once. This website has around 5.5 million articles. Not only that it has around 32.5 million editors who provide you with the latest information. They updated the pages to keep them up to date. On an average 600 new articles are published every single day in English. 

Fun fact: Did you know that Wikipedia is available in around 298 language versions.

It has articles relating to all the topics that people are looking for. Have you never been curious about the business model of this website? You must have been right? Not any more. In this article, you will know about the business model of this article along with its income sources? Amazing right? What is waiting for? 

Let’s jump straight into the topic then.

The business model of Wikipedia 

First thing you must learn about Wikipedia is that this is an encyclopedia that is written by people who use it. Simply put, users are the people who contribute to it. They create the pages relating to the topic and update the information in case they find anything missing on the page. Yup, this is a brilliant idea. Don’t you agree? The volunteers across the world are contributing to this website and making data creation simple and easy. Thanks to their contribution, people across the globe are using this website to gain information. 

As you see the business model of Wikipedia is quite easy to understand. The organization only works on handling the Wikipedia website, administration and servers. It doesn’t involve providing data. The data is provided by the users/ volunteers across the globe. But this brings us to the question. Who owns this website? 

This is the question that is most commonly asked. Who owns this website? Who manages it serves and administration. The answer to this question is “The Wikimedia Foundation”. Yup, you heard it right. This is the foundation that owns Wikipedia. But one thing that people must know is that it is a non-profit organisation. There are many people who think that Wikipedia is managed by a non-profit organization. Yup, you’re right, it is managed by a non-profit organization.

Apart from this organisation supports many other websites that provide users with the knowledge for free. The vision of this foundation is to provide users with knowledge. Precisely they want to create a knowledge base that is free and available for people across the world. Some of the knowledge websites that it supports are Wiktionary, WikiBooks, MediaWiki, WIKIMEDIA COMMONS, WIKIDATA, WikiVoyage, etc. 

Will Wikipedia still be as relevant as today in the next 20 years? Well, that needs to be seen in the future. Because technology is changing every day and people try, you don’t know what the future of technology will be like. It is highly impossible to guess Wikipedia’s position in the future. Already Wikipedia is facing trouble because of the increasing smartphones.

Yup, with an increase in the smartphones the number of editors, visitors and content creators are considerably decreasing. Wikipedia is also planning to adapt to the changes in technology to meet the needs of its users. Wikipedia is providing its users with reliable, transparent and neutral information. Whenever you want to find adequate information about a topic.

The first go-to source is Wikipedia. Because you know that the information will neutral and transparent. So that is what Wikipedia will be striving for in the future too. 

Since you have known about the foundation that owns Wikipedia. Aren’t you curious to know how it makes money? You are. Then without any further delay let’s jump straight into the topic.

How does Wikipedia make money?

As the foundation that runs Wikipedia is non-profit. Most of you must be curious about how this platform makes money? The answer to your question is Donations. In 2017 Wikipedia has earned a whopping sum of $91 Million. The most interesting thing is that this income didn’t come from affiliates, paid services or advertisements. Yup, you heard it right. All this sum has come from the Donations. 

So now that you have understood the source of income. Let’s take about it in detail. This revenue model for this website is donation-based. They receive income in the form of donations from many websites, corporations and individuals across the globe. Apart from the donations, the other sources of income for this website include in-kind donations, Wikipedia store, Grants & Awards.

In-kind Donations

The in-kind donations of this website are another source of revenue. In-kind donations are in the form of equipment, supplies and services. 

Website Support

The support to the website includes ongoing engineering improvement costs, research and design costs, product development costs, legal costs and server costs. This is where Wikipedia spends its revenue. Apart from this it also spends money on  Governance and Administration, Fundraisings, etc.

Store

Yes, they make money through selling merch too. Users who are passionate about Wikipedia would really like to purchase their merch right. So the Wikipedia store is also an excellent source of income for them. In the merch, they sell mugs, notebooks, t-shirts, etc. If you want to get hands on their merch then visit Wikipedia’s official store.

Grants 

The foundations also receive grants from third parties to keep the website running. Not only that Wikipedia raises money through fundraisers too. In most countries, an average donation of $15 is tax-deductible so most of the users are interested in donating money to this website. All the profit that websites make go straight to fund Wikipedia and other knowledge websites/projects of the foundation.

Wrapping up

Wikipedia is undoubtedly one of the most popular websites in the world. It has been providing users with information regarding all the topics. As you have already known this website is run by a non-profit foundation. And it mainly runs on the donations received from the users. Recently Wikipedia has been urging users to donate money to keep the site running.

You would have also seen the message on the Wikipedia pages you visited. Hope you understood about Wikipedia’s business model and how it makes money in detail. If you want to know more about business models. Then you’re at the right location. Check out other articles in the business model category and understand more about the business model of companies like Netflix and Uber.

Shopping has changed a lot in the past decade. It can be anything from groceries to clothes to appliances things are not like they were before. The technological advancements have made shopping very sophisticated and fastidious. You don’t even  have to go out if you want to get something. All you have to do is open your smartphone, press a few buttons and watch things get delivered to you. The one thing that everyone has noticed is how you get things for cheap when you get them at certain places. Gone are the days when you could only get groceries in a supermarket. Today you have supermarkets that sell almost everything that you need for your home. This is great because people don’t have to go to ten different places to get ten different things. You can get all of them at one place. 

Ever since places like this have emerged people have welcomed them with open arms. People rush to these places if there is one near to them. Because they like shopping at these kinds of places. Not only they can get the things they want but they can also find them in bigger packages compared to the normal stores. The best part about shopping at these places is the discount you get on all the things you buy. It doesn’t matter what your social status is, if people know that they can get something for cheap they would definitely go to that place where they can get it. Everyone wants to save a few bucks whenever they buy something and these places understand this. The best examples for this are places like Walmart and Costco. The current article is about the business model of Costco. So, let’s dive into the topic. 

What is Costco?

If you are someone who is living in the United States then there is no need to tell you what Costco is. For those who don’t know what Costco is, it is a wholesale corporation that is very huge in America. It is the largest retailer in the world after Walmart. Buy unlike Walmart you cannot just walk into a Costco and buy anything you want. It is a bit different. Costco is a chain of clubs that is only for the people who are members of it. So if you want to buy something from Costco you have to be a member of it. It all started way back in 1983 when the Costco has opened its first warehouse in Seattle by Jeffery H. Brotman and James Sinegal. This was after they saw the idea of Sol Price and his son opened the first Price Club Warehouse in 1976.

1993 was an important year for Costco as they merged with Price Club. This was a big deal as it happened after the Price Club declined the offer of Walmart to merge with them. But merging with Costco was very easy for the Price Club as the scale and business models of both companies were similar. So they didn’t have any problems during the merger and it was seamless. After the merger the company was named PriceCostco. After this the membership of the companies have become the same. So if you had Costco membership you could just shop at Price Club and vice versa. But the Price brothers left the company in 1994 to form another Warehouse Club in central America called PriceSmart. In 1997 the name was Changed to Costco. Today Costco is a multi-national retail corporation and is present also in countries like Canada, UK, Japan and France.

How does it work?

As mentioned earlier, Costco is a warehouse for members only. So it functions a bit differently from other similar businesses. There are two ways in which you can get a membership at Costco. The first way to get a membership is to walk into your nearest Costco store and find the counter where you can get the membership. If not you can just get your membership online as you can also get a digital membership card now. But this membership is not for free. You have to pay a certain amount of money to get your membership card. 

You can do it through the application of Costco. To do this you have to first download the Costco application from the Google Play Store or App Store. After you install the application you will find a Membership icon at the bottom when you open it. If you click on it you will go to the login page. Create your own Costco account. After you do this you have to answer a series of questions. All of these questions are posed to know who you are. Once this happens they will ask you to verify your membership. If the verification is successful you will find a digital membership card on your screen. You have to open this application whenever you visit a Costco store. After the shopping is done you can checkout at the counter. 

Business model of Costco

As you already know this is a retail corporation and the business models of companies like this are similar. Most of them follow the same strategies to reach out to potential customers. So the Costco business model will have some similarities with the business model of Walmart. Let’s take a look at the strategies they follow to bring in profits. 

Reaching the target audience

It is a members only warehouse so you cannot expect the store to reach out to people belonging to all economic conditions. So this warehouse Club is for people who belong to  the middle class and above. Because these are the people who will buy a membership in these stores if they know that they can save on the things they buy. If they know that they will be able to get all kinds of products at Costco if they get a membership then they will definitely get one. 

If you look at places like Costco most of the people shopping there are from the middle class. So they have to hold on to these people and they do this by giving the people exactly what they want. They have all the products that people need in their life. You can find everything at Costco from food to appliances. So it is a win win situation for both. 

Partnering with manufacturers

When you have a retail chain as big as Costco you have to partner with the manufacturer’s if you want to get all the products you want. This is especially important if they want to sell the items at low price. You cannot possibly make profit if you sell products without having a direct deal with the manufacturers. Costco partners with them to make sure that they get the amount of supply they need. In turn the manufacturers will have a partner who will be buying goods from them at a large scale. But in order to sell the products for less price Costco asks the manufactures to sell them for less price. Not only that but they will also be asked to make packages that are bigger in sizes so that people don’t have to buy a multiple packages of a single product.

Making sure that employees are happy

If you look at these warehouses then you know how big they are. They a need a lot of staff to manage a single store. Each and every one of the employees are important if they want to run the store smoothly. So they have to make sure that the employees are happy doing their job. Only then they will be able to help the customers and the company to improve the business. They don’t want to keep losing employees frequently because it may effect their business and reputation. Apart from salary Costco offers the employees life insurance, health insurance vision insurance, paid leaves and etc. 

Increase their members

If Costco wants to increase their profit then they have to make sure there membership base keeps growing. To do this they have tk open more stores in the places where they are not yet present. They have to do this especially in the places where there is no competition. This will allow them to capture the market in that area. They have to provide great offers so that people know about them through the word of mouth as it is the best type of marketing. 

How does Costco make money?

Looking at the business model it is not really hard to understand how Costco earns money. So let’s look at the two ways in which it earns money. 

Selling products at lower prices

This is what Costco is known for. They sell groceries and other stuff for lower prices than other stores. By doing this they will be getting less profit margin on each product. But they do it on a large scale so they will be making profit by selling products in large quantities. 

Membership fee

This is the second way in which the Costco makes money. Each person who want to be a member has to pay a membership fee. There are three membership offered by Costco. Gold Star membership is for $60 and you get two membership cards. Gold Star Executive for $120 through which you will get two cards and 2% discount on all purchases that are over $120. The business membership is for $100 but it allows you can add an additional member for every $60 you pay.

Conclusion

This is the business model of Costco. Current it is one of the largest chain of retail corporation in the world. You can check out other interesting business models on Postling. If you want you can check out the business model of Dunzo here.

If you are familiar with bidding and auction sites, then you might have probably known DealDash. DealDash is one of the popular auction sites founded in 2009 and headquartered in the US and Finland.

Though auction is a familiar term for centuries, eBay being the popular one for decades, running an auction-based company is not an easy thing. It needs a lot of research and knowledge and adherence to legal policies. Else, the company may end up as a scam. However, DealDash has been in the game for a decade, despite controversies. Wondering what is its business model and how DealDash makes money? You will find the answers in this article. But before jumping into the DealDash business model, let us see what DealDash is. So, shall we get started?

What is DealDash?

DealDash is a bidding fee auction site or penny auction site that lets users bid for a product, the final and highest bidder wins the auction. As the users have to pay to participate in the auctions, it sells bids in packs of 100s and different sizes. Sometimes, it offers discounts on bids. However, the more bids people buy, the more money it makes.

DealDash was founded in 2009 by William Wolfram, a Finnish entrepreneur. The surprising fact is that the founder was just 16 years at the time he started DealDash.

DealDash is available as both the website and the mobile app. It offers a wide range of eCommerce products such as electronics, home goods, jewelry, fashion and lifestyle for auctions.

Among multiple auction sites, what makes DealDash stand out is – The company lets bidders who are not fortunate enough to win the bidding game to get back their bids. Confused? It lets lost bidders to buy the product for the retail price and gives back all the placed bids.

The company is partnered with popular eCommerce retailers such as Walmart.

How Bidding on DealDash Works?

• Users enter into the bidding process with their purchased bids.
• Every time a user places a bid, the price is raised by $1.01 or 1 cent.
• The auction clock restarts from 10 seconds or up to 30 seconds based on the bid each time someone bids.
• If no one bids after the clock run out, the last bidder wins the auction.

Okay, now let’s get into the actual topic DealDash business model.

Read: Shopify Business Model – How does Shopify Make Money

DealDash Business Model

As said, DealDash is a bidding fee auction site that works almost the same as other auction sites where users enter a bidding process by paying some money to win the auction item. But here the company is a little different by letting bidders get back placed bids if they lose with the “Buy it Now & Get Back your Bids Back for Free” option. For that, they need to buy the items for retail prices (lesser than the market price). Thus it is a win-win for both bidders and the company.

Moreover, the site has a few gamification elements that boost user experience. For example, whenever a user becomes the highest bidder his progress bar fills up. When the progress bar of users fills up entirely, they “Level up”, meaning they can win in more auctions weekly.

These features are not only making users loyal to the platform but the platform’s engagement increased to 6 times.

Read: Etsy Business Model – How Etsy makes Money

How DealDash Makes Money?

With the successful business model and smart strategies, it is not tough for DealDash to make money. With over 8 million users on the platform, it makes a good amount of money. It was estimated that the company made over $9.7 million of profit as of 2018. In fact, within just 4 years of its launch (in 2013), the company made $44 million in revenue.

Though there are no current exact numbers related to DealDash, it is clear that it makes a good deal of profits.

Bids

DealDash sells bids typically 12 to 60 cents each in a pack of 100 or other sizes. Users save up to 95% of money purchasing bids instead of real money. This is also how DealDash makes more than half of its revenue. DealDash earns money from unspent bids. However, the company retains its customers luring with loyalty. As the auction industry itself is an addictive space, it is no short of customers.

Say, a watch is for an auction on the platform whose actual cost is $20. The auction begins at $0, every time someone places a bid, the price of the items goes by 1 cent. Thus the bidder who placed the final bid wins the item for the bid he placed (assume $5). 

Now, DealDash earns the bid amount from the winner ($5) plus the remaining bids of other bidders who lost. This way the company makes more than what the product actually costs. Additionally, with the Buy It Now features, it makes money from eCommerce stores even though it returns the placed bids to the bidder who opted for this option.

Want to know how PayPal makes money? Read PayPal Business Model

Sales (Referral Fees)

As said, not only the Buy It Now (& Get Back Bids) feature makes the company different from its competitors but brings more profit. Firstly, it is attracting more customers with the strategy of giving them their bids back, thus increasing its number of participants. Secondly, it earns a referral fee from the retailer for making sales. The only catch is bidders have to buy the product for full price or retail price to get back the placed bids.

Hence, it is advisable to only bid for products they want to really buy. So, they can win it in the auction or else buy it for the retail price- bearing zero loss.

Funding

DealDash has raised around $2 million in funding from investors. Its investors include David Friend, Ari Korhonen, Finnvera and others.

Controversies

A few Consumer reports are claiming that the prices of products from the But It Now option are higher than the actual market place, sold on Amazon. Besides, it is reported that DealDash represents certain unknown brands as luxury brands. But actually, such products are proved to be cheap imitations and generic products.

However, despite all these controversies, DealDash hasn’t seen any downfall at any time in terms of revenue.

Bottom Line

No matter the controversies and complaints, DealDash is not going to see any downfalls in the bottom line. Though the appetite towards easy earning which generally any auction site has is the major reason, the gamification elements, outstanding features such as Buy It Now & Get Back Bids also contributed to the success of DealDash. The consumer base and engagement with the company are growing steadily as per social media networks, though the numbers are unknown. However, with such a user base, the company makes good profits currently and it is likely to continue the same in the future.