Of Communities and Processors
It started when I had to switch booking engines. As you might know, I run these food tours in Chinatown and using an online booking and payment system has made organizing and getting paid for these tours significantly easier. However, my longtime provider Gidsy recently shutdown after being purchased by GetYoutGuide. Coming to the realization that I wanted to continue hosting the tours, I needed to scramble to find an alternative solution.
The appeal of such websites for sellers/providers comes down to convenience and reach. It is in the vain of the Craigslist model, but for specific niches, whether it is for tours, job postings, real estate, or anything else. Posting a listing is fairly simple and said listing reaches anyone with access to a browser or app, whether sitting in front of a computer or on the go, 24 hours, 365 days a year.
What has accelerated much of the popularity of these online marketplaces is the “sharing economy”, also known as collaborative consumption. The idea is simple; I have something to offer while others have something they want for a particular amount of time. In essence, it is access over ownership. In the past this would have been the purview of companies renting to consumers like landlords or car rental agencies as they were the only ones that had the time and capital to make it work. Now anyone can get into the game, so you can rent one of your rooms on Airbnb, share your car on SideCar, or offer your time on TaskRabbit. In my case, I am sharing my time and intimate knowledge of all things dumpling to eager urban explorers wanting a more personalized experience.
The shift from ownership to access is certainly a momentous societal and generational shift in the nature of consumption. Adopting the core concepts of social media, many of these online marketplaces have been able to quickly develop thriving communities. The benefits seem obvious for many of these sites; they get to control the engagement and experience, foster a sense of trust among participants, and turn this network into an self-perpetuating engine for driving supply and demand in their marketplaces. It is this last point on “network effects” that has been driving much of the tech startup community the past few years.
In this intersection of community building and commerce however, serious problems are beginning to arise in the shiny world of sharing. For many on the supply side, the reality is that these sites merely offer the means to supplement ones income. That is not an issue and has been the default usage mode that most of the startups operated upon. The problem is when those users wish to evolve the hobby or secondary income into an actual business. The conflicts specifically come on two fronts; the first is with privacy over commerce and the second is in valuing community over providers.
When I was looking into new booking sites, a few had what I thought was an unusual setup. Instead of passing along contact information when people booked a tour, the only form of communication available was through the site’s messaging system. No email addresses or phone numbers were ever shared. In talking with the staff of these sites, they emphasized this was in the best interests of ensuring privacy. Privacy, really? Are users expecting such a level of coddling in this day and age? When consumers buy anything over the Internet, is not some basic level of information exchanged between buyers and sellers in order to facilitate the rendering of services? It seems overly paternalistic and it also confuses the core nature of why these sites even exist, which is to facilitate commerce. While we couch it in soft terms like sharing and collaboration and peer-to-peer, ultimately these are all ecommerce sites and standard ecommerce privacy practices should apply.
When you are purely about providing a community, anonymity makes sense. But when a core part of that “community” involves the exchange of service or product, privacy only creates friction between the buyer and the seller. This is a cardinal sin of customer engagement and overvalues the so-called community or network over the needs of providers and customers. Yet some of these young companies contend that their network brings customers and providers should be content. That is a debatable point given the importance of scale. Open Table brings customers. Craigslist brings customers. That is because they both have massive scale. Yet neither are arrogant enough to block the exchange of contact information between buyers and sellers. They realize their value is in reducing the friction between consumers and providers and creating an efficient market. The community is a consequence of having a viable and healthy market with happy providers willing to place their business and trust in the market.
Now you might say that if these hobbyists-cum-entrepreneurs are serious about creating a business, why bother with these marketplaces. The answer is that they are not, at least till they get big enough to create their own online presence. On the flip side, you might ask whether this even matters for the marketplaces. At the moment, because many are still very niche and very small, it is not much of an issue. However, when they try to scale, the legions of amateurs are not going to provide enough volume or availability (or value) to create a large enough network. If I look at the more successful travel and tour marketplaces, they cater to the professional outfits that are looking to distribute as widely as possible excess inventory.
If you are starting up an online network, you need to figure out whether you are building a community or acting as a processor. The community is in itself the value and goods or services are exchanged only as a side activity. The processor is about facilitating commerce and creating a liquid market for buyers and sellers. You can be one or the other. Once you try to be both things however, your chances of creating a successful network drop dramatically.
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