Why this services marketplace works more like a lead generator

This article is from an episode on Disrupting Japan. This is heavily revised from the original show transcript. For the full episode, go here.

Zehitomo founders James McCarty (left) and Jordan Fisher / Photo credit: Zehitomo

Many foreign companies enter the Japanese market with proprietary technology or a strong brand. But Zehitomo, an online marketplace for offline services, is using business process as an advantage.

In this episode, we talked to Jordan Fisher, CEO and co-founder of Zehitomo, to get a closer look at the company and its business model.

What is Zehitomo?

In a nutshell, it’s a marketplace for local services, meaning the jobs that happen offline. Think photographer, plumber, personal trainer: all these scenarios where you’re connecting directly with a vendor or a freelancer offline, as opposed to a programming, design, or legal task that could be done through online crowdsourcing.

One way that we differentiate ourselves is that we are a platform for professionals. The average job size is closer to around US$500. These are professionals that do the job for their living. Some of them do it as fukugyo or a sideline work, but the vast majority are small businesses, followed by freelancers.

My co-founder James McCarty and I launched the service in 2016, but we had been talking about it, trying to work on it in stealth mode, since 2015.

How does the platform exactly simplify things?

One of the really frustrating things about local services is that it’s inefficient and nontransparent. If you want to hire somebody to take photographs of your wedding or renovate your kitchen, you have no idea how much that’s going to cost or whom to actually ask.

And generally, what happens in Japan is you go through a series of different agencies that all take cuts in between. Then, you finally arrive at some sort of a packaged solution, which may or may not be what you’re looking for. Wedding venues usually charge around US$2,000 for a wedding photographer, and they get paid around US$300 in the end – it’s like 85% cut. It’s ridiculous.

You would think that the internet has done a lot to change these things. But I think in Japan everybody loves what’s called tesuryou, or margin.

The bottom line is that this doesn’t actually add any value to either side. If the problem you’re trying to solve is how to make a payment and then you take a margin off the top of that, that makes sense, as you’re facilitating a need. But in the case of local services, you don’t actually add any value to the requester or to the professional by taking a cut in between.

I think there’s no good solution out there right now. When it comes to ordering a service, you need a custom set of requirements and you don’t know what those are unless you’re a subject matter expert. What we try to do is make it as simple as possible so vendors have all the information they need.