Accion Verde Case Solution

1. How does Accion Verde make money from the e-marketplace website?

The revenue generation model of the company is similar to the income models of Ebay and Amazon. The company makes money by earning a ‘commission’ or ‘transaction fee’ for bringing the buyer and sellers at a single platform. The money is earned through different channels descried afterwards. 

2. Accion Verde does not own the wood, they don't buy the wood - what is in it for them as a for-profit company?

Accion Verde earns a profit through a number of channels. The revenue generation of the company is rooted through three separate channels. Firstly, the sellers posting their advertisements will be charged for posting an advertisement. After each completed transaction, each buyer and seller also have to deposit equal amount of transaction fee. After the goods are delivered to buyer by the seller (all the transportation costs are included in the transaction amount), the money credited by the buyer to ELF will be transferred to the account of the seller. The 102.5% value of the transaction amount will be credited by the buyer to ELF and 97.5% will be credited to the seller by ELF leaving a net spread of 5%. Thirdly, the company will also target its website visitors with online advertisements. The company will get paid on a per click basis for the advertisements. The model of the website is such that on each completed transaction, the buyer will rate the seller and vice versa. In this manner, the ratings of both the buyer and seller will be effected by the total amount of transactions they have carried out. Moreover, the website platform of Accion Verde will also provide comprehensive ratings to its buyers and sellers in the fourth years of its operations. In this manner, sellers and buyers will be dis-incentivized to carry out the sales negotiations through private channels. 

3. Best practices - how do other successful websites that operate in a similar model make money from their sites?

The other websites (belonging to a different industry or industry model) like eBay, amazon, Alibaba etc generate money through the exact same process. Both the sellers and buyers will have to deposit a small amount of transaction fee to the website. This revenue generation model is also similar to the models of the above mentioned companies.