A Quick Framework for the Success of Aggregators

09 September 2014

The startup that I worked for was an aggregator, specifically one for daily deals, so nowadays I'm really fascinated to see how aggregators in other industries work. In some industries, aggregators are amazing and have changed how users interact with some really old industries. For example, plane ticket aggregators like Kayak or Hipmunk have pushed plane ticket purchasing from the realms of travel agents to an individual, online task.

Some industries, however, are resistant to having an aggregator. Recently I had to deal with one of them: moving companies. This is not for lack of trying - Unpakt is a startup in the moving company aggregation space. However, the overall experience of scheduling a move through Unpakt was a less-than-ideal one, and I think this was more because of characteristics of the moving industry than Unpakt's business or design decisions.

So, I wanted to formally write down some of my observations about aggregators, ones that I think apply to aggregators across all different kinds of industries. Although I don't think any of these points are earth-shattering, with this framework it is easier to identify why an aggregator in the plane ticket space works, while one in the moving space might not.

Aggregators, at their core, serve to simplify a user's purchasing decision in a given industry by showing users all available options out there in a standardized, comparable way. Aggregators then provide additional value by presenting more information that helps users compare these options.

This means that there are some characteristics that all aggregators either have or strive to have:

  1. Comprehensiveness of data - an aggregator has to have as much of the information in the relevant field as possible. Think of how much less useful Rotten Tomatoes would be if it was missing 10% of movies. Corollary: comprehensiveness doesn't have to be 100%, but must cover the biggest or most popular sources in the industry being aggregated in order to maintain credibility.

  2. Accuracy of data - an aggregator can't get fundamental information about the thing being aggregated wrong. Corollary: the content on an aggregator has to be updated quickly if the underlying sources change their content often (e.g. airplane ticket prices fluctuating over time).

  3. Clear communication of data - an aggregator must present the information in a clear way that allows for quick comparison between sources. Design plays a large factor here. Corollary: the aggregator has to figure out some level of standardization in its industry's products and prices. This is easier in some industries than others.

Given this quick framework, here are some key factors that I think make the moving company space difficult to aggregate:

1. Fudgy price quotes which are highly variable on exact circumstances

Some factors of a moving job can be expressed in standardized terms - for example, what floor the apartments are on, whether there's an elevator, etc. You can also speak of relatively standard "sets" of furniture, such as "one bedroom and one living room's worth". However, the nuances of each move can often make quite a big difference - a sofa that's really hard to take apart and move might add significant cost, for example.

The less standardized the good or service is, the more difficult it is to achieve "accurate" data (in quotes because accuracy depends on what the user perceives, rather than standard base rates the companies provide). It also complicates the communication of pricing information, and increases the burden on the user to provide more information about her situation (number of boxes, different items of furniture, etc.). When the source has to intervene to judge and price an individual instance, the aggregator loses the power to be the portal of information for the user.

2. Negotiation making a big difference.

Again attacking the ability to be accurate, negotiation throws a wrench into aggregation. If you can talk to the moving company directly to explain your situation and bargain for a better price, the aggregator can't be the ultimate source of information about that moving service.

3. Hidden, unexpected fees when the service is rendered.

Even after you have a quote for a move, there are often fees that you incur the day-of that any aggregator would have a hard time predicting. For example, you might have to pay for the amount of moving supplies the mover used, or for parking tickets incurred by the truck, etc. This is different from the fees on an airline ticket, where additional taxes are known beforehand (or at least discoverable and applicable to everyone), or there are fees for defined add-ons, like checking a bag or an upgrade to a seat. These mean that mover aggregators have a harder time maintaining accurate data, and have a harder time communicating the differences in price that might occur.

4. An older industry that doesn't need much technology itself.

Moving companies don't need very up-to-date technology to work. Fundamentally, they could operate without any kind of a scheduling program or computerized way to manage its jobs. Since this is the case, moving companies usually take care of scheduling and pricing jobs on a customer-to-customer basis. There is certainly no API or standardized system unifying moving companies. This makes it hard for an aggregator to be comprehensive, since there's no standardized way for a moving company to list all its services. This can be contrasted with, say, Groupon in the daily deal space, which has an API that lists all its current deals.

5. A fragmented industry.

Aggregating is harder when there aren't clear market leaders in the industry being aggregated. A plane ticket aggregator can provide a lot of value by just aggregating the few, biggest airlines; a moving company aggregator needs to gather and standardize information from dozens of small, local firms in each geography in order to appear credible as an aggregator.

6. Not many ratings or reviews of movers.

Collecting and displaying rating information on moving companies would be a great way for a moving aggregator to add more value to the user experience, but this is hard. There often aren't many ratings of movers, and consequently it's harder to find sources of many reviews of the same mover to try to construct an accurate view of their quality. The moving industry arguably suffers strongly from the problem of customers being very vocal only when something goes wrong.

The team at Unpakt has their work cut out for them, and they're already making headway on standardizing the offerings of this very old, low-tech industry. If it grows in size, perhaps Unpakt can be an impetus for faster modernization of this industry by influencing new forms of standardization, which can only benefit itself and users.

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