The returns of fintech enabled marketplace businesses are far superior to those of marketplaces without fintech capabilities according to a new report from global classifieds giant Adevinta.
The new report, which has been created in partnership with dealroom.co and Speedinvest, also claims that European marketplace businesses are now worth a combined €685 billion and account for 19.5% of all consumer spending (up from 13.6% in 2019).
With an enterprise value to sales ratio of 6.7x, compared to 5.3x and 4.6x for other marketplaces and financial services, respectively, the report says that fintech enabled marketplaces are the future of the industry and that the lines are blurring between marketplaces and financial products.
Jordi Iserte, Investment Director at Adevinta Ventures says:
“The long-term success of marketplaces depends on their ability to adapt and integrate fintech solutions into their platforms. This will allow for a seamless, frictionless experience, and ultimately benefit customers. Fintech-enabled marketplaces are becoming the new norm and we are excited to take an active role in this growing market.”
Citing a figure of €78 billion invested in online marketplace businesses so far in 2021, the report says that many marketplaces around the world have the capital to invest heavily in either building or acquiring financial products and payment capabilities.
The report uses the examples of iBuyers such as Opendoor and Zillow providing mortgage services and generalist marketplaces such as Jumia and Mercado Libre providing native borrowing and payment solutions.
As for Adevinta itself, since its colossal $9.2 billion deal to acquire eBay Classifieds was rubber-stamped in June, the company has been focussing on moving its marketplace sites into the realm of fintech. Its flagship brand in France LeBonCoin is already offering escrow on car and home purchases and many other Adevinta brands are likely to follow.
The report is available in full here.