I was talking to my brother the other day. As a bioengineering PhD and now an entrepreneur of his own diagnostics startup, he was telling me how cool the app “Fiverr” has helped him in website design.
“I spent $5 to get an Indian graphic designer for my company logo, and another $5 for a landing webpage for his company website”
Fiverr is an online marketplace that offers a range of tasks and services, from design, online marketing, writing & translation to other business services such as consulting, beginning at a cost of $5 per job performed. Fiverr attracts clients by making the tasks “cheap” (although suppliers can charge more than $5 if they want to), attracting clients like my brother who would otherwise not able to afford professional services. It also provides a wide range of services with more than 3 million service listing (“gigs”), allowing clients to choose the suppliers that best fit their needs. From the suppliers’ side, it is a lower barrier for them to earn some additional money and improve their skill set. As for Fiverr, they will charge 20% commission for each successful transaction.
In terms of value creation, Fiverr disrupts the traditional professional service market by allowing more clients and suppliers to enjoy and provide services for a much lower price. To ensure customer services quality, Fiverr introduced a rating system for clients to leave ratings and comments, and prioritized the high rating suppliers for selection. The wide range of services provided as well as the number of providers also present a strong indirect network effect, enabling clients to choose from the highest quality suppliers and crowdsource their task. For example, Alec Wiggs, a musician from a small town, leveraged Fiverr for song crowdsourcing. He played the guitar track, and crowdsourced the bass, drum, vocal track as well as the sound engineering service to 4 suppliers who love their craft enough to do it for an affordable price. In 10 days with $230, the song “Hydrangea” was made with 4 strangers across the United States. In my brother’s example, with just $10 he is able to get the basic of his company up in the online world.
In terms of value captured, Fiverr charges 20% of commission for each successful transaction. Fiverr also charged suppliers advertising fee if they want to become “featured suppliers” and appear at the top of filter results.
Meanwhile I see a lot of potentials for these types of talent platforms to thrive given its reasonable pricing and breadth and depth of services available, they also have their shadier side which makes me question their sustainability. Some research has shown that key growth drivers are people who sell spam. For example, for $5 they will create 2,000 fake Twitter followers for you. These types of businesses that appeal to those who want to inflate their online influence, yet creates a false sense of economics that might get Fiverr into trouble. While Fiverr proves to be a good platform to start with, it needs to be more careful in selecting the right tasks to put on the website.