Crowd, Gig, & Marketplace Platforms Need to Re-think Scalable Relationships
Rob Israch, our CMO, recently took part in a webinar with Epi Ludvik Nekaj (@LPlus), the founder and CEO of Crowdsourcing Week and Neil Gorenflow (@gorenflo), co-founder of Shareable, around the status and challenges of crowdsourcing, marketplaces, (including multi-sided platforms and the sharing and gig economy), and partner payouts.
The future of work increasingly relies on the global and freelance providers, and the webinar looked examined if marketplaces are ready to address this major impact on their operations, compliance, and partner relations.
Epi walked us through his “14 parts of crowd economy marketplaces” and where they are in terms of the trends and challenges. The panel looked at how marketplaces can build loyalty within a transient, distracted freelance population, fixable compliance and efficiency gaps in most gig-based processes, and the ways to enhance cashflow to accommodate a group that expects to be paid immediately.
Here are some key highlights from the presentation.
We’re no longer talking about reputations that are existent in the social media, but about the reputations that now are starting to build up in platforms. These reputations are very important because they’re built on actions… the Internet of Value brings in people’s passions, talents, skills, and resources.
On the Five Ps of the crowd economy…
[Marketplaces] need to be designed for the people to participate, it’s not just the platform that’s going to cut it. People, purpose, participation, platform, and productivity.
On what crowdsourcing means for organizations…
Organizations today have been focused a lot around the talent development and not in terms of the talent utilization. The opportunity when we talk about crowdsourcing does not really exist on the external side but also brings us on the internal side of the organization. How can individuals in the companies be utilized in a cross function? So, I think the opportunity of this is what we call like a “hyperloop of innovation.” It brings the opportunity for organizations to really utilize all these skills and the passions and talents that they have internally. We’re not just talking about the opportunities that these people are directly involved, but also indirect involvement. Think about how many great stories are out there, but they’re just existing in a book, existing in papers, but they’re not brought to life. The opportunity that I always see in terms of what these crowdsourcing marketplaces can bring us much connected to the past, present, and for the future. There is real opportunity that anyone can be part of it without really being tied into any centralized organization.
On the challenges of multi-sided marketplaces…
Obviously, in the two-sided economy world, you have to not only bring demand but the real challenge is you have to also build that supply chain out of freelancers, of towns of drivers et cetera and when you’re building that two-sided marketplace there’s always a question of where you start. Ultimately your product is your towns and your drivers and your freelancers. You need to make sure you provide them with an outstanding experience. The biggest threat to many marketplaces in today’s scenario is that freelancers have options. There are a lot of marketplaces out there, the gig economy is taking hold and they’re looking at numerous different marketplaces. They’re going to go where they think the better experience is, the marketplace that treats them better, where they feel gives them better business and certainly just an overall better experience.
About 64% of freelancers are using at least two different marketplaces at once. Actually, almost 20% are using four or more which is amazing. There’s still a good chunk, 37.5 who are only using one marketplace, but the trend seems to be moving in the direction of being a part of multiple marketplaces.
One of the things that really stuck out to me was that over 19% of freelancers use four or more marketplaces and so I really saw that as kind of perhaps the vanguard of future work and plus that a high percentage of these are from outside the United States, this is going to be a different type of worker or freelancer than someone just using one marketplace.
On the partner payment experience…
96% said the payment experience matters to them, 49% referred to their freelancer work as a primary source of income so it’s almost the majority of their income and obviously that’s pretty important to them from that perspective. 39% want to work with a marketplace they consider reliable. Reliability is an important perception to build with your freelancers.
On the risks of partner churn…
74% of freelancers would or already have dropped a marketplace because of a payment issue. It’s a huge number, and so if you think about your experience for your freelancers you know from onboarding them, and getting them going, giving them training, interaction with your app or your product, all the way through the end of the process, you know getting a customer and satisfying that customer, the payment experience is arguably, based on some of this data, the most important touchpoint you have with them and so you really have to focus on that not just from getting them paid on time or accurately but the whole experience around it.
It’s about the communication and the relationship you build through that process and in a service business there are always going to be problems, you are always going to fail as a provider at one point or another in the relationship and what matters is how do you handle that failure? Are you prompt? Do you take ownership of it, do you set a deadline when it’s going to be fixed, do you meet those expectations in fixing them and better, even better if you exceed the expectations in how you resolve it with your user.
On the worst mistake marketplaces can make…
The number one highest requirement or most common requirement is general payment visibility. They feel like their communication on payment status is subpar and so there are big expectations automatic notifications, real time notifications if there’s a payment issue and some help on how to resolve it. I want to view my payment status online so I can see it in real time, maybe see my payment history and such. Automatically update me on payment status, was my payment approved. Was my payment sent? Was there an issue? Did it land?
On the need to offer payment choice…
Preferences on payment methods, so this varied pretty widely and I think the general message is offer choice, offer a range of different payment methods. Definitely PayPal is by far today the most popular method. Very close by, and we’ve seen other research indicate this is probably the fastest trending, but U.S. ACH or otherwise known as local bank transfer or global ACH or eChecks. Wire transfers still have their fair share of the pie here, also over 25%, very good for expensive payments and very good for fast payments although there’s increasing data around fraud risk with that so you have to watch that.
I was really surprised about over 50% of people are taking PayPal as the preferred payment system given the fact that PayPal is one of the most expensive in terms of the fees.
From other knowledge we’ve conducted that for payment methods under $500 PayPal is particularly popular. I think even in our own payment base we pay out to about 4 billion dollars a year to different payees around the world and about half of our transactions, maybe 40% are PayPal. But when we cut back the data it’s particularly popular for sub $500 payments and if you think about it PayPal charges a percentage model so the bigger the dollar amount goes, the more substantial that penalty is so to speak and so, but for sub-500 it’s not as meaningful for the freelancer and yet it’s a very effective payment experience.
Definitely those payment method preferences we talked about earlier, that’s exacerbated by country. Different countries have preferences for different payment methods and then related to that payment in local currency. You know it’s borderline offensive to insist on paying people in another country in U.S. dollar and I think there’s an emotional aspect of it regardless of the reason why, almost 70% of non-U.S. freelancers want to be paid in their local currency.
On building a scalable, multi-sided marketplace…
One of the things that I see across the board is that often the methods of growth and the governance of these platforms are incompatible with the scale. If you’re building a platform where people were kind of peer-to-peer of any service, it’s co-created, right? And this is where the user actually contributes a lot of value and has to understand how their contribution is going to help create that value and make that marketplace thrive. So, there’s a kind of cultural facet that’s really important that if you are using very transactional advertising to bring on a user which only appeals to kind of saving or earning money you’ll get a lot of users who are not going to really behave in a way that’s going to build a business and create an experience that will have a sustainable advantage.