Aggregator Business Model – How Does It Work? (Explained)

The internet has allowed various unique business models to initiate. Some several companies or businesses use these models in the online market to make money. However, there is also a lot of information available, both online and offline. Therefore, users have to search around to find the right product or services.

For these customers, finding information can be challenging. Similarly, going through online and offline information at the same time can be hectic. Therefore, various companies allow customers to get all the information under the same roof. Among these companies, the aggregator business model is most common.

What is the Aggregate business model?

The aggregate business model is for companies that don’t offer their own products or services. Instead, they act as an intermediary and collect information about particular brands. Sometimes, these companies may sign contracts with the brands as well. From the collected information, these companies establish a platform for customers to use.

The aggregate company’s primary service to the client is bringing the information under one roof. For customers, the services provided by these companies are valuable.

In the absence of aggregator companies, customers must collect the information themselves. It is a costly and time-consuming process. Therefore, these companies provide a unique service to their clients. On the other side, aggregator companies may also deal with the brands directly. These companies contact the brands to get more information, which may not otherwise be available to customers.

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Therefore, these companies add value to their process, allowing it to attract more users. The aggregator business, then, becomes its own brand and has its unique identity.

How does the Aggregator business model work?

The core of the aggregator business model is a two-fold customer strategy. Firstly, companies serve their consumers. On the other hand, the providers also act as their customers. The business model works by attracting both parties to use the platform. Therefore, it provides value to both customers and consumers while generating revenues from both.

The aggregator business model doesn’t work for all industries, though. It is most prevalent in the hospitality industry. Most companies that use the aggregator business model collect information about service providers from the industry. These companies then put all the information under one roof.

Usually, the service providers listed on the aggregator company’s platform act as its partners. Both parties may have an official agreement based on what each of them proposes. Similarly, being partners, each party has the freedom to accept or reject any offers from the other.

The primary source of revenues in the aggregator business model is the brand name developed by these companies. Usually, the more well-known an aggregator company is, the more consumers it will have. Similarly, with a higher consumer count, more service providers will enlist their services on its platform. Therefore, through both of these, the company generates revenues.

What are the advantages and disadvantages of using the Aggregator business model?

The aggregator business model has its advantages and disadvantages. Among those, some of the top ones are below.

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Advantages

The aggregator business model allows companies to generate revenues without offering their own products or services. Aggregator companies work by collecting information about other businesses. Therefore, these businesses provide the services, while the aggregator company only provides information.

The aggregator business model is also beneficial as companies can generate money from both consumers and customers. Aggregator companies have an agreement with customers to share any sales made through the platform. Similarly, consumers also pay a percentage of their spending for the company.

For customers, the aggregate business model is also beneficial. They can get all their information about a particular industry from one platform. In the absence of aggregator companies, customers have to conduct research themselves.

Disadvantages

The aggregator business model comes with high competition. Any company can easily replicate the business model and collect data about products or service providers. Therefore, any company that uses this business model must always face high competition. For smaller markets, companies may have to fight for a smaller market share.

Aggregator companies may also distribute only selective information with customers. For example, some companies may only share or promote service providers that offer them higher commissions. Therefore, it may create an unfair platform for consumers and customers.

Examples

Hotels.com, Trivago, MakeMyTrip, and Booking.com are companies that use the aggregator business model. These companies collect information about the travel and hotel industry.

Once collected, they share the information for consumers to view on their platform. Any transactions that consumers make through their platform generate money for them.

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Conclusion

The aggregator business model is for companies that collect information about a specific product or service provider. These companies share the collected information on their website for consumers to use. The service providers act as the company’s partners and customers. Aggregator companies generate money from their customers and consumers.

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