I first encountered Fiverr when I needed to design a logo for a side project I was working on. After trying to design a logo myself on Canva and failing, I decided to look on Fiverr. I found a seller who replied me in less than an hour and sent the final logo to me in a few days. The process was seamless and stress-free.
I noticed that graphic design was one of many talents available on Fiverr. Freelancers across the world use the platform to offer everything from Digital Marketing to App Development to Gaming to Astrology. Freelancers are no longer limited by geography and can compete for business on a global scale. This is especially important in the era of remote work where geography does not have to limit talent pools. Fiverr views itself as a “Service-as-a-Product” platform that provides valuable services for both freelancers (sellers) and businesses/individuals(sellers).
From the freelancers’ standpoint, the obvious benefit is being able to provide services globally and the availability of a deep client pool that can be tapped. This global feature is especially important for freelancers in developing countries with unstable currencies. The ability to get paid in USD is one that may not be appreciated in developed countries, but in countries with high inflation and volatile currencies, this access to dollar-denominated income is key. Setting up payment infrastructure is also usually a pain-point for small businesses and freelancers. Fiverr’s seamless payment infrastructure allows freelancers to instantly receive money in their bank accounts and avoid the hassle of chasing clients for payments.
Fiverr also provides exposure for sellers. There is a “rising talent” section that features up and coming talent in various fields. These sellers are given prime real estate on the Fiverr page and are more likely to receive inbounds from potentially clients. Other forms of tiered exposure include a badge system where Top Rated Sellers (TRS) are selected by Fiverr moderators based on a pre-defined list of criteria.
From the business / individual’s standpoint, Fiverr provides an intuitive UX that allows buyers to easy search for and communicate with sellers with the relevant skill set. The global nature of the platform means the buyers get to access a wide talent pool and potentially more competitive prices. Furthermore, buyers have the comfort of knowing that sellers are vetted and if a seller provides subpar service, Fiverr can offer a refund. This de-risks the transaction substantially and helps build trust on the platform.
As a pure marketplace, Fiverr is an extremely scalable platform. It collects ~20% of each transaction from the seller and apart from ongoing capital investments in infrastructure to support increases in scale, I expect that the platform requires little ongoing maintenance expenditures. The COVID-19 pandemic accelerated people’s desire to be in control of their own schedules and work as much or as little as they please. This “shift” in the way people think about work is a tailwind for Fiverr and I think the company is well positioned to capitalize on the momentum.
A long-term concern that I have that I do have with the business model is that it is not particularly sticky like some of the other business models we have explored in class (e.g. the simulation). There are many alternative websites (Upwork, Solidgigs, etc.) that sellers can easily use in lieu of Fiverr. Sellers are naturally sensitive to commission fees that platforms take and with little differentiation between platforms and low switching costs, there is no reason why sellers cannot move to various platforms and take their clients with them. Fiverr in particularly seems to be geared more towards one-time jobs whereas platforms like Upwork are for longer, on-going projects. This lowers the stickiness of Fiverr’s platform in general as sellers are not building a long-term relationship with buyers. However, internal data from Fiverr shows that majority of buyers are repeat buyers which goes to show that despite the lack of “structural stickiness”, buyers continue to choose Fiverr.
Overall, Fiverr is a great business model and has the tailwinds of pivotal changes in society with regards to how we view work. The model benefits from a flywheel effect on both the buyer and seller ends.