Serving the sweet spots: Catawiki Online Auction


Recently, the Dutch website Catawiki has made the news for raising 10 million euros of investments. A large part of the investment was made by the American capitalist Accel Partners. Accel Partners is a party that has invested in other well-known companies like Dropbox, Facebook and Spotify. The fast growth of this unique online auction has caught the attention of investors.

So what is Catawiki?
Catawiki is a website that, since 2008, sells unique objects that are interesting for collectors. At first they offered the possibility to open shops via Catawiki in specialized categories. However, this business model wasn’t as successful as they had hoped for. Therefore, Catawiki switched to an online auction business model. For the ones that think: But isn’t that how eBay started out as well? Indeed eBay started out similarly, but eventually grew out to a big Amazon-like company. Catawiki, unlike eBay, tries to maintain its exclusivity by letting the auctioneer selectively choose the supplied items that are auctioned online. Furthermore, the auctioneers are specialists in their category e.g. the auction of old images are managed by Frans Laurentius which is a consultant for old images at the Dutch Rijksmuseum. This allows Catawiki to ensure that only the right items will be auctioned on their website.

Why did Catawiki grow so fast?
Due to the guarantee of high quality items the website soon attracted more and more customers. Nowadays Catawiki has 3 million unique customers per month and auctions 7000 items per week. Last year the revenue totaled 10 million, and expects that this year that will grow to a multiplication of that number. According to Clemons (2008) the products in the market are increasingly determined by the preferences for unserved and underserved market offerings. This is exactly what Catawiki does; it offers the opportunity to the underserved market or sweet spots, to auction collectors’ items online through a more exclusive medium than Marktplaats does. The lack of profitability of serving sweet spots is therefore compensated by Catawiki’s large number of offerings and superior margins.

Should Marktplaats worry?
According to Catawiki-ceo René Schoenmakers, Marktplaats offers too much items that are uninteresting to collectors. This results in customers that have to search through a whole pile of items that they do not want anyway. However, Schoenmakers thinks that he will not propose a threat to Marktplaats, because Catawiki’s main focus is serving different niche markets, whereas Marktplaats appeals to the bigger crowd.

What would you prefer; an online auction website that has a large supply of goods, like Marktplaats? or several specialized auction websites, like Catawiki?

Sources:
http://www.sprout.nl/artikel/explosieve-groei-catawiki-lokte-facebook-investeerder
http://www.nu.nl/internet/3887612/nederlands-veilingplatform-catawiki-haalt-10-miljoen-euro.html
Clemons, E.K. 2008. How Information Changes Consumer Behavior and Consumer Behavior Determines Corporate Strategy. Journal of Management Information Systems 25(2) 13-40.

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