Tapping into an existing affinity network can be one of the fastest ways to scale a business concept. Panjo, a Los Angeles based ecommerce startup, has taken this to the extreme, offering a marketplace platform tailored to the 350 million worldwide auto, sports, and hobby enthusiasts who collectively spend $15 billion buying and selling parts, products, and accessories each year.
“Enthusiasts are some of the most passionate buyers and sellers in the digital commerce marketplace, but they are too often met with frustrating and fragmented experiences when dealing with peer-to-peer communities,” says Panjo CEO and co-founder Chad Billmyer.
Today, the company which launched into public beta at the time of its January Demo Day and graduation from Santa Monica’s MuckerLab accelerator, announced $1.6 million in seed funding. The round was led by Spark Capital, with participation from Bertelsmann Digital Media Investments (BDMI), Lerer Ventures, and Mesa. (Disclosure: Lerer Ventures is an investor in PandoDaily.) The company previously raised approximately $150,000 from several angel investors.
It’s easiest to think of the Panjo platform like a purpose-built hybrid between Craigslist and Ebay. Craigslist, in this metaphor, is the the existing forum communities with which it integrates – sources/destinations of rabid fandom and enormous purchase potential. Most are powered by Internet Brands-owned vBulletin which is where Panjo has concentrated its integration efforts. Our Ebay equivalent is Panjo’s a white-label marketplace that allows these enthusiasts to list their own products for sale or discover and purchase those from others in the peer-to-peer community. Listings can be structured as an auction or “buy it now.” The platform deals with hosting, security, and payment processing. In the company’s words, it offers buyers and sellers a “simple ‘list, pay and ship’ structure.”
As shocking as this may be given that it’s now 2013 and single housewives in middle America now routinely operate Etsy and Shopify storefronts, most enthusiast forums lack any sort of marketplace functionality, let alone the sophistication offered by Panjo. The tools that are available within the category are often a decade old. The status quo is a basic classified ad with the actual transaction typically happening outside the platform. This is partially because many of these communities are not operated as businesses, or, at best, are viewed as lifestyle businesses by their owners. It’s not surprising then that Panjo claims to have generated 25 times better sell through rates than these existing solutions. The company has completed tens of thousands of transactions to date, with an average transaction size of approximately $400.
“Online marketplaces and peer-to-peer transactions are continuing to gain popularity, and I am convinced that Panjo’s solution will cut through the noise and become the favored option for high-end products and accessories for enthusiasts around the world,” says Spark Capital Principal Andrew Parker.
General purpose marketplaces like Ebay and Craigslist are ill-suited to deal with the specific needs of the most discerning auto, sports, and hobby enthusiasts. We’ve seen this same conclusion reached in other categories such as consignment fashion, which is why sites like Tradesy, ThreadFlip, Poshmark, and ThreadUp all exist. Given the multi-billion dollar size of the enthusiast market, it makes perfect sense that there would be an opportunity for a purpose-built ecommerce marketplace – one that can offer specific features that cater to this community like listing and search categorization, rich seller profiles, and ratings.
For sellers, Panjo charges fees “comparable to ebay” according to Billmyer. The overarching forum operator can also choose to charge an additional “final value fee” of 0.5 to 2.0 percent, although many opt not to. The company plans to explore additional monetization channels such as VigLink interactive links and display advertising, according to its CEO. With the infusion of capital, Panjo’s next order of business will be to complete the development of its mobile app and to build out a distribution network for members to share listings with non-members.
Panjo sees slightly more than 55,000 monthly active users, a number that’s up nearly 50 percent this year, and has more than doubled its monthly transaction volume over the same period to more than $500,000. This is still just a drop in the bucket, given the roughly 100 million monthly active unique visitors available across the company’s addressable audience of enthusiast forums. The platform also only supports English language and US dollar transactions, although internationalization on both fronts is a top priority going forward according to Panjo’s CEO.
As with most things, however, Pareto’s 80/20 rule surely applies here and the company will do well to strike up partnerships with a few dozen of the most influential and highly trafficked sites – Porsche and Harley Davidson forums come to mind. The great white whale in the online forum category is Internet Brands (IB), which owns the dominant vBulletin platform and the ForumRunner mobile product, as well as dozens of topical brands and publishers like CarsDirect.com, Autos.com, and forums related to each major auto manufacturer. Billmyer discussed hoping to partner with IB during an earlier conversation, but has not yet shared any updates on this front.
Panjo appears to be a good idea amid an eager market. The biggest challenge the company faces is likely the apathy of many of the forum owners that it must convince to integrate its product. But if the company can achieve even modest market penetration, there’s an opportunity to build a significant business.
[Image source: AutoWeek]
- PanjoMarketplace for enthusiasts
Panjo is a marketplace for the world’s most ardent auto, sport, and hobby enthusiasts. Existing marketplaces poorly underserve and ignore this audience. Each year, 350M worldwide enthusiasts spend $15B buying products, parts, and accessories from their peers through a patchwork of inefficient methods. Panjo makes it convenient, faster, and more secure for enthusiasts to transact.Panjo is hiring: