The Digitally-Enabled Local Business: Transitioning OfferUp’s Platform from C2C to B2C

Phillip: [00:00:00.06] Hello and welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Phillip.

Brian: [00:00:04.94] And I'm Brian. And today we have another exciting guests on the show with us, CEO and co-founder of OfferUp, Nick Huzar. Welcome, Nick. Happy to have you.

Nick: [00:00:16.17] It's great to be here.

Phillip: [00:00:17.28] This is a moment for me because I spent way too much time on OfferUp buying secondhand bicycle parts. I love your app so much. It's great to have you. It's like you're a hero of mine.

Brian: [00:00:32.55] Yes. Totally.

Nick: [00:00:32.55] Oh really? You're too kind. I'm just happy that it's working for you. And by the way, bikes are very hot right now.

Phillip: [00:00:38.55] Are they?

Nick: [00:00:41.29] It's one of the hottest things. Everyone's looking for a bike, so hopefully you're not in the market for a bunch of stuff at the moment.

Phillip: [00:00:45.36] It's an interesting thing. We usually start by asking, you know, who you are and how you kind of got started and ask you to give us your story. But we're speaking at a moment where, to kind of like grounded in the culture at the moment... We've talked a lot historically about B to C on this podcast. We talked a lot about B to B on this podcast, but we haven't really talked a whole lot about C to C, or that customer to customer, peer to peer commerce. And I wrote an article four weeks ago for Future Commerce that said, "We are all retailers now." I think OfferUp and some others of this generation are teaching a whole new entrepreneurial mindset to a new generation. And I think that that's kind of cements us in our time at the moment. So with that as the setting, Nick, tell us a little bit about who you are and what possessed you to create OfferUp and all that good stuff.

Nick: [00:01:37.35] Yeah, well I've done a few different tech ventures in my time, so I guess I kind of have the sickness or I like building things and creating things. I had no plans at starting OfferUp. Honestly. Startups are a lot of work. Before I had kids, I used to live in my office. I literally had an air mattress in my office at my last startup. So I'd moved on from a previous company and the spark for OfferUp was just a personal pain point honestly. I had a room full of stuff. I had a daughter on the way, and I was going to turn this room into her nursery. And I just thought to myself, this is going to take me all weekend just to post these items online. And I think I just slammed the door and ran away. I'm like, you know, forget this. I'm not going to do this. And that was my frustration for a while. And then transitioning on from a different company, I wasn't working, I had no income. I had a wife that was working and a kid on the way. So, you know, I didn't want to be a deadbeat father. So I was interviewing. But I kept that itch that was there. And I kept thinking, am I all alone in this or is there a big problem kind of out there? And can this problem be redefined because of these devices now that we all have in our pockets? But when I started to OfferUp, this was nine years ago, there was no Android phone.

Phillip: [00:03:05.79] Wow.

Nick: [00:03:05.79] And so I think we had a belief that everyone would have these devices. And if everyone had this capability in their pockets, could we rethink local commerce as we know it and leverage the power of these smartphones? I did not go all in day one. I spent months and months just doing homework. And my conclusion, after months and months of homework, was value is locked up. It's everywhere. It's in our garages. It's in retail. It's in storage. And the challenge is there's too much friction in the way. So most people don't even know that these things exist, so a very basic part of OfferUp is if I want to make something discoverable like this chair that I'm sitting on right now, I can just turn around and take a picture, and in 20 seconds it's online. And when we started the company, that was not the case. If you were using a desktop solution, it would take you like 15 minutes. So that was kind of the early days. And, you know, I started to uncover stats like, 25% of U.S. households with a two car garage can't park in their garage. You know, 10% of the population rents storage units. You can wrap a seven by seven square around every man, woman and child in this country with storage space. So I just felt like while they were existing desktop solutions, I just felt like there was a much bigger problem that could be solved.

Brian: [00:04:23.76] You nailed it. We have collected stuff in America to the nth degree. It's just our thing that we do all the time. And actually the idea of resale is definitely something we've been talking about for a long time on the show and we call it secondhand commerce. And I think, as Phillip said, we've not focused as much on, like the idea of peer to peer selling and how important that is. You've become effectively the fastest growing marketplace in the US and have grown into a true unicorn. Talk to us a little bit about the idea of peer to peer and how that has helped empower the growth that you've seen, and how important that is right now in America given that we have all this stuff.

Nick: [00:05:14.25] Yeah, I think to be clear, I've always thought about what we're building is really a platform for local commerce and it has many different, I think, phases in our evolution. So while today I think the primary use case of OfferUp is definitely peer to peer, long term it definitely doesn't have to be. We have a growing segment of stores that are using OfferUp both online commerce and just local commerce... Furniture... Car dealerships. So we really think of ourselves as is a platform. But in order to get there, we had to figure out, like, OK, what's the best approach? And we actually pivoted from our first approach, which was to try to get retailers to post and we kind of had a chicken and egg problem. So early on we moved to more of a C to C approach with the idea that if we could get consumers to use the product, then we would have a huge base of users that we could then layer on other businesses. And so C to C was very intentional. We all have a need to get things and get rid of things. And if you look today, OfferUp has been installed over 90 million times. We're only here focused in the US. So we obsessed early on about the product experience, creating simplicity, bringing trust to that experience. And I think because of that, a lot of our growth came from word of mouth. People got a great deal on something or they sold something very quickly, and they told family and friends about it. So that's how helped district really quickly, especially in some of the top markets in the country. If you look at LA, for example, close to 18% of the entire adult population in LA uses OfferUp every month. Seattle and Phenix is now over 20% of the population using our marketplace every month. So it's been great to see just how we've been growing, mostly organically, I'd say, over the years. And we've always been very community driven. We're definitely a local marketplace, so we do a lot to kind of help engage and add features into the product around community. And so, not surprisingly, I think when COVID hit, we really saw big uptick. I mean, if you look at our numbers, we compare January, the first four weeks of the year, to now, and we're up over 90% in terms of just overall engagement. So people are turning to OfferUp in a time of need and maybe. Maybe they need supply that they can't get at a store. I mean, I met a woman the other day who was desperately trying to keep her kids entertained if she wanted to buy a trampoline. And there were no stores open. So she went to OfferUp and bought one same day. And now her kids are jumping around in the back yard. We see that, too, in a lot of our stats where parents are finding ways to keep their kids entertained right now. If you look at electronics, people buying video games. That's up like 300 percent. Puzzle's is up 1000 percent. Toilet paper and hand sanitizer were really sought after. Who would've thought those old puzzles in the back of your closet are actually worth something? But it's really interesting to kind of see the shift in trends, what's going up, and then other things are clearly kind of shifting downward, like nonessentials. Maybe fashion is not the top of people's list right now. But definitely things like fitness equipment and things that people really need, we're able to help them during this time.

Phillip: [00:08:44.72] Early on, that's actually exactly how I got some fitness equipment. Everybody was out of stock on kettle bells and all the rest, right? So I had to take to Letgo, which I think we'll talk about in a bit, and OfferUp and other local apps to try to find something to tide me over and build out a pretty ruddy home gym. And thank goodness I already had a treadmill, which I also bought secondhand. I think that there's an interesting shift that's happening in that consumers are filling the gap of retail. But to your point, the long term viability is that retailers can make greater use of these platforms to sort of rise above the fray. If you're a local business, it's really tough to buy a lot of online advertising. It's really tough to get in front of the consumer. And I think that having more channels to do that is very desirable. Well, what kind of tools do you give to local businesses? And what sort of approaches are you taking to help local businesses to connect with the customer? Is there some learning that you do to put those businesses in front of consumers or is there an ad platform? Tell us a little bit about the ways in which local can get in front of a customer.

Nick: [00:10:11.50] Yeah, I think the best example here would be what we do for auto dealerships. So rather organically, auto dealers started really jumping on our platform as we started to get scale. So quite a few cars in the country sell through OfferUp today. And what we wanted to build out was, okay, how can we make it easier for dealers to get their inventory online and to promote it and get analytics and truly measure that buyers are not only engaging online, but coming into car dealerships? And so what we offer them is a subscription, a monthly subscription fee, where they get a special detail page, a badge in their profile. They get increased promotions. They get a lot more visibility by being in this program versus the free program. They get a lot of analytics, so they can understand kind of what's working and what's not. And so that's been really helpful, I think, for car dealerships, especially right now. And it's been interesting to see how they're evolving during this time where we've been hearing stories where a buyer would reach out to a car dealership and say, "OK, I'm interested in this car." They will do all the paperwork, all the financing and everything, from the convenience of their couch, and the car dealer will actually drive the car to the person's home, wave at them through the front door, and put the key on the mat, and give them a car. And so I think dealerships are finding ways to adapt and still sell cars, which is interesting during this time.

Phillip: [00:11:42.11] That's arguably a better experience than the five hours you spend at the dealer waiting to get into the business office.

Nick: [00:11:48.92] Yeah, there's nothing worse than sitting there for, like, three hours for no reason. It's quite frustrating. I bought a new car recently, and I eventually Ubered home because I was there with my wife, and I said, I don't know why I'm sitting here. I've got work to do. And I took off. So yeah, that's how we're seeing them adapt. I mean, we also give them tools. So I think some of the challenges we've seen with the local businesses are our initial app was designed for an individual. It was designed to just, you know, you're in the garage and take a picture of the bike or whatever you want to post. It was not designed to have thousands of items up at one time. And that, again, kind of happened organically with a lot of these local retailers. So we're helping to plug into their CMS system. So when a car comes on the lot, for example, that automatically shows up on OfferUp, so they don't have to do any of the manual work. And that's part of the value add we provide in that program we give to dealers.

Brian: [00:12:41.96] One thing that caught me that I thought was really interesting is just how much usage you're getting right now, during this time. I would have thought that people would have been a little bit nervous about selling peer to peer and like meeting in person with a stranger, potentially exposing themselves. But then I started to think about it, and it's like actually you're limiting exposure if you're selling peer to peer or if you're doing one to one selling like you would on OfferUp because you're only interacting with one person. You don't have to go to a store. You don't have to go walk down aisles, or spend time in rooms in public spaces. Talk to me a little bit about any feedback you've heard from customers about how they feel during this time of selling directly to somebody else that they've never met before. And have you been able to help provide any tools with safety and sort of protection and just confidence to be able to make these types of transactions?

Nick: [00:13:45.09] Yeah. And I think your points are definitely valid. I think you've got multiple kind of variables at play here. I think on one side you have supply that's constrained. I was in Target like three weeks ago, and I took a picture. There was one bike left in the whole store. So on one side, if you need things, they're very hard to get. I just had a ladder delivered to me yesterday. It took five weeks to get a ladder. So luckily, I didn't have anything urgent to do, but still frustrated that it took that long to get here. So I think that's one element at play. And what we've seen is people adapting and doing what I call porch pickups. Like, if I'm selling something I'll just say... I sold a bike about three weeks ago, and I just left it outside of my door and I just told the buyer, "Hey, just leave the money under the mat." And so the buyer showed up, you know, waved at me through the door. I never even spoke to him, you know, face to face, really. And they just put the money under the mat. So I think in general, people are being accommodating and trusting each other. And we're hearing that happening quite a bit. We're also seeing people take advantage of our shipping feature. And so our shipping is up over 100% since COVID started. And that's great because you don't have to meet anybody. And you can buy and sell things anywhere in the country. So I think we're seeing a lot more people taking advantage of shipping as, again, a direct result of COVID.

Brian: [00:15:19.91] That is so cool.

Phillip: [00:15:23.90] There's a little bit of a tailwind, as we've been talking about, about these favorable market conditions that might make somebody choose to use OfferUp at this time. What are some of the headwinds that you might face that you're gonna have to overcome? Any challenges you'll have to overcome in the next three to six months to continue to get trust from the consumer and to win a new consumer?

Nick: [00:15:52.52] Man, I'd be stretching if I could think of many at the moment. I feel like we have a lot of tailwinds at the moment. We're trying to really help, I think, bring more supply in our system. I think part of our challenge is supply is definitely up. Every week has record numbers. We're seeing more and more people posting. And part of that just simply could be people are home more. I think you also have a percentage of people that really need to make ends meet. And I've heard a number of stories of people literally liquidating the things in their home just to pay rent. And that's really unfortunate. But again, I'm happy we can be a service that that can help them. But as supply is up, demand is really up. And so you will see more from us this year in terms of how can we bring more supply into the system to help people when they're looking for things. That's probably our biggest focus, I'd say, in the near term is trying to fill this gap that we see on supply. And I think through the rest of the year, we're going to have a lot of tailwinds that we can... I think a lot of our focus at the moment is really trying to figure out how can we adapt as quickly as possible to help people when they're looking for things.

Brian: [00:17:08.66] This is actually so exciting to hear. We've heard so many difficult stories out there right now in retail, in the world, about the challenges they're facing that are difficult. But hearing stories like people trusting each other and just putting an item outside their house and then coming and just putting money under the mat. I love to hear stories where people can connect with each other and trust each other and sell to each other. And it's powered by commerce. That's one of the visions and part of this show is that commerce connects people, and this is a perfect example of how commerce connects people and demonstrates that people still have the ability to interact with each other in good ways in crisis. It's amazing. So you mentioned your challenge is supply. And we earlier, at the beginning of the show, we mentioned Letgo. You just acquired Letgo. Talk to us a little bit about the strategy behind acquiring Letgo and how that might be able to help you with connecting more people with more things.

Nick: [00:18:33.06] Yeah, I think if you look at the US opportunity, it's clearly a very large market. And when we looked at our strengths, and we looked at Letgo's strengths, there were just still a lot of synergies there. You know, we had a number of markets where we had significant scale. They had a number of markets where they had significant scale. So as we got to know each other more, we said, well, we could really accelerate our growth in the US by coming together. And so we thought there was a lot of synergies in that approach. And I think, again, the timing, clearly we were talking before COVID, but I think it is great that it's happening now because I think we can really expand not only, like I said before, supply, but the audience should grow significantly for both OfferUp and Letgo customers as we take the time this year and kind of think through how we can best come together as a unified marketplace.

Phillip: [00:19:35.88] So there is this interesting thing that's happening at the moment and PR always hates when I... I'm not going to ask you to comment on anyone else in the marketplace, but I'll make the observation. Etsy is up 300% on the day, topping out over 100 at market open this morning. I think the DIY culture and the sort of, again, coming back to the idea that there are things that are beyond just liquidating items in your house that is an opportunity here. How have you thought about helping that local crafts person or local individual sole proprietor connect with an audience? Is there an opportunity with this other platform in creating a greater suite of tools that's more specific to them? Or is that something that you think is more purpose built marketplace opportunity that is a little bit lost in in the broader OfferUp/Letgo ecosystem?

Nick: [00:20:35.62] Yeah, it's something... I think the biggest things we can do is really add a lot more in terms of the feature sets to support entrepreneurs like that. We do see a large number of what I consider kind of craftsman or up cyclers. You'll see people that will buy things and fix them up and sell them for a profit. So they're all over OfferUp already. But I think for them to be more successful, we need to continue to do what I was mentioning before for professional sellers. We need to create more tools for them and make it easier for them to use the product. And again, we grew so quickly, we were not focused on that segment. We were really focused more on C to C. But as it's grown on the platform, I think we're kind of in the stage of playing a little bit of catch up to make sure we can better support them.

Brian: [00:21:27.07] That's awesome. I had another question a little bit off topic as well. We look back at sort of the evolution of peer to peer sales. We look back in the 90s, we had garage sales, and then it evolved to Craigslist and then it evolved to OfferUp. And you've sort of become the default at this point for that peer to peer sale. Looking backwards a little bit, though, I still see garage sale signs everywhere. And I kind of think about garage sales as sort of the brick and mortar of peer to peer. Have you looked at bringing OfferUp into sort of a more IRL experience where you do like little events and other things like that as well? And that might even be with merchants. Have you looked at features to that end?

Nick: [00:22:26.24] I'd say not so much today. I think, as we think about where we're going, definitely we can explore more of those opportunities. Garage sales are still out there. But I remember going to my friend's house a few years ago. He had a garage sale. And I said, "Can I just come by for a few hours? I just want to watch this," because it had been so long since I'd actually seen that. And he was on a major road, and I wanted to watch liquidity and it was like locusts. Like within two hours, his front yard was gone and like, well, I don't know if OfferUp can compete with that. You know, I think that's probably the benefit of a garage sale, sometimes. Honestly, if you're on a great road, and you've got people driving by, and you just want to clear out a garage, garage sales work. But I think we've seen people posting garage sales quite a bit on OfferUp, too. They'll just use it as a free promotional mechanism. They'll have a garage sale and then a post like 20 items and they'll say, "Hey, come on by."

Brian: [00:23:22.52] That's interesting. So as we kind of close out here, talk to us about the future of peer to peer. What's the next evolution? If it's not physical or like event type stuff, what do you see as the next iteration for peer to peer, especially as we continue down this road of being in crisis?

Nick: [00:23:48.07] Yeah, I mean, I think that our focus has always been how do we remove as much friction and in the buying and selling experience as possible? And as I mentioned earlier, in the beginning, it was just for me to make somebody discoverable. OK. We can make that process better. But I still think there's still plenty of friction in local commerce. And everything from, how do we move goods, to payments... I think there's still plenty of opportunity there. I think in addition, not just peer to peer, but also how do we help more professionals to come onto our platform? I think especially right now with what's happening with COVID, if you look at a lot of the merchants... I mean, the ones that are struggling the most don't have the infrastructure. They're not the big chains that have armies of people and tech people to do these things. So, you know, we want to be a platform that enables anybody to be able to buy and sell things locally. And it can be a business. It could be an individual. So we still think there's a lot of opportunity there. If you look at the overall stats, like 85% of commerce is still not online today. And even in the world of these huge, you know, online tech companies, the vast majority of it is still local. And so I think a lot of them are struggling, as I said. I don't think they have the infrastructure. So we want to be able to create a really simple solution for them that doesn't require an IT degree to use.

Phillip: [00:25:18.25] Yeah. If I had to ask you to give a little advice... The economy of nine years ago was a little uncertain. I think we look out six months and maybe it's still a little uncertain. What would you tell yourself nine years ago, and if you had to speak to a founder that's listening right now?

Nick: [00:25:33.32] Oh, man. That's a tough one. I think that anytime someone is building a company, they better be super passionate about it because they're just a lot of hurdles that you have to overcome to build something. And I don't care what company it is. Any great company has had to overcome a lot of major obstacles. And I think we were no exception there. So I think if any of is starting a company, be passionate and be persistent. I think a lot of people will typically get caught up in the hurdle in front of them and end up quitting. Yeah, I kind of had this no quit attitude, no matter what. And luckily, you know, we continue to make progress despite some large challenges along the way.

Phillip: [00:26:11.02] Awesome. Well, I hope to get you back on the show in another year or so and hear about how you're helping entrepreneurs of all kinds to do that and how they can succeed on your platform. Thank you so much for your time, Nick.

Nick: [00:26:22.39] Thanks for having me. It's been great.

Phillip: [00:26:23.74] Nick Huzar, from OfferUp and Letgo. And I want to hear from you. Maybe you have a conversation that you want to start of your own variety. You can do that over at FutureCommerce.fm. Or drop us a line at hello@FutureCommerce.fm And remember, the future is what you make of it. So let's shape the future together. Thanks for listening.

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