If you read this blog more than once (apparently someone has), you’ll have realised I am fascinated and passionate about markets and market mechanisms, amongst other things. So whenever someone at OpenCoffee starts to outline a venture that is markets related I confess to taking a keen interest in understanding how they intend to operate the market.
Last week I met with the founder of autoedbid, which is an excellent business that operates a reverse auction for the sale of new cars. Quite simply, you publish the car specification and the maximum price you commit to pay, then let car dealers fight it out for your business by competitively bidding down the price they are willing to sell you the car for. Autobid operates a “no win, no fee” revenue and has 700 UK dealers signed up.
Dealers submit their bids anonymously thereby protecting their reputation – only the buyer gets to find out who the successful dealer was and the identity of other bidders remains secret. Dealers are motivated to use this service as it enables them to quietly shift stock to meet quotas and earn improve terms. Buyers are motivated to use the service simply getting a better deal and without the pressure sell they might get in a dealership – of course, the buyer has to make a commitment when opening the auction; it’s not a play thing, so take care.
This market simply could not exist in any workable fashion without the internet.
Today I came across Parkatmyhouse, which is an online market for parking spaces, the founder of which is an OpenCoffee member. People willing to rent out their driveways/parking space post a listing including a price and details of when the space is available.
People looking for a space can then search locations to identify listings or can post a “want” listing if no suitable ones are presently showing. Spaces are shown in context on google maps.
Presently there is no price negotiation facility I could locate on the site, nor is there any price history data (the site is fairly recent) of advertised spaces or transactions done on the site, to help participants gauge what to pay/charge. I think both of these would help.
Whilst this market could exist in the classified ads section, the fact that it didn’t shows two things
- people can identify new opportunities for markets which subsequently will appear obvious, and achieve rapid takeover thereafter
- the internet democratises markets and can sustain markets that would otherwise struggle to get traction because there would be too much friction/aggro to participate in