Platt Perspective on Business and Technology

Online store, online market space – part 20: vetting and brokerage as business expansion -1

Posted in startups, strategy and planning by Timothy Platt on April 1, 2012

This is the twentieth posting in a series on building an online store as a new business (see Startups and Early Stage Businesses, postings 20 to 33, 35, 37, 40 and 55 for parts 1-19) and my first addition to it on over a year now. But this is also a topic area that I see as very important and it is one I have continued to think about. A recent conversation has prompted me to pick up on this again and I turn here to address a gap that I have left in my previous discussions.

Businesses exist and function in complex ecosystems with supply chain and other supportive business partners, competitors and potential competitors, colleagues and of course the marketplaces in which all of these businesses and business persons interact. Up until now I have focused in this series on the online business as viewed from within a specific single business. I turn in this posting to the larger-perspective view of how individual businesses fit into these larger systems, and with a specific goal of discussing how a business and business owner can gain value from these interactions.

I have written separately about supply chain systems per se and will continue to do so in separate series, at least for now. My focus in this posting and for this series is going to be on online brokering and developing online marketplace portals as a means of:

• Providing direct added value for your customers,
• Developing increased market share for your own business, and
• Creating new revenue streams.

I begin by noting what should be an obvious point: a broker is a middleman. And as a middleman, any value that you develop and receive for your business is going to be dependent on your capacity to meaningfully connect your website and other online visitors to the businesses you would introduce them to as a broker and intermediary. You need to know:

• Your customers and what they would look for in the larger marketplace, and particularly as those needs and interests would relate to what you do and offer.
• Businesses and business professionals in the business ecosystems that you work with who provide products or services that would meet your customers’ needs, and particularly as this expanded set of products and services would connect to what you do and offer.
• Which of those products and services would primarily compete with what you offer for market share?
• Which of them could best be seen as offering extra added value for your customers, not competing with you but rather serving as extra incentive for potential customers to buy from you?
• Here, offering more of a one-stop shopping experience can be a source of value, that customers find a connected and more comprehensive range of products and services in one location that would support some needs-set they seek to address.
• But more importantly, reliable brokers do not just list sources they know of that happen to provide seemingly relevant product and service widgets. They offer leads to providers that they vouch for as qualified, capable and reliable – they vet the references they share.

So you need to build this from a foundation of knowledge, and of both your customers and their demographics, and their demographic-level needs, and from a knowledge base of the potential business partners you could work with.

But before you do this, you have to have already built a sufficient enough reputation and customer base to be an attractive marketing option for the businesses and professionals who you would partner with. But this need not represent a steep threshold requirement and certainly if you:

• Market this side of your business as a vetted-service brokerage,
• You actively online market for both your own and your business partners’ products and services as a part of this service, and
• You both vet the businesses you work with in this way and market your brokerage service as offering access to business partners that meet highest quality standards. Simply searching online can still mean a great deal of guesswork and even with review sites as too many businesses game those sites with bogus reviews to increase their ratings scores. Ratings and quality assurance vetting from clearly identified and known sources still carry special value.
• You charge your business partners who you market and provide leads for through your brokerage service, according to the return on investment they receive with results-based fees added onto an at most minor basic setup fee.

I am going to continue this discussion turning to look at the customer and marketplace side to brokering, and I will also delve into some of the issues involved in finding the right types of businesses to connect to and market in this way. As a part of that, I will look into reciprocal linkage models and one-way linkage models and how the two can be selectively used to business advantage. Meanwhile, you can find this series and related postings at Startups and Early Stage Businesses and also at Business Strategy and Operations and its continuation page Business Strategy and Operations – 2.

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