1. Startups

The Long Journey of Market Validation Process

Paxel, Flip and Netflix stories when they first launched the solution

The challenge of setting up a startup has existed since the beginning, even before a product was created. There is a stage named market validation which must be passed. This stage gives startups the opportunity to evaluate their products, as well as being the stage of whether a product can continue or not.

Make sure consumers are willing to pay

We once asked Paxel's Co-Founder, Zaldy Ilham Masita, about how Paxel validates its market. Zaldy shared that Paxel's initial idea began in 2017 to find a suitable model for last mile delivery in Indonesia, especially to meet the rapid development of the e-commerce industry.

Paxel from the beginning tried to create a new model for last mile delivery with relay model or relay by utilizing smart lockers as a mini sorting center at the end of 2017, and by providing pick-up service and flat rate. Paxel's focus is on how to provide service same-day delivery within cities and between cities--markets that have been empty of players so far, so Paxel can immediately lead the market without any price wars.

"For two years, paxel tried this new model, it gave a high SLA for same-day delivery at an affordable cost. Even same-day delivery can be offered to all major cities in Java and Bali. Model last mile delivery with system relays, menggunakan smart lockers, and application-based for customer requires a very large system and technology. [..] Most of the investment was made in the technology [sector] with 4 IT centers built in Jakarta, Bandung, Surabaya and Chennai with 60+ engineers," Zaldy explained.

Zaldy continued, over the last three years he and the team have learned a lot. One of them same day delivery service between cities opens up new markets for market last mile delivery that had never existed before, namely the delivery of food, products perisable between cities, and also frozen food. Market This new approach can actually encourage SMEs in the region to expand their market to other cities.

For Zaldy and the Paxel team, doing market validation need to consider many things, including business model innovation so that it is not easily imitated by big players or new players.

"[Ensure] consumers really need service and are willing to pay. Sometimes the business model is very innovative and very good but consumers still don't want to use it when they pay. Roadmap which is clear to enter into another larger market segment by staying focused on core competencies so you can give all-in service to consumers," Zaldy added.

So far the service same-day delivery Paxel is claimed to have skyrocketed up to 250 percent. With the number of users reaching 1 million, Paxel already has more than 50 partners to meet various needs.

Make an impression

Flip has also had a long journey to find suitable markets and products. One of the financial technology companies whose innovation is quite important for many people by cutting bank transfer fees.

Flip started with the concerns of Rafi Putra Arriyan (Ari), Ginanjar Ibn Solikhin, and Luqman Sungkar about the large bank transfer fees. For a single transfer between banks the cost is equivalent to a plate of rice and eggs.

First service Flip created using Google Forms and own domain. Users who want to make a bank transfer must fill out the form then the founders will make a manual transfer via internet banking. Unexpectedly, Flip gained popularity among University of Indonesia students. At that time there were 30 transfer requests per day. Overwhelmed, they eventually recruited their own operational team. The story is the first validation market and products from Flip.

There are several things that Flip learns at that stage. One of them, many were hesitant to use Flip when they first tried it, but after getting their first experience the user returned to using it. First impression.

"First of all it's best to start validating market of something we really feel the problem with. After validating the problem, then entering the solution validation stage again. Every validation that is done should be done with Yago's defensive effort which is little and time is fast. The sooner we validate, the sooner we can gain insight to build the solution we want," said Flip CEO Rafi Putra Arriyan.

Currently Flip already has its own application. The number of banks that work with Flip is also growing. So are the features. Now they are also providing cost-effective transfer solutions for corporations through BigFlip.

Adapt to market needs

The story of the struggle to find market validation Netflix, a technology company that is now a phenomenon, is also experiencing the exact same thing. Before finding the best form as a streaming service video on demand Netflix has a long history. One of them is an online CD/DVD sales service.

Problems then began to appear, such as the risk of damage when sending CD/DVDs and the like. From there Netflix started to rent movies based online. Another story about how Netflix started was told by Reed Hastings, the co-founder of Netflix at the event MWC Barcelona 2017 ago.

In a presentation, Hastings explained that they started their DVD delivery business to customers in 1997, then introduced the service streaming in 2007. Three years later, the number of service users streaming outnumber their DVD subscribers.

Netflix's business model changes were in line with the adoption of user habits and increasingly advanced technology at that time. By maintaining a culture of continuous adaptation, Netflix is ​​now more than just a service provider streaming films but also produces its own films and series. Netflix is ​​proof that businesses need to be dynamic and stay diligent to see the opportunities that exist in the market.

In Indonesia, for example, Netflix collaborates creatively with filmmakers in Indonesia by producing and publishing films made in the country.

Not an instant job

Based on the experience of Paxel, Flip, and Netflix, ideas need to be validated first based on real concerns or concerns. Then they go into the field to measure how big the problem is and what solutions are needed.

Validating the market is also not a job that can be completed immediately. In business continuity, the market validation process must continue to be carried out--exploring new innovation potentials and, most importantly, seeking new sources of income.

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