I am a bit surprised that the article doesn't have any introspection about knowing the market (or not). It seems like the reasoning was: we want some money; women have money; women buy clothes; let's do fashion. It doesn't seem like there was much of a value proposition for the customer. Maybe the customer likes browsing Instagram. Maybe the customer asks all these questions (stupid questions as well as clarifying questions) to gauge how quickly a return would be dealt with if desired, to establish some info about company knowledge and responsiveness. (Buying clothes online is risky in terms of fit and fabric quality, especially with resellers.) How could a startup cater to the features of the marketplace instead of fighting them?
I returned home from Silicon Valley and built a failed startup
11–20 of 81 posts
Re: I returned home from Silicon Valley and built a failed startup
#12Thanks for your write up. After my own failed attempt I came to the conclusion that any product based primarily on aggregating products that others sell is a failed model. You are a middle man in an already thin-margin industry and are competing directly with shops (who are incentivized to have customers come directly to them and bypass you) and other aggregators. It would be better if you became a drop shipper and s…
> any product based primarily on aggregating products that others sell is a failed model
What about eBay?
Re: I returned home from Silicon Valley and built a failed startup
#13Thanks for your write up. After my own failed attempt I came to the conclusion that any product based primarily on aggregating products that others sell is a failed model. You are a middle man in an already thin-margin industry and are competing directly with shops (who are incentivized to have customers come directly to them and bypass you) and other aggregators. It would be better if you became a drop shipper and s…
> any product based primarily on aggregating products that others sell is a failed model What about eBay?
eBay is not forwarding you to third-party websites in order to purchase products. They are listing products directly. The company the author was creating forwarded you to someone else. In return the store paid a monthly fee. Essentially this company was targeted lead-gen, and stores paid a fee for them to do the work and drive traffic.
Re: I returned home from Silicon Valley and built a failed startup
#14Thanks for your write up. After my own failed attempt I came to the conclusion that any product based primarily on aggregating products that others sell is a failed model. You are a middle man in an already thin-margin industry and are competing directly with shops (who are incentivized to have customers come directly to them and bypass you) and other aggregators. It would be better if you became a drop shipper and s…
The point of having an aggregator is not to have a headache with stock keepings and shippings, on the other hand doing an aggregator leads you to have less control over the products and customer service. Each has its own drawbacks
Yes I understand the thought process, but as you wrote in detail, it was a failed model. The benefits to being an aggregator (lack of stock and shipping headaches) is far outweighed by the negatives (lack of control, competition, lack of loyalty, little money).
If you were building a shopping platform, and getting loyalty, perhaps you should have just sold the items yourself. The experience would have been much better, for sure.
Re: I returned home from Silicon Valley and built a failed startup
#15> This just sounds so wrong to me. If you have a good product and it brings value, then others should be able to value it by paying you back for your product or services. Period. I completely understand this philosophy, but an attempt at building a two-sided market place is very likely going to require outside investors. This opinion that you need to be profitable from day one has been proven wrong repeatedly and whi…
We did raise funding it was around $100k-$500k (not going to disclose the real amount). We realized that we needed some boost to test the market overall, but after 1.5 year of using that money and got to 30-40k UV per day, the path of profitability from that point seems far away, numbers just don't add up.
It gets worse as I stated in the article that new startups in the same area are raising behemoth amount of funding. The funds were used to attract and subsidized sellers and buyers.
Re: I returned home from Silicon Valley and built a failed startup
#16Earlier quoted context omitted.
The point of having an aggregator is not to have a headache with stock keepings and shippings, on the other hand doing an aggregator leads you to have less control over the products and customer service. Each has its own drawbacks
Yes I understand the thought process, but as you wrote in detail, it was a failed model. The benefits to being an aggregator (lack of stock and shipping headaches) is far outweighed by the negatives (lack of control, competition, lack of loyalty, little money). If you were building a shopping platform, and getting loyalty, perhaps you should have just sold the items yourself. The experience would have been much bette…
So any successful aggregators out there? I think the closest one seemed to be pinterest
Re: I returned home from Silicon Valley and built a failed startup
#17Thanks for your write up. After my own failed attempt I came to the conclusion that any product based primarily on aggregating products that others sell is a failed model. You are a middle man in an already thin-margin industry and are competing directly with shops (who are incentivized to have customers come directly to them and bypass you) and other aggregators. It would be better if you became a drop shipper and s…
> any product based primarily on aggregating products that others sell is a failed model What about eBay?
I don't think eBay is really an aggregation service; it's a platform on which people directly sell items. An aggregation service on the other hand goes out and finds shops already selling items through other platforms and provides one place where you can search all these shops. They would then presumably collect some sort of commission on sales.
Re: I returned home from Silicon Valley and built a failed startup
#18I am a bit surprised that the article doesn't have any introspection about knowing the market (or not). It seems like the reasoning was: we want some money; women have money; women buy clothes; let's do fashion. It doesn't seem like there was much of a value proposition for the customer. Maybe the customer likes browsing Instagram. Maybe the customer asks all these questions (stupid questions as well as clarifying qu…
The one I wrote was an over simplification. There are of course more than that.
The value proposition to the seller were clear, we wanted to give them more exposure outside of Instagram, make their store be discovered by style/trends.
The value proposition to the buyer is what I think is lacking. We tried to generate sort of a board as a form of style inspirations, but it seemed the market doesn't really care about the mix and match of outfits. I guess what i realized too late is developing country markets are prioritizing price over style way more than developed countries
Re: I returned home from Silicon Valley and built a failed startup
#19> This just sounds so wrong to me. If you have a good product and it brings value, then others should be able to value it by paying you back for your product or services. Period. I completely understand this philosophy, but an attempt at building a two-sided market place is very likely going to require outside investors. This opinion that you need to be profitable from day one has been proven wrong repeatedly and whi…
We did raise funding it was around $100k-$500k (not going to disclose the real amount). We realized that we needed some boost to test the market overall, but after 1.5 year of using that money and got to 30-40k UV per day, the path of profitability from that point seems far away, numbers just don't add up. It gets worse as I stated in the article that new startups in the same area are raising behemoth amount of fundi…
The hard part in building a two-sided market is getting users AND buyers on your platform. This generally means epic shit-tons of brand marketing to end users, which is where a lot of those millions of VC dollars go. There's really no way to get brand recognition otherwise -- you have to spend some ad dollars to inform users of your product. Ad spend is a zero-sum game from a competitive lens, so if your competitors are out-advertising you, they're going to win. And yes, this is why companies tackling two-sided markets focus on user acquisition over profitability.
You were also trying to fix the wrong problem. Focusing on the user experience is the right call, but your mistake was saying "fuck this, the distributor model is so fucked we can't do it". Ok, if the supply chain of a specific industry is super-expensive, your business model should be to streamline it by going direct and undercutting everyone else (this is what Uber did).
You needed to build a new distribution model. It's fair to say "I'm a college student and don't have time to fix this big problem" -- which is fair, supply chain problems like this are usually best left to people with experience in them or at least a passion for solving them.
Re: I returned home from Silicon Valley and built a failed startup
#20I couldn't imagine doing something like this in the Philippines, which I'm guessing is much like Indonesia.
Nobody has credit cards to buy anything online. Credit card alternatives haven't gained traction. People use cheap alternatives to Western Union to send money.
Nobody surfs the web except at internet cafes. And at internet cafes it's either FB or homework. Nobody aimlessly browses when they are dishing out money every hour.
Nobody uses apps. Even those with smart phones only use FB, Instagram, games and a handful of other messaging apps. Even if they did want to use apps, cheap smart phones are out of resources after installing FB and the rest of the above mentioned.
No matter the phone, everyone uses SMS.
The postal system is shady. I never order anything online. I don't even have a proper address. I don't know how the postal system is able to deliver anything.
There are exceptions to all of the above and these are likely your target market since they likely have money. But this is a small percentage.
And speaking of money. Nobody has that either.
I noticed the post mentions there are tons of Instagram shops. I have no experience with this, but the number of shops seems irrelevant to me. Anyone can start an Instagram shop, post pictures once in a while and largely be invisible. It seems that much more important would be the above logistical issues which would also be important in Indonesia.
I imagine people selling through Instagram are much like the street vendors. They see no problem with being the 4th guy within an hour trying to sell you the exact same things as the 3 guys ahead of him while you are trying to eat a meal and drink some beers. They just don't try very hard. But any money beyond whatever income they have is better than nothing.
A place like the Philippines is all about improvisation. I don't see how you could improve much on the Instagram / FB shop model. In the vast majority of cases, there is probably nothing there to improve because there is no activity. For those who do get it to work, it's probably good enough.