Austin-based Wikibuy has created a free Chrome browser extension that crowdsources deals from across the web and tests coupon codes before checkout with the goal of ensuring shoppers are getting the best prices.
I was starting with a complicated product and trying to scale too fast.
When we first launched a few years ago, we started with a version of our product that was too complicated. Plus, we tried to scale it up too quickly.
We allowed customers to shop 500 sites on the Internet and add all purchases to just one cart. The system would automatically find the best price as well as any coupon codes.
Our system handled all the logistics of placing separate orders at one time. It was really cool and mostly worked. But when it didn’t, it was extremely labor intensive and costly for us. So if we found someone an item on a site and then it was out of stock when ordered, we had to eat the difference in price and involve a human to let the customer know the item might be late. The customers liked it but then it became difficult for us to scale it.
Because I had had some success with my previous company, 1800contacts, we had really good access to capital and I believe that led to making this mistake. We thought we didn’t have to start simple and focused and that we’d have to start with this grand vision of a single cart across 500 sites.
We tried to scale it up too quickly and then we couldn’t scale it. We were providing a frictionless awesome experience for the customers but we were serving as the retailer, and essentially on the hook for all those promises and packages to be delivered. But we didn’t have the margins of the retailer.
It took us about 18 months to realize this, and it was very painful. The financials just didn’t work. It was a very costly, expensive mistake. It was millions of dollars burned on an idea that couldn’t scale. Without the access to capital we had, this mistake would have been the death of our business.
Experience is what you get when you don’t get what you wanted.
We finally decided to scale back and re-focus on something more simple. We have 25 people serving more than 1 million customers. But with the previous system, we would have needed at least 200 employees at this point.
With our first version, we lost money on every customer. We couldn’t afford to handle any more customers because each one increased our burn rate. We were selling a service for less than it cost us to provide it. But now we are focusing more on just the things that save our customers money such as running coupon codes and comparison shopping. We’re working to help our retail partners compete with Amazon by giving them a way to get considered when they otherwise wouldn’t.
In our first two years, we’d only gotten to about 40,000 customers. By comparison, from August of last year to today, we’ve gone from 40,000 installs to 1.5 million installs. We learned that experience is what you get when you don’t get what you wanted.
Follow Wikibuy on Twitter at @Wikibuy.
Pictured is Jonathan Coon. | Photo courtesy of Wikibuy.