Marketplace Model

The model starts with two-sided acquisition. New buyers come from buyer-focused sales and marketing spend divided by buyer CAC, while new sellers come from seller-focused S&M spend divided by seller CAC.

• These feed active buyer cohorts and active seller listings. Buyer cohorts are tracked with a retention curve, and active buyers are the sum of all live cohorts.
• Sellers churn annually at a flat rate. Demand-side GMV is calculated as average active buyers times order frequency times average order value.

Supply-side GMV is a cross-check using active listings and GMV per listing. Revenue then flows from GMV through a fee waterfall: transaction commissions based on an effective take rate from category mix, listing fees, per-transaction fees, advertising revenue from ad penetration and ad take rate, and value-added services from attach rates.

Demand-side GMV = average active buyers × order frequency × average order valueCopy

The model is built with a deliberate acyclic structure to avoid circular dependencies. Sales and marketing spend for the first year is hardcoded as a seed, anchoring initial buyer acquisition.

• From year two onward, S&M is sized as a percentage of prior-year net revenue, which breaks the loop where current S&M drives current buyers who drive current revenue. Assumptions feed all other sheets through named ranges.
• OpEx S&M feeds new buyer and new seller calculations. Cohort and operating metrics produce GMV and orders, which feed the revenue build.
• Net revenue then feeds COGS and OpEx, which flow into the income statement. Working capital uses revenue, GMV, and OpEx.

The income statement feeds the cash flow statement, and the balance sheet aggregates working capital, capital expenditures, and cash flow.

The model produces unit economics for both sides of the marketplace. Buyer LTV is annual gross profit per buyer times buyer lifetime, where lifetime is the sum of the retention curve.

• Seller LTV is based on annual GMV per seller, effective take rate, gross margin, and seller churn. These LTVs are compared to their respective CACs to give buyer and seller LTV:CAC ratios, plus a blended LTV:CAC that weights each side by acquisition volume.
• CAC payback months are also calculated. The income statement shows net revenue, gross profit, EBITDA, and net income, with expected operating leverage as S&M as a percentage of revenue declines over time.

The cash flow statement captures operating, investing, and financing cash flows, including the working capital benefit from seller payables.

This marketplace model is suited for evaluating a platform's projected GMV growth, take-rate expansion, unit economics, and path to profitability. It includes a set of built-in validation checks to ensure the model behaves sensibly.

• These include verifying that the balance sheet balances, that net revenue as a percentage of GMV does not exceed a reasonable ceiling, that gross margin stays within a target range, that payment processing costs are at least a minimum percentage of GMV, and that the cash balance never goes negative.
• The model also checks that blended LTV:CAC exceeds a threshold in mature years, that SBC stays below a cap, that S&M percentage of revenue declines over time, and that demand-side GMV approximates supply-side GMV within a tolerance.