Aggregator Business Model: Buzzing Start-up Mantra

Aggregator business model has been a popular choice with most emerging start-ups in India, who have made their presence felt in most of the domains that we can think of. Few popular ones with national presence are Oyo Rooms, Ola Cabs, Food Panda, Grofers etc while other interesting ones expanding their network have been start-ups like flatpebble.com, Wonk, Flickstree etc., the list is constantly expanding….

What is the model?

In literary terms, an aggregator means a ‘website or program that collects related items of content and displays them or links to them’. The aggregator business model is based on the same concept. In this the service provider, acts as an aggregator or intermediary in a specialist domain to provide services to a target audience. For this, it partners with various vendors who operate in that domain, and services are provided under the umbrella of aggregator, with a common brand name. For the end user, the brand name of aggregator serves as Single Point of Contact (SPOC).

The model is basically partnership or commission based. All the vendors that provide services under the common umbrella are not employees of the aggregator. They continue to function as independent entities, but give a part of their revenue earned to the parent aggregator.

Business Process Flow

In this, the aggregator serves as single point of contact for end user. End user searches for required services on platform created by aggregator. User preferences are then matched with available vendor options, out of which user selects best vendor and books for services. Service alert reaches the selected vendor, who discharges services in receipt of payment. A pre-defined percentage from total payment is deducted by the host aggregator.

Key drivers

Brand Building: The essence lies in creation of a powerful brand, and how it can reach out to target customers. Better is the brand building across various consumer touch points, higher is the recall. The brand story should clearly highlight the edge that brand possesses.

Right positioning: Strong focus on key deliverables viz-a-viz price point that would appeal to target customers. Reference frame with distinct quadrants, and spelt out points of differentiation help to strengthen the positioning and connect better with the consumer

Defining Terms of Trade: Since vendor is in direct connect with the end consumer; Terms of Trade should be clearly defined for smooth conduct of business. Devising Standard Operating Procedure (SOP) for vendor to follow; compliance with quality, turn-around time, price point, ensuring transparency in customer handling and other things relevant to individual domain must be clearly highlighted in terms of trade.

Ensuring Quality Metrics: The repeat purchase of any customer is dependent on the quality of service received. Since service providers are the vendors on board, therefore stringent quality checks by the aggregator should be ensured, so that deliverables are in sync with the objectives of the company and there is no deviation from the promises made in the brand story.

Being End-user focussed: The ultimate success rests on end-user satisfaction. Any suggestions, queries, complaints from end users must be attended on priority basis. It can also be leveraged to drive referrals or generate positive word of mouth.

It’s a win-win situation for both, the vendor as well as the aggregator. Whereas the aggregator benefits from generating revenues on each transaction by creation of a platform, vendor benefits from sourcing additional customers through expanded horizon, without having to spend on brand building or promotional activities and while being associated with a brand.

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