Building Photofaire as an Online Marketplace
There are a few key factors when considering a marketplace model. An ideal marketplace would have a high usage frequency, a potential to disrupt a highly fragmented market, relatively low customer loyalty to a particular seller, unique supply and/or product, and strong network effects. It doesn’t necessarily mean a marketplace should have to meet all of the criteria, though the go-to-market strategy would vary greatly depending on the specific type of business. On hindsight, Photofaire might not have been the best marketplace candidate.
First, let’s take a quick look at the competitive landscape of the photographer booking business:
Photographer booking is a highly fragmented business. According to the 2014 Photography survey from Digitas, there are over 150K freelance photographers and small studios across the U.S. While there are marketplaces such as the Thumbtack or elance providing photographer booking service through their platform, there is no dominant player in the estimated $4.2billion market. This creates opportunities for potential technology disruption.
With that said, there are major headwinds against our business:
- Lower purchase frequency — Photographer booking has never a high usage frequency business. Customers don’t normally hire a professional photographer beyond special life events. Even for families with young children, the segment we initially identified as our niche segment, the need limits to only once or twice a year such as the holidays or birthday parties. Adding to the challenge is the ever evolving smart phone camera technology and increasingly more affordable DSLR cameras. Photographer booking has become more of a luxury than necessity spend.
- Higher customer loyalty — Once the customers find a quality and trustworthy photographer, they tend to keep the relationship for the long haul. Why? As soon as you invite someone to record your most memorable life moments, the relationship gets very personal and involves a high-degree of trust. Once the one-on-one relationship is established, it becomes tough to make the customer switch. Before we started, our plan was to overcome this challenge by a much more streamlined process and 100% price transparency. Majority of our focuses had been placed on building these two pillars, but we did not witness the customer traction we anticipated.
Given the above challenges, we decided to focus on the levers we can pull:
- Get unique supply — When Airbnb launched, they brought something completely new to the market. At the time the few alternative accommodation options only existed in the likes of craigslist. In another word, they created a new market and new experiences. For travelers, they now have the option to rent a room in a beautiful house at a fraction of the hotel price they might have to pay. For hosts, they get steady income steam they would not have gotten elsewhere. At Photofaire, we quickly realized just offering convenience and price transparency was far from enough. We needed a “Wow” factor to give the customers a compelling reason to book with us. We did two things: firstly we curated the photographers on our end by only accepting a small percentage applying to join our platform. Secondly we reached out to our photographers individually to cater special packages to our customers. The latter approach worked to certain degree. Still many photographers lack of the enthusiasm to customize a package unless there is proven customer volume.
- Build stronger network effects — We tested an approach to allow photographers to upvote each other’s work so we can further help our customers curate high-quality photographers besides customer review. And the test site was more heavily imagery-focused with enhanced photo gallery to create a premier photographer community. We received very positive feedback and observed improved photographer acquisition results. Along with this approach, we allowed our photographers to promote their web and social media presence through our platform so customers can review their branded portfolio and connect with them directly. The immediate downside was to lose the transaction revenue as a commission-based marketplace. But I believe this could be a viable business model to first build a unique and stronger supply network before adding a marketplace on top to monetize it.