When Sebastian Wieser, together with his co-CEO, wanted to completely turn his company's well-running business model upside down in 2012, most people thought he was pretty crazy – including his own employees. "Back then, we lost a lot of margin with existing customers," Wieser recalls. What had happened?
Maximilian Sachse
Editor in Business
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In 2000, Wieser founded the online marketplace Mercateo with four colleagues from the management consultancy McKinsey, which has been called Unite for two years. Buyers from companies should be able to easily buy products for everyday office life via the Internet. In particular, niche products that companies only need to a small extent are often ordered digitally via such platforms. A time-consuming price comparison would simply not be worthwhile for the relatively small shopping carts of 200 or 300 euros. That's why companies are hardly interested in Wieser's company being able to demand enormous margins.
The marketplace is profitable after almost five years. But Wieser wants more. "I could have sold profitably at the time, but I didn't feel like it," he says. "What am I supposed to do with the money if I don't know what to do with myself on Mondays?" So he continues to develop the company, wants to offer not only a platform for small quantities of niche products, but also for the purchase of business-critical goods on a large scale. Wieser is convinced that this requires trust. He wants to build a network in which customers and providers exchange information with each other. For this, he asks customers to handle previously analog business relationships via the platform and waives commission. In addition, the new model weakens the actually well-running marketplace business. "Quite a few have wondered whether we have gone totally crazy."
For almost ten years, "the model languished"
In 2012, Wiesner introduced an auction system for this network model, similar to that of the online used goods retailer Ebay. Customers place their desired shopping cart in the system. Sellers can specify a maximum price at which they start at an auction and a minimum price up to which they go. This is not known to the buyers. The software behind the marketplace ensures that competitors are always undercut by one cent up to the minimum price. The shopping cart is then compiled by an algorithm for the buyers fully automated as cheaply as possible, depending on availability also via different providers. Unite then buys the order for one second before proceeding to the customer.
Not only the price decides, but also other preferences. Buyers can set what value they want to attach to delivery time or sustainability criteria. Thus, an auction can also go to the vendor who was perhaps two percent more expensive, but has a woman in the management, if desired by the buyer. "This makes sustainability, for example, economically quantifiable and strategically controllable," says Wieser. Now it could be decided at the highest level to pay two percent more for certain sustainability criteria, for example. Since customers and suppliers receive a detailed evaluation after the auction as to why the competitor and not they received the order, this would be an incentive for suppliers to invest in sustainability. "If a company sees that they can earn more with more sustainable products, it makes investments easier," says Wieser.