How car marketplace websites make money

How do car marketplaces make money? They charge the people who post cars, not the people who look at them. Buyers search for free, while dealers and private sellers pay to list cars and to be seen first.

The big names work this way too. AutoTrader and Cars.com earn most of their money from car dealers, who pay a monthly fee to list their stock. A marketplace for one city can copy the model on a smaller scale.

If you only sell your own cars, you need a car dealer website, not a marketplace. This guide is for a site where many dealers and private sellers post. To build that site first, follow our guide on how to create a website like AutoTrader.

The car classifieds business model

A car marketplace serves two sides. Buyers come for choice and an easy search, and they never pay. Dealers and private sellers pay, because buyers turn into calls, messages and sales.

Dealers matter most. They post every week, they bring many cars at once, and they can pay all year. Private sellers bring the cars that dealers do not have, so a good marketplace wants both.

Keep the two groups apart from the first day. In Vehica, each new account signs up as a Private seller or a Business seller. Every seller then gets a panel to manage their own cars.

How do car marketplaces make money? Five ways

Packages and featured spots earn from the first paying car. Referrals and banners pay only when your site has steady traffic, so add them later. A lender deal may also need a check of the credit rules in your country.

What a car listing website can earn

Car listing website revenue grows with the number of cars more than with your prices. So start with how many cars are for sale in your city each month, and what share of them your site could list.

In Vehica, featured days come inside a package, and there is no bump up. So enter the price of a plain package as the average package price. Enter each featured package as an upgrade, at the extra it costs over a plain one.

The result is income, not profit. Stripe, PayPal and other payment providers keep a fee from each payment. Map search needs a Google Maps key with a billing account, though Google charges only very busy sites.

How to charge dealers to list cars

Dealers pay for buyers, not for a website. Until your site sends them calls, every fee is a reason to say no. So switch things on in this order.

1. Fill the site with free packages

Buyers leave a site with twenty cars on it, so the first job is to fill it. Make posting free at the start, with one or both free options in the Vehica Panel.

• An Add for free option that sellers can use again and again, with no featured days
• A free package once, on sign-up, such as 3 cars for 7 days
• A few featured days in that sign-up package, so each new seller tries featured once

The first option fills the site faster. The second lets each seller try your site for free, then pay for the cars after that. Keep featured days out of the Add for free option, or every free car is featured and nobody pays for it.

2. Bring in the first dealers yourself

Start with the dealers in one town, and offer them free posting for the first months. Dealers add cars one by one in their panel, and only you can load a whole stock file, so do it for them. Ask each dealer for three things.

• Their stock file, saved from Excel as a CSV file
• Their logo and phone number for their profile page
• Their permission to load and update their cars

Vehica loads cars from any CSV or XML file with the free WP All Import plugin, photos included. The free trial cannot add plugins, so you load files once you buy Vehica or move to Site Care. Our guide on how to put your car stock online from an Excel sheet shows each step.

3. Sell featured spots from the start

Sellers who do not want a featured spot still post as before, so featured spots can run from day one. Make one or two packages with featured days and a higher price.

With the Relevant sort, featured cars always come first in the results. A featured-only section on the home page gives paying sellers a second place to be seen. You can also tick Featured on any car yourself, for a deal you make with a dealer.

4. Charge for posting once dealers get calls

Start charging when dealers tell you that buyers call them from your site. Ask the first dealers what one sold car is worth to them.

Two or three packages are enough. Make one for a single car, which suits private sellers, and one for many cars, which suits dealers. Then set the prices with these rules.

• Price the one-car package as a small share of a cheap car's price
• Make the package for many cars cheaper per car, so dealers save by buying for their whole stock
• Set the days online to how long a car usually takes to sell in your city
• Make a featured package cost clearly more than a plain one

Sellers pay by Stripe or PayPal, which are built into Vehica. You can switch to WooCommerce payment gateways instead, which add other ways to pay, such as bank transfer.

With bank transfer, you activate each order by hand once the money arrives. Stripe and PayPal need accounts of your own, and some WooCommerce gateways are paid plugins.

Five mistakes that cost a new car marketplace money

• Charging dealers before your site sends them any calls
• Selling so many featured spots that featured means nothing
• Making packages hard to compare, with too many options
• Leaving sold cars in the search, so buyers call about cars that are gone
• Forgetting payment fees and other running costs in your sums

Sold cars hurt trust the most. In Vehica, sellers mark a car as Sold with a label you create once. You can also keep sold cars out of the search results.

Questions