{"id":17865,"date":"2023-11-07T10:38:47","date_gmt":"2023-11-07T15:38:47","guid":{"rendered":"https:\/\/d3.harvard.edu\/platform-digit\/?post_type=hck-submission&p=17865"},"modified":"2023-11-07T10:48:06","modified_gmt":"2023-11-07T15:48:06","slug":"aptdecos-phygital-platform-for-sustainable-interior-design","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/aptdecos-phygital-platform-for-sustainable-interior-design\/","title":{"rendered":"AptDeco\u2019s Phygital Platform for Sustainable Interior Design"},"content":{"rendered":"\n\n\n

AptDeco \u201cis a peer-to-peer managed marketplace dedicated for buying and selling quality used furniture.\u201d<\/a> It was established in 2014 after one of the co-founders had an unsafe experience<\/a> trying to sell a TV on Craigslist.  <\/sup>The co-founders realized there were plenty of options available for people to buy and sell home goods (Facebook Marketplace, Craigslist, consignment shops, and furniture stores to name a few), but there was no solution that currently met all their requirements on both sides of the transaction: a solution that is easy, safe, fast and sustainable.1<\/sup> By hosting an online platform that is free to use and managing white-glove delivery services, AptDeco hopes to take advantage of cross-side network effects in order to grow quickly.<\/p>\n\n\n

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An example AptDeco listing currently available on their website<\/a>.<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n

The platform captures value from users in two ways: 1) charging sellers a commission on every transaction and 2) charging delivery fees depending on the size of items purchased. Commission rates are up to 48%<\/a>, while shipping and delivery fees are based on item size and location and could be paid by the buyer or the seller. By physically disconnecting the two sides of the transaction and managing the delivery logistics, AptDeco also delivers on its safety value proposition. Because many online marketplaces don\u2019t charge a fee to sellers to post items, multi-homing is a strong possibility. AptDeco differentiates itself by claiming a speedy sale, saying sellers can \u201clist [their] furniture in 2 minutes and sell in 10 days<\/a>,\u201d which can be valuable to people who need to get items out of their space quickly.<\/p>\n\n\n

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AptDeco’s website<\/a> includes testimonials from popular editorials and online magazines.<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n

AptDeco\u2019s business doesn\u2019t solely rely on network effects; they operate on an asset light model which helps keep costs low. For example, no inventory is owned or stored by the platform and they don\u2019t utilize any retail space, leveraging their digital store front for customer interactions. The only physical assets the company has are their delivery vans which also operate as mobile billboards. In addition to advertising, AptDeco benefits from their physical delivery service because they can control the end-to-end customer experience. Initially, the platform outsourced delivery to 3rd parties, but based on early customer feedback, the founders pivoted to in-house logistics for more control.2<\/sup><\/p>\n\n\n\n

AptDeco began by launching operations first in New York City and then the tri-state area. New York has a high population of potential customers who move to new living spaces quite frequently; this made them not only potential buyers, but also potential sellers, enabling one user to exist on both sides of the platform. In addition, many residents don\u2019t have cars, which affirmed the need for pickup and delivery services. Finally, a significant portion of people in the city rely on the subway system for daily transportation which gave AptDeco an easy way to advertise. The platform grew quickly, around 30% week-over-week growth<\/a> in 2014.<\/p>\n\n\n\n

After proving that the business model worked in New York, AptDeco looked to grow quickly to new geographic regions by launching in Washington, D.C. This endeavor was not the success they hoped it to be, in part because users could not transact on items between the two locations.3<\/sup> This severely limited the impact of the network effects and ruined the customer experience. It wasn\u2019t until AptDeco opened their business model and allowed for shipping anywhere within the contiguous US that they again benefited from cross-side network effects.<\/p>\n\n\n\n

However, with this growth came challenges. AptDeco is no longer able to manage all shipping and delivery and has outsourced part of this to third parties. This limits AptDeco\u2019s touchpoint with the customer to only the online platform, which could make it challenging to manage the customer experience and harm retention rates. Current reviews of the service on Trustpilot have AptDeco at just 2.1 stars<\/a> with most of the negative experiences having to do with shipping or delivery. <\/p>\n\n\n

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Current company status on TrustPilot<\/a> (as of 11\/7\/23).<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n

In addition, its questionable whether network effects are strong enough to offer a sustainable competitive moat. Given that the expected number of transactions per user is low (since people don\u2019t buy new furniture that often), the platform must rely on a large acquisition funnel to win users. This, coupled with the threat of multi-homing by sellers, reduces the impact of networks effects and could limit the long-term viability of AptDeco. To combat this issue, they could implement a loyalty or referral program or even a social aspect (like an interior design contest through Instagram). This could enable the platform to leverage not just cross-side network effects, but same-side as well by bringing users closer together and encouraging retention.<\/p>\n\n\n\n

Citations<\/strong><\/p>\n\n\n\n

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  1. Ayelet Israeli and Jamie Merkrebs, \u201cAptDeco: Circular Economy Furniture Marketplace,\u201d HBS No. 9-521-069 (Boston: 性视界 Business School Publishing, 2021).<\/li>\n\n\n\n
  2. IBID, p6.<\/li>\n\n\n\n
  3. IBID, p8.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

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