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On Small Business
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Posted at 08:00 AM ET, 01/25/2013

Online local marketplace Zaarly could expand D.C. presence in 2013

Pooja Mehta, co-owner of Adams Morgan pizza franchise Mellow Mushroom, wants to expand her business into event catering. She’s been dropping off Mellow Mushroom’s informational material at various office buildings in downtown D.C., but hasn’t been getting calls.

This week, Mehta decided to offer a financial incentive to any person who can provide a successful catering lead for her business — at least $25, or 10 percent of the order. She posted on Zaarly.com, an online site people use to request specific tasks or items for a set price.

San Francisco-based start-up Zaarly is part of a growing group of buyer-powered marketplaces, in which individuals post requests and others answer them, often based on where they live. Unlike sites like Craigslist, where posts are often anonymous, Zaarly users can build profiles and accumulate reviews based on their ability to complete tasks or deliver payment. Other sites with similar missions include TaskRabbit, also based in San Francisco, and Agent Anything, based in Montreal, though neither are active in D.C.

These sites represent one take on the “sharing economy,” in which individuals share their own resources with each other, according to Zaarly chief executive Bo Fishback. Other examples include the car-sharing service Zipcar and Airbnb, which connects travelers to accommodations in houses or apartments, Fishback said.

“It’s the democratization of commerce,” he said, explaining that these systems enable any individual — not just big businesses — to use their time or resources to make money.

But as in any marketplace, if no one responds to a request — and so far, no one has responded to Mehta — users will have to look elsewhere.

In its first year using the request model, Zaarly says it facilitated about $40 million in transactions nationwide. The site, which is free to access, has about half a million users.

A few months ago, Zaarly launched a new service catering to small business owners — the “storefront page.” Small business owners in San Francisco, Los Angeles, Kansas City, Mo., Seattle, and New York City can apply to get a specially designed profile page on Zaarly, steering traffic to their products, services and prices.

Storefront pages aren’t currently available for small business owners in the D.C. area, but the District is definitely on Zaarly’s 2013 list because of the enthusiastic response its model has already received from store owners, Fishback said.

Storefront pages tend to feature small business owners who are passionate about their business and who are committed to providing good service, Fishback said — though this doesn’t always mean having low prices.

“Transaction in pure delight and amazement isn’t about being cheap,” he said. Zaarly generates revenue by charging a 10 percent fee on each storefront transaction (the fee is added on to the store owner’s asking price, not cut from it).

One of the site’s challenges, however, is to make sure transactions stay online — if a buyer and seller take their communication offline, they could negotiate a deal without giving Zaarly its fee.

To encourage users to stay on the platform, Zaarly backs each transaction for up to $10,000 (a reimbursement only two people in the site’s history have requested, Fishback said).

Sellers can also accumulate reviews if the transaction happens through Zaarly— so they often “demand to be paid on the platform,” Fishback said.

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By  |  08:00 AM ET, 01/25/2013

 
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