TaskRabbit Business Model - Essay Example

and Introduction TaskRabbit is an online market place where people who have tasks that need to be done post, and people who are interested bid for the chance to work, at a fee of course. This online marketplace targets stay home mothers, retirees, graduates and young people yet to secure jobs, and anyone else who feels they can run errands for people. Taskrabbit has been described as a flexible and timely demand delivery network (Geuss, 2012). Its slogan is; Do more. Live more. Be More. This website was founded by Leah Busque and launched in 2008. These tasks might include lawn mowers, carpet cleaners, baby sitters, nannies, window cleaners, and people to help unpack, fetch groceries, and pick you from the airport among many others. TaskRabbit is a perfect example of an e-commerce business. Its function in the society, as insisted by its founder is to help save time for people, get errands done and create cheap labor (Leber, 2013). A business model refers to activities planned and designed by a business in order to maximize on their profits. It includes how the business functions and its components, the revenues and the expenses (Currie, 2004). An ecommerce business model allows business people to utilize the unique and special qualities of the web. Some of these special qualities include real time, time sharing, traffic and value flows, universal access, the ease of use of the web and searching capabilities. These unique qualities are what drive many people to adopt the use of the internet and the web in their business. Castellano, (2013) confirms that there are many different business models, and each business selects the one that best befits. The e-commerce business models are categorized into B2B, B2C or C2C. Each of these three business models has its own unique characteristics, and this is the reason why one model might work for one company and not for the other. For the TaskRabbit Company, it employs B2C model. B2C means that the business models here are customer oriented, and they deal with the customer either directly or indirectly. Their products and services are made having customer satisfaction in mind. B2B means that it’s a business and another business who are involved in the transactions. C2C simply means that its two customers who are the main agents in the transactions (Currie, 2004). The TaskRabbit Company, in the B2C business model operates as transaction and market provider level. This is because it handles and takes care of customers online transactions by creating and helping fix people in job placements. The revenue is derived through the transaction fees paid by the customers. Its main value is in saving the customers’ time. In addition, it is a market creator in that it enables the buyers and sellers to meet. In TaskRabbit, the sellers are the people who want and require people to help them with their tasks whereas the rabbittasks are the buyers, in that they bid for the available jobs. The revenue, like in transaction level is through transaction fees paid (Sacks, 2013). According to Currie (2004), other business models in the B2C category in the e-commerce industry include the e-tailer who is the digitalized retailer. The revenues are realized through sales made. The content provider is another example, which refers to businesses that provide content such as music, news and videos, and realizes the profit through subscription fees and revenues. The community provider allows people to meet in a social platform and exchange their ideas and views, a perfect example being Facebook and twitter. Revenue is mainly realized through advertising and subscriptions. Others include B2C portal and B2C service providers, an example being Google. Taskrabbit has recently opened up to B2B, where it helps businesses to hire employees. This is a great move in its efforts to maximize their profits. B2B business models target other businesses for as the main customer. The subcategories in B2B include e-procurement, e-distributor, exchanges and industry consortium (Leber, 2013). There are eight key elements of a business model which influence the success or failure of an e commerce business. The following is a brief discussion of the elements, and a quick scan on whether and how TaskRabbit has incorporated them. Value Proposition is one element. This simply refers to the value that the customers are likely to realize by employing the service of one company and not the other. This value might be in terms of saving time, resources, bridging distance, minimizing on expenses among others (Currie, 2004). TaskRabbit aims at saving peoples’ time and at the same time provide cheap services. They do this by providing a website where people who have tasks they want handled post, and bidders bid on the job. The task giver can then select the bidder they want, usually based on the price. They can also select a TaskRabbit who had worked for them before, if they had done quality work. The company also puts a time limit by which the Taskrabbits (the bidders) should be done delivering the tasks for which they were hired for (Leber, 2013). The second element is the revenue model. Revenue model refers to the means through which a company generates its profit. The main revenue models in businesses are; advertising revenue model, affiliate revenue model, transaction fee revenue model and subscription revenue model. The TaskRabbit Company employs the transaction revenue model. As earlier mentioned, it is, by large extent a B2C Company, under the subcategory of transaction. This being the case, it earns its revenue through transaction fees. It takes a small fraction on the bid awarded, 20% for an irregular employee, and 26% for a regular or full time employee. Sacks (2013) says that if a bidder, for example had been awarded a $ 150 job, the company’s share in this is $ 30. For a full time employee, the company’s earning in the above case would have been $36. This revenue is the company’s profit. To some people, this might appear a small value for a company, but there are very many bidders, and this is what the company capitalizes on. Statistics show that by the end of 2011, the company had generated revenue of $48 million, which translated to $ 4 million per month (Geuss, 2012). Their revenue business model is therefore very effective as the returns reflect. Market opportunity is another element in the company’s business model. Market opportunity refers to the volume or number that a business serves and commands, or intends to cover in a given time. It also might refer to the physical area in which it is located (Currie, 2004). TaskRabbit commands a large market volume. It has its customers widespread in its nine cities where it has its branches. Some of the cities include San Francisco, New York, Los Angeles among others. Reviews about the company in San Francisco show that the company has very many clients, and some have even become permanent and loyal customers. When the company was introduced in 2008, then called RunMyerrands, it was meant to be neighbors carrying out tasks for neighbors, at a small fee. However, with time, it has embraced collaborative consumption and has diversified its scope. The volume of customers and its employees can clearly depict this. One can hire anyone to do anything for them, so long as it is ethically and legally right. The company commands about 50 % of the market share in some of the cities where it has its branches (Leber, 2013). The fourth, yet very important element is the competitive environment of the company. TaskRabbit Company faces high and stiff competition from WeGoLook. This is a privately owned company in Oklahoma, which was launched in mid 2010. It employs about 8,000 lookers (Sacks, 2013). This company specializes in product check and examination for its clients. When a customer places an order to buy equipment or a machine, and they are too busy or too far to go verify its condition, the lookers are deployed by the company to do this on behalf of the client. This company also commands a significant size of the market. Another competitor is Zaarly, founded by Bo Fishback. It is a local service provider, with statistics revealing that by the end of 2011, it had revenues to the tune of $ 15.2 million (Leber, 2013). Gigwalk, launched in 2011 is the other great competitor, which is ranked the largest in online demand and mobile force. Castellano (2013) notes that it has over 350,000 walkers that helps to get jobs for the clients done. AgentAnything is also a competitor. Founded in 2010, it offers a platform where people post jobs and tasks they want done by skilled yet affordable labor. Other competitors include Aladom, Barefootstudent, Thumbtack among others. Taskrabbit Company understands the value and importance of competition, and they do their best to stay ahead of their competitors (Sacks, 2013). Competitive advantage is the other element. Taskrabbit has managed to stay ahead of its competitors. This is evident by the fact that of late, Taskrabbit is slowly graduating to B2B business category. This however, does not mean that it will disregard its B2C customers but it will only expand the market. In addition, it has introduced its Elite program, where at the beginning of every new month it will recognize and reward its top and exemplary workers. This will boost their efficiency, and as a result, customer satisfaction will be higher. Their competitive advantage was also seen when it acquired One Jackson last year, and also acquired Skill Slate. This helped it to increase its market share. In July 2011, it introduced and developed a mobile phone app that allows users to post their tasks using their mobile phones (Sacks, 2013). All this has enabled it to keep abreast with its competitors. In addition, marketing strategy is an element to consider. Taskrabbit has a provision whereby it awards its customers with a tee-shirt. Reviews and research shows that most of the customers in this company are satisfied with their services, and they would never consider hiring other Taskrabbits other than that from this company. The company, in future, is also planning on strengthening its business to business links, by carefully running more extensive background check-ups on their employees. This will ensure that only the qualified and competent people will be hired, increasing the chances of the company referring other companies to Taskrabbit for hiring (Sacks, 2013). The seventh element is organizational structure of the company. Geuss (2012) asserts that Taskrabbit has a well defined organizational structure, further subdivided into departments. The roles and responsibilities of each staff in the company is clearly explained and stipulated. The company has a finance department that is responsible for funds management; it has a team that closely follows up to assert the satisfaction and value of work done, a market research team, a web development team, a hiring team among others. The people in all these teams help to ensure that the company stays abreast in the market, and that the company’s operations are efficiently run (Geuss, 2012). Lastly, the company has leaders as competent as they should be. The founder, Leah, was once an employee herself. Apparently, she came to start the company together with her husband. As the company’s CEO, she offers the much needed guidance, inspiration, motivation and challenge to the other leaders. The leaders here know that it is wise and important to have a strong and firm business model, otherwise they will collapse (Sacks, 2013). Good leadership is the major reason that the company has been able to compete and come out as winners. It is also the reason as to why plans for the company can be put in place and work out effectively. The leaders clearly know that employees are a major reflection of the success of any business Conclusion It goes without debate that a strong business model is very important for the success of any e- commerce business. Taskrabbit faces stiff competition and numerous challenges, but the suitability of its business model has ensured that it stays among the top and highly ranked businesses. With its launch, Taskrabbit opened doors for other businesses, and challenged others like bid-willy. With the advent and progress of technology, and to a greater extent the access of internet and the web, life has become easy for people (Leber, 2013). Companies such as Taskrabbit serve to show the importance of a business laying a foundation of a strong business model, if it is to withstand the test of time. References Castellano, W. (2013). Practices for Engaging the 21st Century Workforce: Challenges of Talent Management in a changing Workplace. New Jersey: FT Press. Currie, W. (2013). Value Creation from E- Business Models. Oxford: Butterworth-Heinemann. Geuss, M. (2012).Too Much to Do? Hire a TaskRabbit. PC World, 30(3), 24. Leber, J. (2013). In the jobless economic recovery, an online labor marketplace thrives. Technology Review, 116(5). 46. Sacks, D. (2013). The Purpose Driven Start-up. Fast Company, 177(1), 92-106. Read More