The ‘Aggregator Model’ is becoming increasingly popular among entrepreneurs and consumers alike, with at least one brand for every sector – from transportation (Ola, Uber), services (UrbanClap), groceries (Big Basket, Grofers), fitness (Fitternity), hotels (Airbnb, Oyo) and more.
For the consumer, it is the convenience that is attractive, for the entrepreneur, it is the large volumes and the visibility, and for the service provider, it is a readymade customer base resulting in higher usage. Sounds like a win-win situation now, doesn’t it?
In this Information Age, start-ups can learn a lot from existing businesses that have made it big using the aggregator model and here are my top five:
1. You don’t always have to limit your customer base
The right targeting and how you communicate with your audience is what is conventionally most important in any business. However, as an aggregator, you can do it all.
According to Travis Kalanick, Uber’s Chief Executive, the company wants to make transportation as reliable as running water. Their target audience is pretty much everyone who uses a cab. It hardly matters if they want a small budget car (UberX) or a luxury vehicle like an Audi or a Mercedes (UberSelect). They would prefer to carpool to work (Uber Pool) or ride pillion behind a two-wheeler (Uber Bike) – you name it and they have it.
Similarly, with Airbnb, you can choose to bunk with someone on your backpacking vacation using the ‘Shared Rooms’ option or an entire villa if travelling with your extended family. The destination would be the same but what they are offering are entirely different experiences of the same place. Their target audience? People who are looking for places and those who are willing to rent out theirs.
What’s more, you can now even choose to get married at an Airbnb – without the oversized budget a typical wedding demands. Getting hitched at a beautiful Hollywood style mansion in California or at a small country castle in Italy sounds more doable now, right?
If you are an aggregator business, one size can usually fit all!
2. Asset-Light is Asset Right
Going asset light reduces capital risk and allows businesses to function largely on just aggressive marketing. It also lets you diversify and achieve scalability without looking too heavy on the books.
For instance, Oyo does not own its hotels. It just offers the same degree of standardisation, irrespective of the city you are in. Similarly, UrbanClap does not have its own beauty salons (or spas or photography studios for that matter) and neither does Ola own its own cars.
Being asset light also means lower operational costs, with the focus remaining on creating value for the business.
3. No competition is too big or too small
Airbnb has proved to be one of the biggest threats to hotels in New York. I have been reading about the scuffle between the two reach new lows over the last one year.
Naturally vulnerable against the affordable accommodation available to visitors in what is one of the most expensive places in the world, hotel associations are using scare tactics, citing security issues, racism and more against Airbnb homeowners. Airbnb, however, has maintained that their hosts represent the best part of New York – hardworking families willing to open their homes and neighbourhoods to travellers for a bit of extra money.
Closer home in India, auto rickshaws are very vocal on the cheap and more importantly, metered cab rides that Ola and Uber offer and have frequently protested their presence.
On the other hand, you can now book a metered Auto (yes, a thing of fantasies indeed, in most cities) through Ola and Uber.
I guess if you can’t beat them, join them – goes for both sides!
4. Start with the perfect outcome and then work backwards
Imagine a young couple staying in Mumbai’s suburbs, bravely facing the perils of the big city traffic each day. To them, poha is just as important as smoked Dutch cheese, coconut is as much as a superfood as quinoa and kale and spinach are equally needed for their breakfast smoothies.
Luckily for them, they don’t have to spend their weekends running between their neighbourhood kirana store and the gourmet supermarket. There is a grocery aggregator that does it all – delivering it right to their doorstep every week.
As an entrepreneur, this is what you must always keep in perspective – imagine the ideal situation and what needs to be done to achieve it.
This is exactly what BigBasket does – focussing on inventory-led, hyperlocal delivery, procuring groceries from multiple sources like neighbourhood grocery stores, from suppliers directly and even farmers for the ‘farm to fork’ experience everyone is looking for now.
5. You are an entrepreneur helping other entrepreneurs
The make-up artist you hire through UrbanClap, the Ola driver who drops you to work and the Airbnb host from your trip to the hills are all entrepreneurs too.
As the owner of an aggregator business, you are not only fulfilling your own start-up dream but also helping hundreds, maybe even thousands of entrepreneurs fulfil theirs.
Your business is the platform for other business owners to showcase theirs. They are relying on you just as much as you rely on them to make it work, with both of you heading towards the same goal – enhancing customer experience.
Like any other business, your venture too will require careful review, friendly testing by friends and family and adequate consideration on what will it take to get people to adopt your service. If the current offline market is unorganised, think how you plan to disrupt it.
The endeavour of any aggregator business model is to create a user-friendly, e-commerce environment for its consumers that encourages repeat use, regular use, so much that it becomes part of their lifestyle – like you ‘Uber it’ and don’t take a cab anymore.