Every industry is being disrupted by the aggregator business model. This model, which is frequently confused with other types of platforms, typically entails organizing a highly populated sector, such as taxis, hotels, travel, groceries, food, and so on, under a single brand. To put it simply, the aggregator may act as a sort of middleman, but unlike other platforms, it maintains tight control over the entire user experience. The internet also made this possible. The Internet’s fundamental disruption has been to flip the traditional value-chain on its head. First, the Internet has made distribution (of digital goods) free, effectively negating the advantage that pre-Internet distributors had in integrating with suppliers. Second, because the Internet has eliminated transaction costs, it is now possible for a distributor to integrate forward with end users/consumers at scale.
Advantages of the Aggregator Business Model
Operating expenses — As previously stated, running an aggregator app or website does not necessitate the purchase of heavy equipment, the storage of physical goods, or even the operation of large offices. Technically, all you need are servers and skilled employees. As a result, the cost of running an aggregator company can be extremely low.
There are numerous monetization options — Another significant advantage is that aggregators can monetize their traffic in numerous ways. They can be paid for every click to an offer (Cost Per Click, or CPC), every sale (Cost Per Acquisition, or CPA), through sponsored placements (e.g., banner ads), or even by selling data access (such as through APIs).
Price-setting power — Aggregators have grown so impactful in a few sectors that they can essentially squeeze out every last bit of edges for their associates. One prominent example is the airline industry, where frameworks such as Google Flights, KAYAK, and Skyscanner have accumulated so much customer trust that many travelers no longer consider visiting the airline’s website.
Conclusion
It’s common to believe that the aggregator business model was born in the digital age, because the internet enabled adaptability (think Uber or Airbnb) and simplified all procedures, from payment to shipping. The aggregator business model, on the other hand, predates the internet. In the music industry, for example, many companies controlled artists and CD production (and that is not so far from today). Regardless, the digital age has transformed the aggregator into a destructive business model capable of altering the way we do business in any marketplace. Simply be present and observe!
