Convertible Notes and Startup Funding
February 12, 2025
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A lot of new-age start-ups are very innovative in their business models. However, a lot of these start-ups also follow the same type of model in a different industry. The aggregator model is a great example of such a start-ups. Companies like Uber and Airbnb can all be called aggregators. Also, there is a dearth of other companies who are using this model in their respective fields and marketing themselves as being the “Uber of X industry”.
The aggregator business model is a relatively new form of business model. Hence, it is not deeply understood by the average person. In this article, we will demystify the aggregator concept and try to explain it in layman’s language.
The aggregator business model is a by-product of the information age. With the internet boom, information became abundant. Many different types of service providers started providing their services online. However, customers did not have the time, inclination, or the know-how to search the internet in order to find the best deal for themselves.
As a result, the aggregator model came into being. The aggregator is simply a website that creates a brand and also creates partnerships with the actual service providers. The job of the aggregator is to collect information from various service providers, display them on their websites and sell the product. The actual job of providing the service is done by the service providers.
From the customer’s point of view, aggregators help them avoid the hassle of due diligence. Any service provider listed on the aggregator’s website has generally been vetted to ensure a basic level of service quality. It is common for aggregators to try to standardize various elements of service in order to provide a standardized experience. Hence, customers can be assured of a good service experience because of the brand association.
It is also important to note that all service providers on the aggregator’s website are actually independent entities. They are not employed by the aggregator. Hence, they are free to make their own choices. They generally decide to associate with the aggregator since they can provide more business. Some aggregators may allow service providers to continue their own independent business whereas other may require the service providers to exclusively serve their customers.
Aggregators create value for two sets of customers. The details of both are as follows:
The bottom line is that aggregation-based start-ups are available in almost every industry and in every part of the world. There are companies that aggregate all types of products and services right from household cleaning services to complex medical services.
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