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The fundamentals of building an online marketplace

As seen through the eyes of Tailster CEO, Indy Sangha.
Cem Guralp Cem Guralp Wed 1st Jul 2015 17:07
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We recently sat down with Indy Sangha, co-founder and CEO of Tailster - a successful online marketplace that connects dog owners with people who want to look after or walk dogs in a fast, effective, reliable way. Tailster solves a perennial problem for both parties - one has a dog but can’t care for it all the time and the other wants a dog but can’t care for it all the time.

It’s a natural fit and Tailster has proved it’s not a gimmick. But how have they gone about building a marketplace, inspiring trust, looking after their brand and ultimately growing their revenue?

Supply vs. Demand - What Comes First?

Going into the interview the question that was most prevalent in our minds was that old chicken and egg chestnut - what comes first, the supply or the demand? Indy is crystal clear in his answer to this; “There’s no point in spending money on driving traffic to a site if you’ve got no supply side sorted that can service it.”

Indy describes people’s views of their dogs as “surrogate children” and one of the main pain points they were solving was that it was hard to find trusted carers, so they had to be of the highest quality to genuinely solve a problem.

So at the beginning, what was important to Tailster - and what should be important to all online marketplaces - is the quality of supply.

Finding Quality - Don’t Rule Out Your Competition

Tailster did something quite unusual for a ‘disruptive’ online marketplace by approaching what could be perceived as their competition - professional dog carers.

Indy says that it was clear from looking at professional dog carers they “did not do the internet.” Their sites were old, static, gave no indication of quality and couldn’t accept payments.

If Tailster could offer existing carers these benefits on their platform, professionals had potential to become a source of high-quality supply rather than play the part of old industry agents.

Education, not competition.

When they first approached professional dog carers directly there were significant levels of push-back. Pros were concerned that Tailster would expose their business to unlimited competition as anyone could now be a carer in their spare time. But when they realised that Tailster could be a major source of new business, manage their payments for them and ensure that they were trusted by potential customers they soon came round. By offering their platform to professionals as a discovery channel rather than direct competition Tailster had found a way to guarantee quality supply.

Customer Experience and Brand

Now Tailster have 2,500 vetted and approved dog carers all over the UK including 35 within a three mile radius of anywhere in London. Even now they still turn down five in every six applications to become carers and rigorously monitor the performance in each transaction. “Because we’re looking to build a brand in this space, we want customers to know that it was Tailster who helped them … ultimately carers represent Tailster” says Indy.

Essentially in Indy’s experience, in spite of providing no service directly, the quality of the customer’s experience is directly correlated with their view of Tailster, so ensuring everything runs smoothly is key in retaining customers.

Online, to Offline and back to Online

As is the case with many online marketplaces, the supply and demand sides of the market often meet offline as part of their interaction. Owners meet carers in much the same way that drivers meet carpoolers and tourists meet holiday let hosts, so there is a real issue around what Indy describes as “leakage.”

Tailster and many other marketplaces get around leakage with their added service layer that is a necessary prerequisite of monetising an online marketplace.

Tailster hold payments in escrow and critically provide comprehensive insurance, it took the company a year to negotiate a deal with the UKs biggest insurers and they are the only ones who have such a deal. It goes to show how important it is to add value to an online transaction that wouldn’t be there offline. Further more this differentiates Tailster from its competitors - and obviously that differentiation is crucial.

Expansion and the Full Service Stack

Tailster have become substantially more than just a conduit by which dog owners connect with dog lovers. The model applies to any and all kinds of pets given a demand for carers and a people willing to care for animals. In fact, Tailster has had requests for a number of other animals including cats and guinea pigs.

They provide “a full service stack” that has the symbiotic effect of creating the incentives that keep people acting online even though they meet offline and also improving the experience a user has in the process.

Marketplaces that are vertically focused need to develop as they mature from just a ‘meet and greet’ offering to something much more involved. “If you look at Gumtree and Craigslist they are losing verticals that they actually used to own because there is a service stack on top of it.”

Image coutesy of CB Insights

 

In Conclusion

Tailster have taken the concept of a marketplace and added a layer of service that puts them at the forefront of their customers minds. By guaranteeing a level of quality amongst their supply and increasing functionality for their customers they have become a full service business that started with supply, married it with demand and added value for their ever-expanding user base



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