Why Fiverr Is the Next Amazon
In February 2020, I placed my first order on Fiverr. The experience of finding a freelance writer and buying a digital product was so easy. I immediately knew I had stumbled upon something special. I have since placed 22 orders in the span of two months and it is astounding to me how satisfied I have been with every order. This e-commerce platform is unlike anything I have ever seen before. Yet, the functionality reminds me so much of Amazon. My intuition tells me that there is something big here. I had to do my research to understand its true potential. If this is what I think it is, Fiverr is about to change our entire economy.
Before we get into this article, I would recommend visiting the Fiverr website just to get a basic understanding of what it’s all about.
So What Is Fiverr?
Fiverr is a marketplace for buying and selling digital services; allowing freelancers to connect with businesses of all sizes.
“Our mission is to change how the world works together.” -Fiverr
What Problems Does Fiverr Solve?
- Fiverr makes it easy for individuals to package their skills into a well-defined digital product.
- Fiverr eliminates negotiations and delays by setting fixed prices and deadlines.
- Fiverr makes it possible for people to work and earn money remotely.
- Fiverr is an affordable alternative for SMEs (small and medium-sized businesses) to produce marketing and advertising material.
- The majority of digital services offered in the Fiverr Marketplace can help a buyer grow their online presence.
- Fiverr saves you time and acts as a search engine to find qualified freelancers.
Fiverr’s Amazon Approach
Fiverr started with the idea that people should be able to buy and sell digital services in the same way as physical goods. They call this the “service as a product” concept.
“For 20 years, the market has been educating us to do this one-click purchase on e-commerce. Can we do that for freelancing?”
“The experience of buying a service online should be as easy as buying a product on Amazon.” -Micha Kaufman
The strength of the platform is the simplicity of purchasing a digital service. Founder and CEO Micha Kaufman compares the buying experience to shopping on Amazon. You have four easy steps.
- You search
- You browse
- You find something you like
- You click to order
According to Micha Kaufman, the average time to place an order on Fiverr is 15 minutes.
Fiverr vs Upwork
If you’re wondering who Fiverr’s competition is, I would argue they have none. Recognize any of the names on this list?
Upwork, Freelancer.com, PeoplePerHour.com, Skyword, Envato Studio, Guru.com, Dribbble Hiring, Bluerang
One could argue Upwork. However, I believe the space race between the two is over. The deciding factor being who would do better in the event of an economic downturn. Well, we got to see that with COVID-19 and the results are in. Fiverr stock is $60 and Upwork is $12.
If you do a simple Google search, you can find out how many users are on each platform. At the time of this article, Fiverr has 14 million compared to Upwork’s 12 million. As we all know, the consumer will always flock to the best platform. But what makes Fiverr a better platform? Well, upon further inspection the difference became quite clear; and all you have to do is look at the homepages.
The Impressive UI/UX Design
You can learn a lot about how a business has positioned itself for digital success just by looking at the website. Take the homepage, for example, Fiverr does a few things that at first glance seem pretty standard but are actually pretty ingenious.
- The minimal text. “Find The Perfect Freelance Services For Your Business”. As I said before, most buyers of Fiverr are SMBs belonging to a diverse selection of industry groups. This text is important because it lets their demographic know they are in the right place.
- The search bar. Fiverr is actually more than just a marketplace, it’s a search engine. A search engine that helps you find qualified freelancers. Notice how the search bar is front and center similar to that of Google. This makes it extremely obvious to start browsing by the task you need.
- The black and white portraits. The constant slideshow of 5-star freelancers creates a sense of agency-like professionalism. You feel as though you are selecting from a group of highly-touted freelancers.
- Finally, let’s look at the variety of digital services Fiverr offers. People don’t always know what freelance service they want or how to get what they need. Fiverr anticipates their challenges and proactively showcases a multitude of digital services you can purchase right from the homepage. The use of attractive stock photos that act as buttons to showcase a variety of freelance services entices the user to click on one.
Layers to Fiverr’s website
- Homepage (search)
- Listing page (browse)
- Gig page (pick what you like)
- Order page (order)
Simply type a query into the search bar or select it from a drop-down menu of digital services. The lists are super easy to navigate.
Each page consists of 48 listings, in rows of 4. Automatically sorted by best selling, each listing includes a cover photo, username, description, rating, bookmark, and price. Filter options are at the top, allowing you to search for what you need.
Once you place an order, it is easy to communicate with the seller through the message board.
Just How Big Is the Freelance Market?
I’m sure we all know several people who have done freelance work in their lifetime. If you were to ask those people how they got those gigs, a large majority of them would tell you it was done through networking. Maybe they marketed themselves across social media? Marketing takes a lot of work. Wouldn’t it be easier if the buyer came to you? Like eBay or Amazon, this is a central marketplace that acts as a search engine for freelance services.
Today, the freelance market is a very old-school business. Most transactions are done offline. Fiverr estimates the freelance market to be over $100 billion in the US alone. So the opportunity is massive and it’s just starting to come online.
“This is like 1995 for e-commerce” -Micha Kaufman
What Is Fiverr’s Demographic?
Most Fiverr buyers are SMBs belonging to a diverse selection of industry groups. Fiverr had over 2.4 million buyers on their marketplace at the end of 2019.
How Does Fiverr Make Money?
Fiverr makes money by charging sellers a flat fee of 20% for every successful transaction facilitated on its platform.
For example, if a buyer purchases a logo design service for $50, $10 will go to Fiverr while the rest goes to the seller (minus a maximum payment processing fee of $ 1).
How Will Fiverr Grow?
The company follows a two-sided digital marketplace business model, in which it must attract both buyers (SMEs businesses) and sellers (freelancers) who allow the platform to grow. The company looks at two key metrics for its growth over time, repeat buyers, and spend per buyer over time.
The growth engine of this business is ultimately the adoption of online freelancing. When asked who Fiverr’s main competitors were, Micha Kaufman responded with
“Definitely the offline market… We don’t need to eat anybody’s lunch to grow. We just need to move offline activity to online.” -Micha Kaufman
What Happens to Fiverr During a Recession?
In a video from June 2019, Fiverr founder and CEO Micha Kaufman made an appearance on CNBC to answer questions regarding the company’s initial public offering. One of the correspondents asked him what would potentially happen to Fiverr in the event of a global recession? Micha gave an unusual response.
I hate to think of us as countercyclical but I think we can actually benefit from a recession. I wouldn’t want to test that theory but I think in a downturn what would happen is that more people are going to look for ways to make money so the supply is pretty obvious. And more businesses would like to focus on getting things done rather than hiring people. -Micha Kaufman
Let’s use logic once more. What happens during a recession? In short, people end up losing their jobs because companies have to cut their budgets to stay in business. When people lose their jobs, what do they do to provide for their families before they find a new job? That’s if they can find a new job. They have to bring in money. Well, Fiverr is helping people make money online. This is called freelance work.
How Fiverr Will Change the Advertising Industry
Fiverr is a great place to find underpriced digital content. If more and more businesses go bankrupt during a recession, the large companies that are still in business must find cost-effective ways to outsource freelance work. Rather than throw a 100k at a marketing company that might go bankrupt, why not pay talented people a lot less on Fiverr? Maybe only a few thousand, right? These are decisions that many CEOs will have to make in these difficult times.
The Gig Economy
Ultimately, I believe Fiverr will usher us into a gig economy. This labor market seemed inevitable given the maturation of the internet and Fiverr seems to be the marketplace that will host this revolution. The traditional economy of full-time workers who rarely change jobs and instead focus on a lifelong career is slowly fading away. In order to save money tied up in wages, companies will turn to hire independent contractors and freelancers rather than full-time employees. COVID-19 has shown businesses how adept people are at working from home and how mature the internet has become. Expect Fiverr to become a giant e-commerce platform that will drive the economy just like Amazon.