XO Marshmallow primarily monetizes through an online store hosted on Shopify. This platform enables them to sell their gourmet marshmallows and other treats directly to consumers, focusing heavily on customer experience and brand engagement online. The business leverages its e-commerce setup to reach a broad audience beyond geographical limitations, playing into the digital shopping preferences of its millennial and Gen Z customers. By building a strong online presence through social media and a dedicated website, they capture sales from unique, hand-crafted marshmallow products, as well as some merchandise, optimizing their e-commerce strategy.

XO Marshmallow also monetizes through a physical marshmallow café, which was funded via a Kickstarter campaign. This café allows customers to experience their brand and products in person, offering unique menu items and combinations that cater to their lifestyle brand image. The café serves as both a retail and experiential space, enhancing brand loyalty and giving local customers an opportunity to interact with the brand in a tangible way.

The business employs a subscription box model via ReCharge Payments, providing a recurring revenue stream. Subscription boxes allow XO Marshmallow to offer curated assortments of marshmallow-related products on a regular basis, ensuring consistent revenue while also surprising and delighting their customers. This business model is particularly attractive for their clientele who seek regular and exclusive product experiences and works well alongside their primary e-commerce channel.