Building a Profitable Aggregator business
In recent times, a lot of aggregator and marketplace business models have come up. There is an aggregator for almost all types of services consumers may require in their day-to-day activities. When a model is booming it is copied very fast. The speed is sometimes so high that the only way to survive is by having a large consumer and vendor base. This can lead to operational problems as the size of the consumer base and vendors available for a partnership do not increase at the same rate as the sector may require. In such cases, only those businesses that survive are able to retain their partnerships with consumers and vendors. For that, a business needs to run in a very strategic manner allowing it to plan and execute its approach in a well-organised manner.
To begin with, let us first understand some key elements for running an aggregator business. There are majorly three aspects of aggregator business’s attention.
- Encouraging consumers to only use their services for a particular product or activity: As the business is not producing anything, the only incentive is to retain the consumers. This enables vendors to understand the value you can provide them and they will continue their partnership with you
- Onboarding vendors: To retain your consumer base you need to onboard vendors which can deliver and provide a variety of services for the consumer to think of you as one-stop shop for that industry
- Branding: This is the only major thing for the aggregator business to spend most of their money and time on. The consumers will not come to you even for their first trial if you are not able to establish some kind of trust with them
When a founder has figured out all the three major hurdles and has been able to create a plan and a strategy to execute said then only should they start investing their time and money in the idea. In the beginning, it is difficult to run a business. Especially a business where you depend on partnerships with your vendors and consumers.
Thus before developing and starting your aggregator business figure out the answer to the following questions:
- How many vendors are there for you to onboard
- How many consumers will be able to accept your services
- What are the pain points they are facing during the transactions
- What is the price they are willing to pay for it
A founder doesn’t need to have an in-depth knowledge of these questions. But a rough idea can help the business gain its initial momentum. Scaling that momentum can be easy as you will also learn in the process what to focus on and what can be dealt with later.
I as a mentor to such businesses always say that focus on developing a good and sustainable consumer base. Your vendors are always happy to make more money. If your model make this process to be hassle-free, you will be able to retain both the vendors and consumers.
I hope that you will be able to get some clarity in running your business. If you would like to connect and discuss your business model to increase your revenue connect with me on LinkedIn. You can also set up a meeting for discussion by emailing me at- firstname.lastname@example.org
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