Some dogs get sad when their owner leaves.
Others don’t get sad, they get mad.
DogVacay is here to fix both issues. DogVacay is an online community for dog boarding that facilitates the connection between “Hosts” (dog sitters) and “Guests” (dog owners). Hosts join the platform for free and create a profile with information about the services provided (day care or multi-day), physical location, and experience sitting for dogs. Hosts also set their own rates, schedule, and types of dogs to accepts. After a “rigorous approval process” Hosts can join the community and DogVacay “spends money marketing to customers…so they can find your profile.”
Value Creation: For guests looking for day care or overnight sitting, DogVacay creates a seamless connection to local hosts willing to care for their dog(s). Dog daycare typically costs roughly $45 a day in many metropolitan areas, whereas the average daycare charge on DogVacay is $20, according to CEO Aaron Hirschhorn. Hosts receive value in the form of monetary payment for their services. DogVacay also provides secure payment capabilities (via PayPal), 24/7 customer support, and $2 million comprehensive pet insurance covering the Guest pet and any Host pets.
Value Capture: DogVacay takes a 15% service fee from the total amount charged by the Host, and then forwards the balance of the payment to the Host 24 hours after the Guest picks up his/her dog. There is no 3rd party advertising on DogVacay’s website, iOS app, or Android app.
Network Effects: DogVacay’s platform exhibits indirect network effects in that an increase in Hosts leads to an increase in guests. Providing both sets of users a variety of choices helps deliver the value creation. However, as currently constructed, the strength of the network effects appears limited. Unlike with Uber and Lyft, which riders can use in any city they travel to, most dog owners (typically) only require a sitter in their home city/neighborhood. As such, once the number of Hosts in a given area reach saturation, there is limited value to Guests for each incremental Host. DogVacay has also chosen to limit the number of Hosts in order to provide Guests with a sense of security and quality. The company has received over 130,000 Host applications throughout the U.S. and Canada, and accepted only 20,000.
Interestingly, many Hosts are also Guests, which limits the overall size of total users that join the platform.
Switching Costs: Guests and Hosts are rated (5 star scale) and reviewed after each transaction, which builds in switching costs. However, since it costs neither the Guest nor the Host to post on the site, there is in fact, a low barrier to joining multiple platforms at once. DogVacay’s largest competitor (not including traditional dog daycare and kennels) is Seattle-base Rover, which operates a very similar model.
DogVacay probably wont become the next $1 billion dollar company, but has created an interesting business through a multi-sided platform and direct network effects.