There is an interesting company in China called MyTherapist. It is a digital marketplace platform for services. But instead of connecting consumers with drivers and restaurants, it connects them with therapists and life coaches. That is a really interesting idea and highlights how marketplace platforms are really still in their infancy.
Marketplace platforms began with products. Think eBay and Amazon. And that meant a lot of logistics challenges because you are shipping physical items in boxes. They began with simple products like toys and books. And then went to digital goods, which could be downloaded digitally (i.e., buy a song on iTunes). And then eventually they moved into more complicated products like groceries and fashion. China is really innovating on the frontier of this right now.
We are seeing somewhat the same pattern in marketplaces for services (not products). It began with simple services like hotel reservations and food delivery. And these could be either commodities (getting a ride on Didi, buying a plane ticket) or differentiated services (choosing a hotel, hiring a designer).
But again, most of the early days of services marketplaces have been focused on simple services provided by lower skilled workers (drivers not doctors). And the platforms that did well focused on high frequency, differentiated simple services. Think everything on WeChat. Ant Financial calls this Daily Life Services. I have called the first companies (Expedia, Uber) Services marketplaces 1.0. When Meituan bundled lots of these services together, I called it version 2.0.
But as marketplaces start to offer more complicated services, we are seeing a lot of interesting things. Which I call version 3.0.
Think about Ant Financial, which I have argued is three platforms combined. It is a payment platform, a marketplace platform for simple services (daily life services) and a marketplace platform for much more complicated digital finance services.
We can see Ant Group making the jump into very complicated, low frequency services – such as getting a mortgage and buying a wealth management product. And we have seen So Young International create a marketplace for plastic surgery. From Barrons:
“Getting clients through those channels can be expensive and inefficient because they can’t be accurately targeted. According to the consulting firm Frost & Sullivan, providers of medical aesthetic services spent about one-fourth of their revenues on finding customers last year.
Platforms like So-Young try to offer a more efficient way for customers and doctors to connect. People who use its app are already showing interest, so So-Young tries to push them over the line through education, consulting, and active online communities, as well as through advertising. So-Young hosts some two million user-generated blogs—so-called Beauty Diaries—about individuals’ experiences with plastic surgery.
The company now hosts about 4,000 service providers in more than 30 cities. Almost two million people a month used its app during the first quarter.”
The first thing that jumps out at me when I look at marketplaces for complicated services is the increased importance of content and influencers for consumers. You need to offer a lot of information and guidance when you are trying to get someone to buy plastic surgery. Or to buy home insurance. Or to borrow money. So Young publishes a ton of articles on plastic surgery by doctors. And past customers keep journals of their experience, which are published to potential new customers. Content and influencers are a big part of the power in complicated services.
But you also have to offer more capabilities on the merchant side. Banks want to offer loans to consumers but they have to do the underwriting and assess the risk. So the platform (Ant Group) offers lots of data, analytics and advanced decision-making technology for them.
Which brings us back to MyTherapist.
- What kind of content and influencers would you need to make this marketplace go on the consumer side?
- Are people going to provide testimonials (like for plastic surgery)?
- Are they going to offer reviews of therapists like for books?
- What kind of new capabilities are required on the service provider side? In person consultations? WeWork-like locations to meet? Will we see new retail-like locations for professionals?
It’s an interesting space to think about. We’re really just at the beginning.
Thanks for reading – jeff
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