Aggregators Business Model
Who is an aggregator? What essentially forms the core of an aggregator’s business model & product offering? And more importantly, what would it mean for product managers to join such orgs.?
Background
Ever since the advent of the internet 2 decades ago there have been consistent advancements in Tech and business spilling over to every nook and corner of the world leading to the inclusions of some business verticals that one could have hardly thought of imagining changes with. The pace of innovation be it products or services have been moving at a lightning pace, more so off late, so much so that if one doesn’t find oneself actively participating in this wave, one’s sure to fall back in the race and miss out on market share.
Interpreting the graph here would give anyone a chill to the bone as every 20 years shows an exponential rise in tech advancements.
The only thing that seems to have changed over the course of time is the way the interval – no. of years before one is witness to that exponential rise seems to have gone down by 75%, meaning pathbreaking advancements could now witnessed every 5 years. Going by the disruption evident today with the way AI – ML, DL, NLP has successfully made inroads, we know it for a fact beyond a mere graph / a report.
The turn of tide then led to a few novel business verticals whose model looks more like they are identifying gaps in the workflows of the users and just connecting them to the service providers / creators, making it look like they are just merely connecting the dots.
Such business operating on these models are known as “AGGREGATORS”.
Let’s explore more…
Aggregators – Business Model
As is evident over the illustration here below, the Aggregator’s business model thrives on connecting the dots majorly acting as an essential bridge between the actors both major & minor in the ecosystem – the USERS & the BUSINESSES.
NOTE: In some cases, it could be quite possible that there may be more than 2 business entities brought together under one roof by a certain aggregator.
The central idea of an aggregator is to spend time over studying & getting accustomed to the workflow on either side (users, businesses) employing that understanding to identify problems sizing them all by the impact and then use that to envision and build innovative ways to bring them all together somehow. And that could be done via a niche product or some specific features so as to facilitate / create unmatchable value to predominantly to the users involved whilst throwing a whole gamut of opportunities open to the businesses / providers as well.
Here are some well-known aggregator brands / orgs. from across the world, who happen to be dominant players in their markets today:
Looking Through the PM Lens
So, now to the all-important section and some of the main questions.
Supposing you’re starting out your career as a PM and manage to find an opportunity at one of those orgs. who’s a prime player in the aggregator space:
what can you expect out of the jobs at these orgs.?
what do you need to know so as to be prepared to face it all?
what are the challenges that are typical of these orgs.?
Deep-dive into PM Workflow:
1. Acute understanding of both actors
Unlike any other products like say: a soft drink like Coca Cola where there is an organization that’s looking to straightaway cater to its markets & customer segments with specific launches, there are 2 main actors at a very broad level here for an aggregator to cater to.
One of them could be called the provider and the other one would obviously be the consumer and the aggregator ought to have an acute understanding of both sides even before envisioning / ideating as the problem ought to be something that both the parties / actors in the system identify with and it ought to be BIG enough for both of them for an aggregator to have any semblance of traction over envisioning a product / building a feature.
2. Low participation
The businesses an aggregator is looking to rope in aren’t necessarily struggling or in bad shape over say their user base / market share / revenues. For all one knows, they may already be pretty healthy and may also hold a monopoly in their areas of operations given how some may even be legacy households brands in some pockets of the world they happen to operate in.
So, it may be quite possible that aggregators face a lot of issues when they are trying to make inroads over the conversion a business house that’s already been operative / established, owing to a fundamental question boiling down to “value addition” or they may not be entertained owing to trust issues as well in some cases. An aggregator would have to mandatorily wade through this situation and it could in all certainty be a bumpy ride.
3. Lack of transparency (from the businesses)
Given the modus operandi of the aggregator irrespective of the business vertical one is operating in, there could always be trust issues initially and sharing some information may not always be feasible, given how it could come down to getting classified under the “proprietary information” banner.
That lack of transparency could mean a lot of repercussions for the aggregator as connecting the users to the businesses is just the job they have been signed up to do and the value and benefits they happen to add in revenue terms and beyond over the whole engagement given a cohort could come down to assumptions if they don’t devise methods / specific metrics or resort to ways & means to get a hold over the exact figures.
4. Replication leading to price wars
Aggregator’s businesses are never safe owing to the whole model they operate in. It could be easy for someone else to replicate the model and attach a few other specific services so as to gun for an inclusion of a niche space and snatch market share, which could indeed be a feast for the users. What’s next? They may be dragged into unending price wars which could turn pretty nasty.
So, the burden of pretty sharp innovation as relevant to the market / users & their pain points ought to be a primary focus area for anyone who is a part of such a setup and it could get pretty huge to bear as the business scales into specific market segments and given how one of them always manages to seize the market share the others may always find themselves playing catch up. Hardcore innovation that’s backed by totally relevant and super-fine research ought to be the way forward for product teams to survive in these cases.
5. Idea paralysis
An aggregator could find themselves operating in pretty stringent and heavily constrained environments given how it ought to be in harmony / alignment with the way the business houses seem to operate / function. Moreover, when proposing changes over the existing workflow may never be welcome at all, the scope of ideation could get pretty stringent and that could also lead to some idea paralysis at times.
When such environments could be massively challenging and great places to learn for product managers as once someone gets to operate there and comes out successful, it could mean they have built some solid product sense and may turn into champion strategists going forward. But also, a bout of warning as it may not be for the weak / faint hearted at all.
Conclusion
Looking to break into product and find yourself in a fix over whether or not to pick that org. who is building products operating as a aggregator, you definitely don’t need to think twice as they could be great places to learn, but provided you have the courage to endure the sinuous, tortuous & winding path to growth.
Good to know