Charles Armitage discusses disintermediation and how marketplaces can manage the risk. Disintermediation refers to transactions occurring off the platform between buyers and sellers. It presents risks like lost revenue and data. While disintermediation is not currently a major problem for Florence given its regulated industry and vetting processes, managing it is important for growth. Strategies include providing value-added services, incentives for loyal users, and governance rules around off-platform transactions. The key is continually enhancing user value to make transacting on the platform more convenient.

1. Charles Armitage
Disentangling disintermediation
FLORENCE CO-FOUNDER

2. Florence is the on
demand staffing
marketplace for the
care sector

3. Our Story
Florence

4. • Team of 55 people
• Raised £7m in total - Series A raise of £5m
in June 2019
• Facilitate 50k hours of work per month
across the UK
Where we are today...
Disentangling disintermediation

5. What is disintermediation?
Disentangling disintermediation

7. ● Loss of revenue
○ Impact to unit economics
○ Highest risk with your power users
● Loss of data
● Loss of oversight & control
What’s wrong with disintermediation?
Disentangling disintermediation

8. • If you can’t measure it, you can’t manage it
• How do you detect off platform
transactions?
Measuring disintermediation
Disentangling disintermediation

9. How likely is disintermediation?
Pre-transaction comms
between buyer and seller
Feasibility of direct
purchases
In person delivery of
services
High repeatability of
transaction
Diverse buyer
requirements
Homogeneity of suppliers
Risk Factors Protective Factors

10. Your fundamental task for
preventing disintermediation is to
build value within your ecosystem
“
”

11. What can you do?
Disentangling disintermediation
Services Incentives Governance

12. • What value can you provide to your users that makes it inconvenient
to transact off platform?
• Strategies include:
• Strong UX
• Payments
• Scheduling / Workflow management / Reporting
• Guarantees / Insurance
Services

13. • How do you reward your power users and encourage them to come
back again and again?
• Strategies include:
• Selectively marketing power users
• Profile building for sellers
• Cash incentives for buyers
Incentives

14. • What rules can you put in place that punish people from transacting
off platform?
• Strategies include:
• Withdrawal of incentives or services
• Clear rules around off platform transactions
Governance

15. How do we deal with
disintermediation at
Florence?

16. We do not have a robust, data-driven
approach to assessing whether
disintermediation is a problem for us

17. • Disintermediation is not our most pressing
problem
• Natural marketplace dynamics that de-risk
disintermediation
○ Pre-vetting of workers
○ High volume of (relatively) fungible
supply
○ Highly regulated industry with perceived
protections offered by platform
Our challenges are our moat
Disentangling disintermediation

18. In Place Potential Avenues
Services Payments management
Insights and reporting
Supply side vetting
Calendar management
Internal staff management
workflow tools
Incentives In platform training
Profile building through ratings
and feedback
Pushing power users up
search algorithm
Governance N/A Temp to perm fees
Removing buyers/sellers
from platform

19. • Managing disintermediation can be a
significant determinant of growth
• Each marketplace has certain risk/protective
factors that are innate
• These can be managed through services,
incentives and governance (in that order)
• Continually seek to provide user value
Key Takeaways
Disentangling disintermediation

20. Charles Armitage
Any Questions?
FLORENCE CO-FOUNDER
charles@florence.co.uk
07753 207 582