Zoe Chew

April 7, 2022

Online Marketplaces, On-Demand Economy & HR Tech

⭐️ Premium Post

Issue #03

3 market trends + 3 startup opportunities:

  • Helping home-based entrepreneurs to sell online (Consumer marketplace)
  • Unlock luxury experiences for everyday people (On-demand app)
  • Increase employee motivation and talent retention (HR tech)

Trend #1: Vertical B2C online marketplaces

Existing B2C e-commerce giants like Amazon, eBay, and BestBuy are going after the horizontal approach — by offering products that span across multiple categories and covering a wide scope of audiences.

New B2C online marketplaces are created to cater to specific types of communities, creating unique buyers/sellers experiences and focus on a particular segment or vertical to grow. For example,

  • GOAT is a marketplace for buying and selling sneakers.
  • Houzz is a marketplace for home furniture driven by a community of interior designers & home improvement enthusiasts.
  • Watchbox allows you to buy, sell and trade luxury watches online, driven by communities of watch collectors.

As online businesses continue to rise, more vertical-specific marketplaces will emerge to help small business owners to make money from home.

🚀 Takeaway

  • Any hobbies can potentially be a vertical marketplace opportunity. Connect people who want to monetize their hobbies as an at-home business.
🔥 See Startup Opportunity #1

Trend #2: New on-demand platforms will emerge

The on-demand economy has unlocked “luxury services” to ordinary people. What used to be “only the rich could afford” are now accessible for everyday people through an app — anytime, anywhere:

Today, on-demand services have exploded across different industries — transportation, shopping, food delivery, home cleaning, etc. to help people save time and eliminate hassles.

New on-demand services will focus on enhancing our lifestyle experiences in different aspects. Stitchfix — get a personal stylist service. Urban — get massages, facials, and lashes done at home by professionals.

🚀 Takeaway

  • Help people to curate lifestyle experiences and make money as a business.
🔥 See Startup Opportunity #2

Trend #3: Reinventing employees experience & creating talents moat

Remote work is changing human resources (HR) practices forever.

Interviewing and onboarding new employees are no longer done in face-to-face meetings. Hiring is becoming distributed around the world. Team-building is conducted through Zoom.

New problems that are born out of remote work practices are still awaiting solutions. How can you manage payrolls from multiple countries? How to build great company culture virtually? How to ensure the mental health of employees? How to create workplace engagements?

The future of HR will be focusing on leveling up remote employees’ experience — onboarding, employees reward, elevating motivation, diversity, and personal values:

  • Lattice helps leaders build highly engaged teams remotely.
  • Fond consolidates employee rewards and recognition processes in one place.
  • Officevibe helps managers build trust with their team members.

The next Internet world war will be the tech talent war. Companies are fighting for the best engineers & designers by driving up wages. Those who can retain talents and satisfy their employees will drive out talent competition and create defensibility for their businesses.

🚀 Takeaway

  • Help companies maximize employee satisfaction through rewards.
🔥 See Startup Opportunity #3

Startup Opportunity #1: Wood furniture marketplace

An online marketplace for buying and selling handcrafted wood furniture, woodworking products, and tools — driven by a community of woodworking enthusiasts, furniture makers, artists, and designers.

For Who

  • Handcrafted wood furniture makers. Designers, builders, and home-based furniture entrepreneurs who want to start selling wood furniture online.
  • Customers who are looking to buy high-quality wood furniture or book/hire woodwork professionals to customize their unique piece of wood furniture to decorate their homes.
  • Customers who are looking for a one-stop-shop for buying woodworking products, e.g. power drills, hand saws, table saws, hammers, sanders, drills, mallets, measure tapes, etc.
  • Sellers who are looking to list their woodworking products, reach more customers and get more sales for their business.

Problem

  • Horizontal platforms like Wayfair, Ikea, Etsy, and The Home Depot aren’t built specifically for wood furniture enthusiasts, therefore, generate diluted interests and lower sales volume for wood furniture sellers since these platforms are targeting a wide range of industries and audiences.
  • Lack of curation. It’s hard to find and hire woodworkers for customized wooden furniture projects.
  • Environmental sustainability. How to encourage people to adopt sustainable wood furniture and eco-conscious consumerism? How to ensure eco-responsibility and forest conservation in the furniture business?

Solution

  • Online store for wood furniture. For sellers: list your handcrafted wood furniture (new or second-hand) and start selling online; create a seller page, upload product photos, pricing, and description. For customers: discover wood furniture made by wood furniture makers; shop by category (e.g. living room, kitchen, bathroom, outdoor, decor); filter search by furniture colors, sizes, prices, materials, or free shipping.
  • Online store for woodworking tools. For woodworkers: buy (new or second-hand) power drills, hand saws, table saws, etc. For suppliers: list your products and start selling online.
  • Professional directory. Find and hire the right professional for your customized wooden furniture project. Search local professionals with profile details, contact information, portfolio, pricing, ratings, customer reviews, and availability.
  • Join the community. An online forum for woodworkers to discuss woodworking tips, purchasing the right tools, get advice from starting a handcrafted furniture business, sharing project ideas and inspirations with each other.
  • Eco-friendly collection. Promote sustainable wood furniture by featuring items that are manufactured using trees fallen on their own or with cavities. Introducing reclaimed furniture, or upcycle old furniture and turn it into new products.

Revenue model

  • Marketplace commissions, 2% to 5%. Take a cut from the buyers-sellers transaction.
  • Advertising fees. For sellers who want to rank their furniture listing on top through promoted ads.

Venture Scale

  • Industries: E-commerce, Furniture, Home Decor, Online Retail
  • Business model: E-commerce, Online Marketplace
  • Market potential: (1) Global retail e-commerce sales are on the uptrend and will reach $6,388 billon by 2024. (2) Global furniture market size is expected to reach 650.7 billion U.S. dollars by 2027 from 509.8 billion U.S. dollars in 2020. (3) More than 50% of all businesses in the United States are now home-based and will continue to rise in a post-pandemic future. (4) Think of a vertical marketplace that is unbundled from Reddit “woodworking” community. This community has 3.2 million members who are passionately sharing their woodworking designs, projects, inspirations, and ideas.
  • Execution strategy: (1) Go to Etsy, search for “furniture” keywords. Manually curate wood furniture products and list them on your website. Look for top sellers on Etsy — for example, busywood has 1.9K+ sales and DM the maker. (2) When you DM the wood furniture makers, let them know you’ve featured their products on your marketplace. Offer them to create a profile on this site for free to help them generate visibility. (3) Now you have the sellers & product listings, next you need to generate traffic/buyers for the sellers through content, paid Ads, or YouTube marketing. (4) Once you have reached the monetization stage, you can start charging money for advertising and featured listings.
  • Moat: Create defensibility around your business to drive out competition. (1) Branding moat. Implement customer ratings and reviews to strengthen the trust on the platform. Create successful case studies and feature woodwork makers who have generated sales through the platform. (2) Content moat. Become a go-to platform to find wood furniture inspirations. Curate a large list of wood furniture ideas and decor inspiration. Build content assets to drive traffic to the site and increase brand awareness for the marketplace.

Startup Opportunity #2: Room service at your home

An on-demand app to book hotel-style restaurant foods and personalized hospitality services to your doorstep. Use cases include hotel food delivery, book a mini pop-up kitchen where chefs will present their dishes at your home, or book a pop-up bar for special events such as Valentine's days, birthdays, date nights, anniversaries, family days.

For Who

  • Middle and upper-class consumers, who value the importance of quality lifestyle experiences, personalized services, craftsmanship, and the aesthetic of service design. Frequent customers of exclusive dining experiences, five-star hotels, and fine dining.
  • Hotel staff or talented chefs, bartenders, musicians, and bands who are looking to generate income for their talents and skills by becoming a vendor and start selling their personalized hospitality services.

Problem

  • Travel restrictions force people to search for alternative lifestyle experiences.
  • Eating the same foods from online food delivery services caused flavor fatigues.
  • Hotel staff is getting laid off due to the pandemic. People are changing to other industries to survive financially.
  • Complaints about long working hours, underpaid, and lack of job security are the reasons why many workers are not returning to the hospitality industry in the post-pandemic future.

Solution

  • On-demand room service. Revive the hospitality workforce by providing income opportunities for ex-hotel chefs who can prepare culinary creations at their own homes and sell online. Hotel staff who got laid off can now start their own hospitality delivery service by becoming a vendor who can provide personalized hospitality services. This includes setting up a pop-up kitchen to showcase culinary talents and present dishes at the client’s home for special events or presenting pop-up bartending service.
  • Alternative luxury lifestyle experiences. Customized, at-home sophisticated dining experiences that replicate culinary presentations that are often performed at in-location five-star hotels, high-end restaurants, and bars. Customers can plan their experience using the app, browse, hire & book vendors
  • Vendor listing & directory. Apply as vendors, whether you are working as an individual chef, bartender, musician, special event planner — or hotelier looking to get more sales for your business. Vendors will create a profile with details such as bio, description, location, rate, photo and video upload. Customers can find vendors, view their profile, message vendors, book a service and review each vendor.
  • Vendor upskill. Provide online training programs for passionate chefs to increase value to their skill-set and offer their talents in the on-demand economy.

Revenue Model

  • Earning commissions, 5% to 10%. Take a percentage cut from vendors for each booking.
  • Premium listing fees. Regular vendor listings are free except for premium listing features, i.e. promoted listing, recommended listing, ads, location-based recommendation, keyword-based recommendation, etc.

Venture Scale

Industries: Hospitality, Mobile Apps, Delivery Service, Service Industry

Business model: Marketplace

Market potential: (1) Globally, the online food delivery market has skyrocketed during the pandemic and it is expected to reach $192.16 billion in 2025. (2) Uber has enabled everyday people to trade their time for income opportunities by driving a car; the future of culinary talents will leverage the gig-economy to add value to their skill-set and generate income opportunities — rather than relying on job opportunities provided by hotel employers. (3) Consumer behaviors are shifting toward personalized experiences — Urban (at-home massage services) and Beutii (luxury-focused beauty service to your doorstep). Huge potential for other industries to catch up with this trend.

Execution strategy: (1) Concierge MVP. Manually match talented chefs and customers before building any tech or writing any code. Use Umso or Carrd to create the website and value proposition; Airtable to create chefs application forms, profile details, and a vendor directory. (2) Create a compelling strategy to onboard chefs (supply-side users) by giving them free professional photography, video shooting services, and pop-up kitchen setups. (3) Generate demand-side users (customers) by reaching out to lifestyle influencers and food bloggers to try the on-demand service for free.

Moat: (1) Instead of competing directly with food delivery big players like Ubereats, Doordash, Deliveroo, and Swiggy — create a new category by inventing personalized luxury experiences and dominate this category. (2) Full-stack moat. Bypass competitors by controlling the production, distribution, and user experience within your own product ecosystem. (3) An open question for founders is to think about whether they want to outsource the supply-side users (i.e. vendors) using a marketplace model or build an in-house culinary team to prepare, cook, and deliver the services without giving up any profits (i.e. commissions) since you’re paying your own team a fixed salary.

Startup Opportunity #3: White-labelled employee digital wallet

A digital mobile wallet solution for employees. Employers can consolidate payrolls, benefits, rewards, and bonuses through an e-wallet to increase employee's motivation, recognition, and engagement at work.

For Who

  • Medium to large-sized enterprises with a team of 250+ employees, seeking ways to level up employees’ motivation and satisfaction and to reward employees efficiently.

Problem

  • Lack of employees engagement creates dissatisfaction at work and affects productivity within an organization.
  • Rewarding employees is becoming harder to initiate in a remote workforce.
  • Talent retention is becoming more competitive.
  • Tracking and managing employee benefits (i.e. health insurance, retirement plans, reimbursement) is scattered all over the place with different spreadsheets and paper documents.
  • Companies that have a huge number of employees facing challenges to manage significant payroll transactions.

Solution

  • White-labeled mobile wallet for businesses. Companies can easily set up their own branded e-wallet, pay digital salaries in one click, manage employee payrolls, benefits, rewards, bonuses, etc.
  • Employee rewards. Employees will be able to receive (i.e. bonuses, gift cards, perks, digital coupons, parking coupons, co-working passes, loyalty programs, store discounts & special promotions) instantly through an e-wallet for great job performances. Employees can exchange their rewards with their colleagues to express thank-you, therefore, increase employees' motivation.
  • Digital finance solutions. Employees will have access to the salaries dashboard, bonus payments, reimbursement, business travel expenses, company expenses, budgeting, etc. Employers can pay salaries through an app; employees will be able to send, receive and withdraw their digital salaries.
  • Managing employee benefits. Companies will be able to consolidate employee benefits (i.e. health insurance, dental insurance, medical aid, retirement fund contributions, vacation days) in one digital wallet. Employees can easily keep track of their benefits through an app.

Revenue Model

  • Subscription, $15 to $35 per user/month. Access Basic and Pro features.
  • Enterprise features pricing. For inspiration: The average deal size per enterprise customer is typically in a range between $50,000 and up to multi-million dollars annually. For example, an analytics-based enterprise product can charge up to $526 per customer for software with advanced capabilities that deliver enterprise-level values.

Venture Scale

  • Industries: Human Resources, FinTech, Mobile Apps, Financial Services
  • Business model: SaaS
  • Market potential: (1) HR tech funding is exploding and growing due to the changing workforce — total VC funding amount of $3.6 billion for 260 deals in 2019. (2) According to Global Acceptance Transaction Engine (GATE), there will be more than two billion people will make a payment or transfer money from a mobile wallet. (3) Increased adoption of contactless payment methods due to the pandemic, therefore, driving the demand for mobile finance solutions.
  • Execution strategy: (1) Start by reaching out to your 1st and 2nd-degree network, build relationships with decision-makers of the organization or HR department. Request warm intros from people with whom you have built close relationships. Become a consultant and offer your expertise in leveling up employee engagement is a great way to building relationships with potential customers. (2) Build a track record of companies that are adopting your solutions. Start from SMB customers, then larger companies to demonstrate social proof. (3) To monetize at enterprise-level price focus on solving large company problems such as reducing complexity, privacy control, and streamlining payrolls & employee rewards processes.
  • Moat: (1) Network effects. Slack becomes more useful as other people also use Slack. As more employees within an organization create a digital wallet account, it becomes more valuable to other colleagues because they can send and receive money or exchange rewards from each other. (2) Switching cost moat. Once you get enterprise users to have their company-branded e-wallet, it becomes expensive for them to move to other solutions due to invested time and effort in setting up the workflow including uploading employees benefit documents, tracking payrolls and rewards.