role of technology in sharing economy
TRANSCRIPT
Sharing Economy
Juggernaut
5 Things to consider before launchinga Marketplace
ContentsEditor’s Note
What is Sharing Economy?
Business Model
Expert Roundup
Interviews with Entrepreneurs
Juggernaut helps you deal with choices
Our Secret Sauce
Clients
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Editors Note The world is at the herald of a new era, one where we’re witnessing the dawn of a revolution, much less a phenomenon, oft-known as the Sharing Economy.
A year back, we’d already accomplished over 100 projects in IT industry space over a span of just two years. We started feeling the advent of that change, shar-ing economy, through learnings that our customers gave; the knowledge of their products and understanding market forces predicting the smart consumers’ choice.
We tried, we failed, we persevered. In a short span of 12 months, we’ve success-fully done over 50 iterations of technology solutions for entrepreneurs looking to create online marketplaces, mostly available on demand.
If you choose to join the revolution, come looking for us. We’ll be busy creating bigger and better platforms.
Parag JainTeam Juggernaut
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What is Sharing Economy?We started exploring the idea of sharing economy, a year back, and when we look back, we see people giving them definitions closer to their understanding of how this revolution has touched their lives in more than one ways.
In this context, it’d be appropriate to quote Rachel Botsman, who’s ‘complete picture’ quadrants put all meanings in perspective, explaining the position and percentage of the tech-driven economy in the universe of collaboration.We heard em all, and tried to probe the topic, a bit further, and came up with some definitions of own, discussing the what, why, who, where and when of shar-ing economy.
No doubt, it has broken barriers and created newer interpretations of how tech-nology can transform business models to enable greater degree of sharing in the human race, then what has been customarily achieved. Named as one of TIME Magazine’s 10 ideas that will change the world (2011 edition), the following Info-graphic attempts to throw more light on this idea.
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Have you chosen a business model?Jeff Bordan, a VC with Andreesen Horowitz, aptly said -The #1 job of anyone who manages a marketplace is to protect, maintain, and enhance core princi-ples. To achieve this at eBay, we abided by these mantras:– Maintain complete transparency in the marketplace so that participants (espe-cially buyers but sellers too) had perfect information on products and their pricing.– Focus heavily on safety so the marketplace is as safe as possible to create thetrustrequired on both sides.– Promote ever-greater economic empowerment for sellers, and create an e�-cient structure where marketplace fees were at levels that allow sellers to achieve this. (When I was managing eBay, we estimated that over a million sellers earned part or all of their living on our platform.)
In the light of the above assertion, we can qualify a few parameters crucial to the platforms ability to survive, when they are competing in a cut throat competition, when VCs are betting all failures with one great success.
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Marketplace/aggregated suppliers vs integrated supply/contracted individuals
For interactions to happen in the on demand marketplaces, both buyers and sell-ers should be able to see continuous additional value. If you decide to go ahead with an integrated supply, the marketplace becomes one sided and the onus of funding the supply side during the growth phase lies on you. This can be particu-larly useful in the initial evolutionary phase when you are trying to ensure that you never have to turn down the demand. Once you have attained liquidity, a shift to supplier side aggregation can help you reduce friction in signups and easier expansion of supplier side network from one locality to another.
Some examples of on demand marketplaces will be Uber, Lyft, Handy, Priv and Lish while Washio, Glamsquad, Munchery and Spoonrocket contract their own supply network.
The initial phase of launch/growth requires the entrepreneur to fake supply and ensure liquidity in the marketplace. To do that, s/he must seed the initial supply using middlemen, or established institutions. However, while doing this, a market-place must tend to attain the consumer’s trust, an attribute largely dependent upon the transparency/authenticity of reviews. Here’s a good take on what factors should not incentivize a marketplace, by Josh Breinlinger.
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Choice vs Anonymity
Irrespective of whether you go ahead with aggregated or integrated supply, one design choice, that is a part of business model, is giving the end users the ability to select the service provider vs the user being reliant on the platform for the best possible match. This choice at some levels can depend on the vertical that you are operating in but there are many ingenious ways of going in either direction irrespective of the vertical. As a rule of thumb, higher the di�erential in service or product quality from one choice to another, say a marketplace for on-demand beauty solutions/beauticians, a user choice for service provider is more likelier to work vs an Uber type approach.
Another similar example could be a marketplace for freelance professionals, such as on ODesk or Elance or Freelancer.com, wherein the user makes the choice of end service provider, subject to platforms’ ability to predict user needs with help of parameters like ratings, hours worked, recommendations etc.
On the contrary, when services like uber which promise a singular service, say taxi in this case, shall fulfill customer needs best by matching them to drivers driven by algorithms. From operational perspective, optimized matching increases the e�ciency of supplier side infrastructure. But you might need to invest more in training and vetting the supply.
One recent pivot relevant to this discussion is Task Rabbit changing its business model from an eBay type auction house to an Uber type direct match model focussed on multiple verticals. The discussion about how the London experiment led to changing the face of how TaskRabbit works across geographies, exempli-fies the importance of right model needed to sustain even the marketplaces that have already attained liquidity.
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Standardized vs Non-standardized product or service offering
‘Choose the car type; hail the car’ - Uber pretty much nailed it when it comes to standardizing the service offering. Streamlined user experience which doesn’t strain your cognitive bandwidth is one of the important factors behind accep-tance of these vertically di�erentiated On demand marketplaces. This doesn’t imply On Demand marketplace in every vertical translates to a straightforward standardisation. The challenges arise when you go out of the ambit of fixed price (based on certain parameters), fixed time services.
A good way to look at it is whether you are o�ering a commoditized or non-com-moditized service/product. For commoditized services there are only few vari-ables that can vary and the user experience should reflect that. While others such as specific home services, renting out apartments involve deliberating over number of variables. This is one of the reasons AirBnB focusses on search and discovery while Uber focusses on seamless transactions and automatic matching.
Number of variables at times also require an open channel between the supplier and the buyer during the selection phase.
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Revenue Model
Moving away from a comparative analysis of figuring out the business model, lets touch on the general monetization model to conclude the discussion as you or the investors need to make money someway or the other to keep the platform alive.
“Five years ago, Andrew Parker of Spark Capital published a now well-known post highlighting the different startups attacking different parts or services of Craigslist entitled the Spawn of Craigslist. Then in December 2012, former Spark analyst David Haber updated the chart further expanding the list of companies to more than 80.”
CB Insights recently published this analysis, concluding that they have raised $8.87bn in funding till date. The list included only 2 mobile first On Demand Mar-ketplaces - Uber and Lyft at that time. In another recent analysis (Oct.’14) of Vertical On Demand, mobile first based Marketplaces, the number was $1.46 billion in last 4 quarters excluding Uber’s $1.2 billion funding.
The basis of investors cozying up to the idea lies in the monetization potential of the concept. The business model of Uber, and in turn, Uber for X startups will have you as a platform owner owning every transaction. This puts you in a van-tage position to charge what would have earlier gone to the middleman while providing the said services more conveniently, with a small or no markup in costs to the end customers.
How every transaction is being monetized may vary from one implementation/ver-tical to another. Instacart adds a small markup to every grocery item you buy, while Eaze charges dispensaries for every lead that it brings their way.
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Stakes have never been larger. This is a good time that you stop sitting on your ideas and bring them to life.
Having figured out an appropriate business model, one needs to take the pro-duct/service, to a product market fit, wherein consumer feedback is taken into account, along with emerging market forces and the product/service is tweaked to create a better customer experience.
“Product/market fit means being in a good market with a product that can satisfy that market,” according to Marc Andreessen, to whom the term is often attributed.
Sean Ellis claims the achievement of product/market fit can be measured accord-ing to a specific metric: when, in a survey, at least 40% of users say they would be “very disappointed” without your product or service. After studying 100 startups, he claims this is a good indicator of whether a company has achieved basic trac-tion, while getting beyond “basic” necessitates that this 40% represents a large enough market on which to build your business.
While Sean did say that a 40% or higher result was necessary to have Product / Market Fit, at the March 2010 Lean Startup Circle meetup in San Francisco he did not say it was su�cient. Meaning that while having <40% indicates you don’t have PMF, >40% is a very very strong indicator, but does not necessarily mean with certainty that you have product/market fit.
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Expert Roundup: Sharing Economy
We recently conducted an expert roundup with leaders in sharing economy.
Robin Chase, (Founder and CEO, Buzzcar and co-founder and former CEO, Zipcar) Rachel Botsman (Global thought leader on Sharing Economy)Shel Israel (Influential writer and speaker on social media issues)Antonin Leonard(Co-Founder OuiShare , Collaborative Economy Strategist) Albert Cañigueral (Founder, ConsumoColaborativo.com and OuiShare Barcelona Connector) It helped us to understand few critical aspects which entrepreneurs should think through while building business models around the Sharing Economy/Collabora-tive Consumption.
For more, read here.
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Entrepreneurs Talk
We also enjoy talking with our peers who’ve made it big in the sharing economy space. We do this monthly interview type series with entrepreneurs in this domain and share their experiences with our audience. Here are some insightful discussions with the achievers.
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These days, every sharing economy business must see technology as a crucial part of their business process, since customers demanding instant gratification are being aggregated online either through smartphones or web on marketplaces.
The variations in the chosen business model, which are a function of niche being served, geography and monetary consideration imply that a straight jacket or clone based approach is unsustainable for high growth startups. But this doesn’t imply that every entrepreneur entering this space needs to reinvent the wheel as far as technology is concerned.
For more information, read here.
Your key focus should be on the business side of things - planning for liquidity and ensuring premium experience for all the stakeholders.
Juggernaut helps you deal with these choices.
Press
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Our Secret Sauce
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Clients
If you don’t believe us, take a look at our list of clients, who’ve worked with us and have gone on to achieve
MiniLuxe
MiniLuxe is a beauty salon chain for self care services, which has been success-fully running in Boston area for the last seven years. They wanted to enter the smart world through their Manicure and Pedicure services. They teamed up with Juggernaut to create a web admin portal and mobile application for technicians and customers. This packable for on demand beauty service allowed the custom-ers to book appointments and technicians to accept as well as provide the ser-vice. MiniLuxe has received $23 million in a new round of funding for showcas-ing promising future.
Smokeio
Project X Inc. wanted to transform the way people were searching, locating and acquiring Medical Marijuana and other related products. Juggernaut helped them create Smokeio™, a proprietary Mobile App and Technology Platform that allows Users to conveniently find, spot and contact Marijuana delivery and storefront businesses, with real-time delivery, driver identification features and and in-store order scheduling. On the Dispensaries’ side, the solution provides multiple fea-tures to interact and validate the medical status and other details of a Marijuana User, prior to the transaction.
Jugnoo
Jugnoo is an on-demand Auto Rickshaw booking solution for both Passengers and Drivers, successfully operating in Punjab (India). Passengers can enjoy a fast, a�ordable and reliable auto rides in couple of clicks. And Drivers can increase their income and customer base conveniently. The app o�ers features like easy auto booking, profile of driver and passenger, legit auto fare, feedback and rating options, etc.
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Iggbo
Iggbo is a mobile and web based portal that connects Doctors, Phlebotomists and Pathology Labs together. In this solution, a Doctor requests and schedules the blood draw. Any available Phlebotomist in the system is assigned the task, who performs the necessary and submits the sample is the Lab. Then, the Lab will process the sample as per the requirements from the Doctor and a report to him immediately. Once this process is complete, financial transactions are settled between Iggbo, Phlebotomists and Pathology Labs.
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Have an idea?We can Power it
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