Any entrepreneur looking to break ground in the online marketplace sector will be familiar with this conundrum: you need to raise capital to launch the business, but without the business and proof of concept, you can’t get the capital. Much like the centuries old argument: which came first, the chicken or the egg?
‘Raising capital for any marketplace pre-launch is near impossible’
Eden Shirley speaks to Dynamic Business about his journey in the online marketplace sector; from “running lean” to revenue increases of 293 per cent, delivering 6.5 million services annually.
“Raising capital for any marketplace pre-launch is near impossible as investors want to see proof of concept and traction before they invest,” said Eden.
Eden was inspired to start his own comparison marketplace after having owned a digital marketing agency where he worked with several hotel booking and comparison sites including Hotel.com.au. Then, in 2000, a move from Melbourne to the Gold Coast gave Eden the idea he needed for execution. No longer surrounded by his regular contacts and trusted service providers, Eden became increasingly frustrated by the significant price variances and lack of consistency when he attempted to get his car serviced. He became determined to take the guess work out of the marketplace. After capturing the interest of 100 workshops who signed up to the concept, his idea became ready for reality. Launching in 2009, Fixed Price Car Service was the world’s first comparison site for car servicing allowing consumers to compare quotes from a range of local mechanics, book online and pay on pick up. The model is simple enough, mechanics join for free but pay a commission once a booking has been fulfilled.
‘It may take several years for the business to build momentum’
But launching was only just the beginning. According to Eden, it might take considerable time before before a business in this industry starts to ‘fruit.’
Eden said “we raised $200k in seed funding and launched knowing full well that it may take several years for the business to build momentum. Running lean for the first 4 to 5 years was extremely challenging. It tests your commitment and resolve like nothing I have experienced prior, and you have to be incredibly disciplined regarding cash flow.”
For the first 6 years, Eden said growth averaged 40 to 50 per cent year-on-year and their network of service providers hovered around 400 to 500. However, over the last 12 months, the repairer network has tripled, Australian users have doubled and bookings revenue has increased by 293 per cent. The workshop network is expected to increase to 2,500 this year.
“At our current growth trajectory we will deliver 6.5 million in services to our valued workshop network in 2016,” said Eden.
‘In full swing and no longer running lean’
With the business in full swing and no longer running lean, Eden is very much looking at how far this momentum will carry them.
“Our focus over the next 2 years is to diversify our product to include general repairs and mechanical, tyres, brakes, batteries, windscreens and much more. Australians spend over 15.3b on vehicle servicing and mechanical repairs and we will remain focused on increasing local market share before considering expansion internationally or into adjacent sectors.”
Flying high but with feet firmly on the ground, there’s no sense of complacency either. In the age of disruption, Eden expects to see “significant changes in technology and consumer behaviour” that will disrupt many sectors influenced by the automotive trade. Nonetheless, Eden asserts that it’s an “exciting time to be involved in the automotive sector and we are looking forward to a technology driven future.”