How we attempt to build a marketplace that challenges Amazon | A business design case study on community eCommerce

Weiwei Li

Published in

PALOIT

10 min readJun 13, 2022

Problem/opportunity

The initial opportunity we identified

The eCommerce landscape needs a different solution — increasingly, sellers are facing the risk of unfair treatment from the big platforms, which inevitably rises when these players attain monopoly positions in the market.

Earlier this year in India, a trader group that represents tens of millions of brick-and-mortar retailers called to ban Amazon, as it reportedly had given preferential treatment to a small group of sellers in India that it had stake in¹. In its home nation, Amazon is also besieged under small businesses’ antitrust campaign².

And Amazon is certainly not the only platform that has misused its competitive clout.

When the playing field is no longer level, small local sellers suffer the most as they have little leverage in this battle, yet they need to stand against the tide brought by globalization.

At the same time, buyers also start to feel the need to have a more personal and secure shopping experience. As convenient as online shopping is, users would still appreciate the warmth and personal touch that often comes with traditional retail. Privacy is another concern — people feel uncomfortable, and occasionally shocked about how much of their personal data is given up for a more targeted advertisement.

Solution

Summarizing community eCommerce in a nutshell

So is it possible to take a different approach? Can we build something that stands in direct contrast with Amazon?

We at PALO IT would like to give it a try. 😀

You see, at PALO IT we have a small innovation lab in-house, and we use this space to explore all sorts of frontier technologies and tinker with products that can change the community for the better. So this time, we want to use this 3-month lab project to build a new kind of eCommerce site, which has the potential to challenge Amazon (well, dream big right?).

Here enters Community eCommerce! 🌈

We would like to take a drastically decentralized approach — instead of aggregating all things to sell on one single, centralized platform, we would like to empower both buyers and sellers alike, on a decentralized platform. Here, they will self-organize into communities, where each member actually knows, or can trust the other member based on the SSI (self-sovereign identity) assigned. Trading activities would then happen organically based on the existing trust network embedded within communities.

It will be a more personal shopping experience, it supports local businesses better, and it also encourages people to consume more responsibly. Meanwhile, since each community owns the node, no single company is able to collect personal data and use it for commercial profit.

At least, this is how we envision our “Community eCommerce” platform to work. But before the vision is translated into reality, there’s still much work to be done.

Zero in on a market segment

Using lean canvas to identify where the most promising segment lies

The first question is which opportunity area to focus on.

As a platform solution, it could be applied across many different industry verticals — fashion, food delivery, tuition service — the possibility is endless. But in order to build a MVP in 3 months, and to deliver value to our end users, we cannot afford to be everything for everyone — we have to do exceptionally well for a small group of users first.

Lean canvas comes in as a handy tool, for us to map out the key differentiators of this platform, and identify the potential early adoptors.

lean canvas exercise we’ve done for sellers — *Lean canvas exercise — the team has done each for both sellers and buyers*

After a few rounds of discussions, with bold assumptions made, we have listed out a number of segments that would benefit the most from our new model of online trading. The segment on commodity producers emerges as the winner, as we believe that our concept dovetails well with the trend to support local producers more, and buying fresh produce definitely grows on veins of trust.

This is the key value proposition we’ve come up with for the farmers (sellers) based on our vision:

“We will improve the quality of the livelihood of farmers by providing a low-cost online marketplace that links them up directly with potential buyers within local and overseas communities, so that they can leverage this existing trust network to sell produce directly, giving their business a great headstart while removing all the middlemen and layers of additional costs. This online platform will also be simple to set up and use, for people with or without technical background alike.”

Meet the customers — rapid validation and feedback loop

Conducting user interviews to test out the concept’s potential

In Steve Blank’s Classic, “The Four Steps to the Epiphany”, he has hit home with the need to do customer discovery as early as possible. Simply put, for any new business ideas, you need to “discover” your true customers by getting out of the building and into the field.

These questions need to be answered during this process:

Do our potential customers indeed have the problem which we are trying to solve?
And do they need to have this solved urgently? How much value do they place on it?

It would be dangerous, and quite frankly ignorant to invest steeply into product development before your hypothesis about the market is validated. So we are happy that we manage to talk to some of our targeted users, understand their behavior and motivations better, and leave the guesswork behind.

We created a concept poster to illustrate the “Community eCommerce” idea, and conducted rounds of interviews with potential users (Concept poster, by the way, is an effective and low-cost way to prototype an early concept in order to get feedback from your end users).

*A glimpse at some of the interview notes taken*

Some key questions we posed during the interviews include

How do they currently do fresh produce shopping?
How do they react to our concept?
What resonates with them, and what could deter them from using the product?

And with that, we are ready to move onto the next step.

Sharpen our value proposition

Getting closer to a product/market fit

After talking to the end users, we have got a sense of our concept’s footing, and most importantly, information on how we can make it a stronger product, so that we move closer to a product/market fit.

We synthesized the data into three main groups:

The Attractors, which are things that resonate with the end users, or motivate the users to adopt the concept
The Detractors, which are things that show up as concerns from the end users, or potential dealbreakers if not implemented well
The Improvers, which are things that could increase the appeal of the concept to the end users

*The “Attractors” section of synthesis notes*

The Attractors are essentially the value proposition perceived by the end users.

From the research, we can see that the main attractors are the human connections on this network, the support for local business, as well as the potential customization/personalization.

These points are largely in line with the unique value we are trying to offer, which is good news for us. However, we also acknowledge that it is currently far from an essential solution that addresses an urgent need.

But we can increase the winning chance of the product by applying the following formula:

Indeed, this is how we do the iteration in a nutshell. Let’s see this in action.

For our existing segment, “commodity producers and buyers”,

- ⬆️ Double Down on the Attractors ⬆️

It is clear that the product design needs to bring out the human connections, and the trust relationships visibly on the platform.

Also if we can make the customized discounts or personal treatment happen easily on the platform, it will encourage adoption.

- ⬇️ Minimize or Even Avoid the Detractors ⬇️

One of the detractors highlighted in the interviews is that people are not very confident about the comprehensiveness in the range of products offered on this platform, or the operations given its self-organized nature.

This sets a clear bar for us, if we are to get the first batch of users. We will need to handle the operational aspect of the platform well, for instance to have sufficient sellers onsite to offer a full range of fresh produce, or to have logistics well integrated, etc.

- ❇️ Augment with Improvers ❇️

If we would like to enhance the concept even further, the Improver aspect has also given us some good ideas:

Make the quality of produce more perceivable, since this is critical for users to decide whether to make a purchase
Devise a way to make the connections between buyers and sellers grow organically and authentically

But besides iterating on our existing segment, we can also use the formula to help pivot to segments for which the value proposition stands out more strongly.

⬆️ Attractors

⬇️ Detractors

Namely, we can find a segment that would appreciate the “Attractors” even more; and/or a segment that would not be bothered by the “Detractors”, especially if the detractors are inherent to the product.

Going in this direction, we identified “secondhand items” as a suitable segment — people do care about the quality here, but they do not need to assess it as much as they do in the case of fresh produce, where people really want to smell, touch and squeeze the products 😆.

Similarly, the detractor on the comprehensiveness in the range of products offered will be less of an issue for this segment too.

So there, we have wrapped up the first iteration on the concept, its value proposition, and its audience. Based on our discussion results, we choose to focus on the secondhand items segment for our very first MVP but the cycle could have continued…

The cycle could continue…

How business design works

Due to project scope and time limit, we had to stop at this iteration, and start to build the MVP. However, in a real startup case, the business design cycle would have continued.

It’s common to get the customer discovery wrong a few times, or the customer validation wrong a few times, before we are able to nail the product/market fit.

Indeed, as we do a reality check with the business idea, oftentimes we find out:

The concept is good for a totally different customer segment
The customers would use your product in a different scenario, aka they find it useful for different purposes
The customers wouldn’t pay for your products, and you still need to work on the business model

*Courtesy of Steve Blank’s Four Steps to Epiphany*

The idea is that the iterative steps here are a natural and valuable part of the learning and discovery.

As a matter of fact, until you have found a viable business model by identifying a group of paying customers, you should hold back on hiring any sales or marketing team — they won’t be able to prop up a business that has yet to learn walking on its own. But they can make your business into a flywheel once you have figured out the customer discovery — customer validation loops above.

What we have learned

Granted, the project done in Innovation Lab is not really equivalent to a startup, and also some of the research was not done as extensively or in-depth as we wish.

But a lot of the learnings are transferable, and likely for the business projects you are working on right now.

When iterating on the product, it’s imperative to always keep these two forces in mind:

Things that draw people in, and things that hold people back.

Unwaveringly focus on both delivering more of the former, and removing more of the latter.

2. People often want quick success, and shy away from the iterations, the ups and downs, yet this is exactly what you need in a business design process.

Perhaps view it as if you are launching a rocket — you just keep cycling through each step until you achieve “escape velocity” — that is, until you generate enough success to carry you out and into the next step.

3. It’s always possible to build a MVP.

When we started the lab, there were voices doubting if we would ever be able to pull off such a complex piece of technical implementation within such a short timeframe. Actually, pretty much every time we run a lab within PALO IT.

But believe in this — it’s always possible.

Know what we are trying to prove with the MVP, and direct every ounce of our energy towards those features. Cut out everything else, or find duct tapes for those non-essential ones.

For instance, can you imagine that our Community eCommerce MVP doesn’t have online payment integration? We purposely circumvent this by getting buyers and sellers to settle it via PayLah offline, so that we can focus our effort on building SSI solution and integrating gossip protocol for the trust network, as these are the cornerstones to our overall concept and its innovation value.

So there you go, that’s all the learnings on business design unpacked! For me personally, the Innovation Lab project has not only been fulfilling but also fun. Watch this space for more updates in the future.