Are you also familiar with the feeling that you want to buy something which you don’t really need? Me neither. Nevertheless there is a new online platform called ‘Letgo’ which raised 175 million dollars from investors (Emerce, 2017). And last month they entered the Dutch market, you might have seen their annoying (yet catchy) advertisements on TV or on billboards. Letgo is basically a platform where people can buy and sell second hand stuff.
Sounds promising, how does it work?
Letgo is a free app for Android and iOS where you can find deals for second hand products (AndroidWorld, 2017). It is possible to create a personal profile where you can tell something about yourself. In addition you can link your profile with your Facebook account. Users can place advertisements, chat with others or extend their network by inviting others via Facebook. The app shows a map of the neighborhood of your current location and shows the products which are for sale. Furthermore you can see what your friends are selling. When you click on one of the ads, you get the possibility to place a bid, share the ad or chat with the seller.
But aren’t there a billion websites doing the same thing?
No, there are only a few thousand websites doing the same thing. But Letgo is slightly different:
- By including Facebook, Letgo becomes more ‘social’ compared to other platforms like Marktplaats or eBay. Furthermore it is not necessary to send emails or make phone calls to make a deal as you can chat via the app.
- It’s much fancier than other platforms (hipster alert!). I think that it’s a bit like Tinder, but instead of selling yourself you can sell your stuff (and meet new people).
- Another part of their unique proposition is its focus on local as you can only see ads near your current location.
How would you evaluate this fantastic business model?
When looking at the joint profitability, they meet this requirement as there are strong network effects. More sellers lead to an increase in (potential) buyers (and the other way around), which enables Letgo to gather more users and data. It’s a bit shady, but it’s likely that Letgo earns money by selling data. Letgo also satisfies the feasibility as there are many similar platforms. The judiciary and polity requirements are less relevant for this case, but the social norms dimension is met as Letgo is already popular in the US, which establishes trust. The achievability criteria is also met as used products are increasing in popularity (AD, 2017).
So, Letgo has a bright future
Not sure about that… This platform is useless if you are looking for a particular product. Furthermore there are already numerous Facebook groups which provide the same ‘social’ and ‘local’ experience. On the other hand, Letgo is focused on mobile devices, which makes it easier, faster and more fun to buy and sell. You could argue that there are tons of dating sites, but Tinder remains a popular app for the exact same reasons. Hence, I believe that Letgo can become a successful platform, especially among young people.