Driving early supply- How we did it
Updated: Jun 18, 2020
An online marketplace is a platform that matches suppliers and consumers of a specific product or service and that brokers the subsequent transaction. Marketplaces make money by taking a commission from each transaction. Some of the most popular online marketplaces are Amazon, Ebay, and Airbnb.
The most common obstacle marketplace founders face when building their platform is the lack of an existing supply and demand. It’s difficult to earn the loyalty of early suppliers without any demand, and it’s as difficult to get consumers without enough variety.
As the first online marketplace connecting local and independently owned luxury car rental companies in the United States with travelers from all around the world, at CarHopper we were able to onboard tens of thousands of high-end cars with a total inventory value of more than $100 million within just 3 years.
The success was a combination of both online and offline efforts that required us to get creative and be resourceful as we didn’t have a large budget.
- On the supply side we onboarded vehicles owned and managed by car rental companies
- On the demand side we matched those cars with renters from all around the world traveling to one of our markets
In this post, I intend to talk about how we built early supply to kickstart our platform and how we later on developed and executed a scalable Supplier (or Host) Acquisition strategy.
The early days
The early days of building supply consisted of a lot of personal outreach. The funnel was as follows:
1- Convince hosts that the sharing economy is reliable and can provide an additional stream of income.
2- Convince hosts their cars can be rented out too.
3- Convince hosts that CarHopper is a reliable platform they can use.
The first car listed on the platform was mine and the second one was my girlfriend’s; if I couldn’t trust the platform and its process with both of our cars, then how could I expect others to trust it? This mentality pushed me to stay true to myself and keep the platform as safe as possible (this story deserves its own post).
The first supply-growth lever consisted of me personally reaching out to all of my friends and asking them whether I could take photos of their cars to list them and create host (or supplier) profiles for them. Then I started attending local tech meetups to meet new people, and asked them to download the CarHopper app and list their cars. Anyone that would list their car would get a special shoutout on CarHopper’s social media and website; if they didn’t feel comfortable accepting a rental request once they received one, that was fine too. Regardless, my sole intention was to display as many cars as possible on our search results page.
As I was walking people through the process of listing their cars and receiving feedback from our beta users, we started noticing small bugs across the platform preventing a good user experience. I decided to open up the platform to a larger audience only once these bugs were fixed. When that day arrived, I ordered 5000 flyers to be printed, and I personally started placing them under the windshield wipers of cars parked in high-density neighborhoods across Miami. I started with outdoor parking lots, sneaked into garages of residential and office buildings, and even took it a step further in the building I lived in by going floor by floor and leaving 1 flyer at the doorsteps of each unit. I eventually got into trouble with the management of my own building but thankfully, the property manager was kind enough to let it go when I promised him that I would stop.
Lastly, I contacted business and entrepreneurship clubs, careers offices, and entrepreneurship professors of local universities. My goal was to create brand awareness on college campuses by incentivizing students to become brand ambassadors in exchange of helping them build their resume and obtain a recommendation letter from the CEO of a start-up (me). Unsurprisingly, some of these brand ambassadors not only signed their friends up, but also listed their personal cars on the platform so they could start making money.
As far as online supply-growth efforts, I mostly piggy-backed off of 2 existing networks in the early days: Craigslist and Airbnb.
- Airbnb: I would find strategically located properties in high-density areas and ask the hosts whether they had a car that they could rent me. When the host’s response was positive I would ask them whether they would feel comfortable renting their personal car through CarHopper. Many of these hosts were very receptive as they already knew and understood the risks of the sharing economy, and had another asset they could monetize.
- Craigslist: I would skim through Craigslist and find the car hosts with already existing Relayrides accounts (now Turo) advertising their cars. I would contact them and let them know of another platform they could use to advertise their cars, CarHopper. These were the perfect hosts as they were already using a platform to rent their personal cars out and all I had to do was to convince them that CarHopper was as reputable and reliable as Relayrides.
Finding the product-market fit
As our web traffic and variety of cars grew, local reporters finally started covering CarHopper. After coverage in the Miami Herald, our sign-ups surged, and so did the number of cars listed. A few weeks later, I started noticing owner profiles with more than 3 cars listed. I picked up the phone and called them to thank them for using CarHopper and requested to meet them to understand who these “power suppliers” were. Turns out, they were owners and/or managers of small car rental companies with 5 to 10 cars in their fleet, operating out of their small offices near (but outside) Miami International Airport’s car rental center. They had very archaic websites, no rental software to manage their fleet, and relied solely on word of mouth referrals from brokers and travel agents.
Had I not gotten out of my comfort zone and gone to meet these people in person, I would have never realized that the smaller car rental companies had no way of competing with the big 3 (Avis, Hertz, Enterprise) online. A few days after these meetings, we made the strategic decision about where we wanted to grow and decided to pivot CarHopper from being a peer-to-peer marketplace to becoming a B2C marketplace.
After analyzing what needed to be changed to customize our platform better to these professional hosts, we quickly realized we first needed to give them another way of signing up besides Facebook. We also needed to offer them a basic (and free) fleet management solution they could use when logged-in to CarHopper as we didn’t really have any substantial demand to get them excited. The key was giving them the freedom to manage their fleet’s availability even for their cars rented outside of CarHopper (Lenny Rachitsky calls this “single-player mode”).
When both of these changes were live, I researched local car rental companies on Google and Groupon, and paid a visit to every legitimate car rental company I found. I simply walked-in, told them what problem I could solve for them, and started showing them our website and app. If they were interested (which in most cases they were), I would sign them on the spot, pick-up my professional camera and tripod from the back of my car and start taking photos of their cars to list them on CarHopper. I literally eliminated every obstacle possible: the platform was free, I offered them free software to manage their fleet, the cars were insured, and I was taking HD photos of their cars. The process was so hassle-free that we started getting calls from owners or managers of car rental companies saying that they had heard about our platform and wanted to list their cars.
Fast-forward a few months, CarHopper finally started getting early demand-traction fueled by the seed funding we received (I will write about this in another post). With growing demand and more funding, we were able to develop a scalable and sustainable supply growth strategy, which consisted of the following steps:
We identified the top luxury & exotic car rental companies with a simple Google search for keywords like “rent a luxury car in [city]” and “exotic car rental in [city]”.
We created a supplier landing page that provides information to fleet owners, and has an “inquire” CTA allowing them to get in touch with us to list their cars.
We then targeted key positions (e.g owner, director, manager, head of sales…) working at these car rental companies using Facebook ads. These ads were intended to direct our targeted audience to our affiliate page so they could get in touch with us and list their cars (visuals below):
Finding the equilibrium
The most challenging part of our supplier growth journey was not building the initial supply, but to refrain it from growing uncontrollably. We had to find the perfect balance between having a variety of cars from different suppliers in each of our markets and maximizing their fleet’s utilization rates to ensure they stayed loyal and collaborative. Had our suppliers received only a few booking requests each month through CarHopper, they wouldn’t have seen the point in investing more time and resources to adapting to our business model. The magic behind our supply-side growth was in limiting new suppliers and always keeping supply at equilibrium.
The strategy of refraining supply-side growth allowed us to control rental prices and improve the customer experience, enabling an eventual increase in demand. Once we were able to enter into this vicious circle of lower rates enabling more demand and vice versa, we were able to target prospective suppliers with case studies and testimonials from our existing suppliers.
In short, the strategies we used to successfully grow the supply-side of our marketplace were: personal outreach, events, piggybacking off of existing networks, word-of-mouth, public relations, product enhancements, content marketing, and performance marketing.
It is important to keep in mind that all of these strategies evolved based on new discoveries and assumptions we would make about our market and product’s capabilities.