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Autobutler and the Six Characteristics of a Successful Online Marketplace

Today we announced that Index Ventures led a €5.8m investment round in Autobutler. This marks another investment for our firm in a Danish company following our previous successful investments in Just Eat (IPO April 2014), Zendesk (IPO May 2014), Milestone Systems (acquired by Canon June 2014) and Trustpilot. 

All of these companies managed to become global category leaders following initial success in Denmark and we believe Autobutler can continue this trend. This flurry of tech exits also underscores the strength of the Danish startup ecosystem, which is now on par with the activity levels we have seen in Sweden and Finland.

Another trend this continues for Index Ventures is a commitment to backing innovative businesses that are online marketplacesconnecting local suppliers and service providers to consumers either globally and or locally. Other Index Ventures portfolio companies that squarely fit this theme are FarfetchEtsyJust Eat, BlaBlaCar,Drivy,Notonthehighstreet and Funding Circle.

The approach Autobutler has taken is to provide garages with a sophisticated order management solution where they can quote on car repair or servicing jobs. For consumers, after providing relevant details of the car and repair work needed, they can request up to three proposals from vetted local garages. They can assess the responses they receive and then make an informed choice taking into account price, speed and availability, guarantee levels and other variables. Both the consumer demand and supplier business case have been validated by rapid growth in Denmark and the Company is now pushing into Sweden, UK and Germany.

Building an online marketplace is a challenging endeavor. Firstly there is the technical challenge to build a product that addresses all the needs of consumers and participating businesses and can scale quickly if needed. In parallel the company must build up the network of suppliers and generate customer demand and always keep these two sides of the network in balance to ensure all participants benefit. Therefore successful founding teams need to have great product insight, an effective sales and marketing engine and operational best practice to ensure efficient growth and high service levels. We are confident in Christian, Peter and theAutobutler team the ingredients are all there.

Besides the quality of the team - which is always critical in startups – when we look at online marketplaces specifically, we seek out those whose proposition fulfills six key criteria.

Firstly for the consumer we have 3 Cs – Convenience, Choice and Clarity. Consumers are using the internet and mobiles to organize virtually every aspect of their lives and making an order of magnitude time-saving in any task is very compelling. Obviously in the case of Autobutler, reasearching all the possible garages by calling around and visiting multiple websites takes vastly longer and is less effective and convenient than the service Autobutler offers.

Consumers love the range and choice that online marketplace businesses can provide. Finding new products or alternative service providers is an empowering experience for consumers and keeps them coming back to use platform. The last one is clarity, predominantly but not exclusively, around price and service level. Online marketplaces often bring new participants into an ecosystem and stimulate more competition and higher service standards from existing players, all of which ultimately benefit the consumer.

As important as engaging consumers is getting suppliers to engage with the service. The attributes we find which are important to them are 3 Ps - promotion, productivity and practicality.

Many local businesses traditionally have no ability to market themselves to customers, beyond dying media formats such as yellow pages and local newspapers. Otherwise small retail and service businesses rely on walk-in traffic for most of their trade. Autobutler and other online marketplaces enable suppliers to promote their service in a much more targeted and efficient way to highly qualified potential customers. Increased productivity or utlisation is also very attractive for merchants. By tapping into online marketplaces to generate extra business, suppliers make much better use out of the contracted labour and business assets they have.  One of the reasons Autobutler is able to offer great value to consumers is because garages are offering attractive rates to ensure they are fully utilized. Finally practicality – businesses can only leverage online marketplaces if they have designed a good solution that is easy to use and fits into the supplier’s workflow patterns. That is why many of the best online marketplaces provide free software and other services that help companies manage their overall business, not just the custom they may generate through participating in the marketplace. Providing a great software-as-a-service business management offering for garages both small and large has always been at the heart of the Autobutler model and carries equal importance to simply providing leads.

If you haven’t already tried Autobutler, please try it out and if you don’t want to take my word for it, check out their score (9.2) and read the reviews on Trustpilot!