Service Central learns a traffic lesson
Thursday, 10 April 2008
Last Updated: Thursday, 10 April 2008
By Jacqui Walker
Young entrepreneur Danial Ahchow has built a thriving online marketplace of service providers in less than five years. In the midst of a skills shortage, Service Central is now pushing hard into other markets, and plans to double turnover to $16 million next year.
When entrepreneur Danial Ahchow, 30, was pitching his internet business Service Central to a boardroom full of high-powered suited potential investors in Sydney last year, he told the story of how eBay beat Yahoo in the online auction game.
eBay got started first and attracted sellers. Buyers were attracted to the large number of sellers on eBay and in turn the large number of buyers attracted more sellers. In other words, eBay created a thriving marketplace first – and it killed Yahoo’s plans.
As Ahchow told the story, Cliff Rosenberg, former CEO of Yahoo Australia, rose from his seat and said: “I completely agree, and it cost me $20 million.”
The point that Ahchow, a former industrial relations lawyer, was making is that to make an online market work you need a critical mass of buyers and sellers. Ahchow’s site Service Central is a marketplace where potential purchasers of services such as plumbing and carpet cleaning find qualified service providers.
He believes he has hit critical mass in Melbourne, where he started the business with his father Bruce, and he is now working hard to achieve it in Sydney and Brisbane. Last financial year he turned over $1.9 million. This year turnover will reach $8 million and he hopes to double it to $16 million in 2008-09. He plans to be cash flow positive this quarter.
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Ahchow has 3000 service providers signed up and gets about 50,000 visitors to his site a month. He has attracted several high profile investors to the business, including Seek co-founder Matthew Rockman and wealthy property developer Shaun Bonett, who, according to BRW magazine, is the richest entrepreneur in Australia aged under 40.
But building the critical mass of buyers and sellers required to make the online marketplace work has been a hard slog, especially since good service providers are hard to find, and usually really busy.
After a stint as an industrial relations lawyer for RACV, Ahchow was developing a tender proposal for his parents’ cleaning contracting business and working out how to recruit cleaning contractors on a large scale when he first appreciated the need for a service like Service Central.