Sheba Makes A Strategic Shift, The Problem Sheba Solves, Sheba’s Model and The Job Strategy Does

Sheba Makes A Strategic Shift, The Problem Sheba Solves, Sheba’s Model and The Job Strategy Does

Sheba, the Dhaka-based service marketplace started 2018 with “a significant strategic shift in their branding.” As part of the shift, the company introduced a new logo and launched a new campaign. I loved the campaign accompanying its new logo – “a symbol of people who love to serve”. From a press release Sheba shared with us:

“The company is launching its new logo today. The logo comes in shape of a box – a symbol for the people serving with love. The empty space inside the box has been purposefully kept empty inside to fit in the company’s service providers. The logo, however, is not restricted to its company only, but anyone who serves with love, be it the mom helping her kid to take the first step or the makeup artist helping the bride to look beautiful. The symbol represents anyone who loves to serve.”

With the new campaign, the company tries to position its logo as “a universal symbol of people who love to serve”. I would like to argue that this is one of the best branding campaigns we have seen in Dhaka in the recent years. It has created a significant buzz on social media but to my reading, the campaign had the potential to do better. Still, as a branding campaign, it does the work.

To my reading, the ambition of the new shift is pretty high – Sheba wanted to get closer to its customers and wanted to be part of the daily conversation when people serve each other which would eventually do the marketing, hence sales, for it in the long run without Sheba having to actively invest in the process. This is logo equivalent of TEDx or GBG, if you are aware. Opening up your brand so that people can participate, contribute or take from it. It will require more work to get there but I think the foundation is well laid out. Kudos to Sheba marketing team.

However, as a reader of this site, you may already know that I don’t take much interest in TVCs, campaigns, and ads. I don’t think the old world way of marketing works anymore. But it works when it connects your overall strategic ambition. Sheba campaign does a wonderful job positioning the company in a brilliant way.

From the outside, the campaign looks more like a strategic shift and departure from Sheba’s existing model of working with service vendors to working with independent professionals. But I later came to know that it is not the case. This is a mere branding campaign and it has nothing to do with the overall strategic ambition of Sheba, from business model perspective. This is where I would argue that the campaign falls short, albeit due to the strategic decision of the company, and lacks the connection with Sheba’s broader strategic direction. More on that in a moment.

The problem Sheba solves

To my reading, Sheba aims to redefine how people receive services and hire servicemen in Bangladesh. This applies to another similar startup Handymama. In an offline world, it is painstaking to find and hire servicemen. For instance, I need a cleaner or an electrician, my options are – I ask my neighbors, or Google or call my friends for reference. This is inefficient and painful for me as a customer. Sheba aims to solve this problem for me. It builds a platform where I can go, select a service and expect a serviceman to arrive at my place the next minute. It efficiently connects me with the service provider I need at the moment. Similarly, it enables servicemen to find recurring customers. Sheba gets rewarded for doing it in the form of commission.

Now there is more to it. Sheba is not only a directory where it merely lists names and contact details of service providers. Rather it finds service providers, onboards them, trains them, prepares standardized pricing for services and ensures service quality and so on. Up until now, my contention, it does a brilliant job. Now read on.

Sheba does all these things well but with one significant and consequential difference for its business, servicemen and service receivers. “Consequential’ is the word here. I think this apparently small and convenient decision makes a lot of difference for all part involved.

It does not work with individual professionals or servicemen – for instance, it does not work with individual electricians or photographers – rather it works with vendors or merchants who work with teams of servicemen and in a way it enables these middlemen.

I would like to argue that this choice has a significant downside for Sheba as a business. At the same time, it does a disservice to its perceived mission to empower individual serviceman and eliminate the middleman. Instead, an individual serviceman now gets to pay commission twice, one to Sheba and another to the company under which he/she works.

Sheba’s model, Sheba’s business

This part may sound redundant but this is important to better understand Sheba and its future.

Sheba is a service marketplace where you can go, find a range of services and service providers and then pick yours. Ideally and theoretically speaking, if uber is press a button, get a ride then Sheba is choose a service and get served. The only problem is the company is not. Its model is a lot closer to eCommerce, in its case specialized for service, than on-demand service platform.

Sheba allows service providers, vendors and merchants, not freelancers or professionals, to use its platform to get customers for a commission. While many similar platforms predominantly focus on individual service providers and freelancers, Sheba does not. It works with big and small service providers, – the company aims to empower service SMEs, – who control a small team of service providers and enable them to get to more customers. On the other hand, for customers, it solves a real problem. It is hard to find a service provider in time. For instance, you need to clean your house or fix your refrigerator or need a beautician, it is often hard to find a fixer readily. This is where Sheba comes in, as I already explained.

Similarly, it helps service providers, in its case merchants, to find more businesses and grow. In its existing model, it is more like an eCommerce marketplace that specializes in service. For a better understanding of how Sheba makes money, it is again disintermediation that I explained a few days ago when I wrote about Shohoz and its decision to get into the ride-hailing business.

From Shohoz Makes A Necessary Move And Shohoz’s Search For Moat

“Theoretically speaking, Shohoz is a logistics company at its core, at least it is for now. It does not sell tickets, it enables customers to get tickets without visiting ticket counters for bus, movies, launch and in the future many other things. It does this either electronically or by delivering ticket physically to customers doorstep in collaboration with owners of buses and other services.

In the process, it makes your life easy and builds an intermediary relationship with the customers and disintermediate ticket counters of buses and cinemas and launches from customers. This disintermediation of service providers’ own distribution channel is where Shohoz’s success lies. When it manages to build a direct relationship with end customers it becomes indispensable to the services providers for selling tickets.

At one point of time, people will stop visiting bus counters, train counters, movie counters for tickets and go to Shohoz for that same purpose making it impossible for service providers to avoid Shohoz platform and increasing Shohoz’s bargaining power with the owners of these services.

Shohoz in a sense is an aggregator and its power lies in its ability to build and control relationship with customers and thus distribution. Customers go to Shohoz because they can buy any ticket from one place and service providers rely on it because it controls customer interaction. That’s the name of the game.”

I understand that Sheba and Shohoz are two completely different businesses. But this analogy does help to understand Sheb’s existing strategy. Sheba is no Urbanclap or Dunzo, rather it is Ajkerdeal for services without any leverage that Ajkerdeal has in its own business.

While this model does make sense, particularly when it comes to service quality, it has also a lot of disadvantages. This model significantly reduces Sheba’s potential, again this is my personal view.

More on that in a moment.

I would like to think that team Sheba does understand this reality and that they have made a strategic decision. Business is a lot like life. You have to make a choice and your choices dictate your life.

Sheba has made a choice in terms of choosing to become a service marketplace where merchants and SMEs will provide the service from the backend, Sheba simply connects the service providers with the customers. It makes money from the providers in the form of commission. Now, this does not limit its ability to allow freelancers or independent professionals to offer service through its platform in the future. However, it does reduce its leverage to move to that model after all these time because it will again call for another rebranding.

The reason behind choosing a marketplace model instead of becoming an on-demand service platform is control. This model offers, according to Sheba, more control over the service quality whereas it is hard to control and manage service professionals and freelancers, a claim I would like to contest.

In fact, I would like to argue that on-demand model and working directly with the professional would offer greater quality control to Sheba because in that case, Sheba would have the control over the real servicemen, not the vendor which will significantly increase its leverage.

In its existing model, Sheba centralizes things, empowers middlemen instead of empowering servicemen, the very things it aims to fix. Moreover, SMEs ultimately control the supply of service providers significantly reducing Sheba’s leverage.

Sheba’s strategic shift and Sheba’s strategy

Since we started with Sheba’s strategic shift, I want to spend a few more lines on that. As I already said, Sheba’s marketing team has done a brilliant job. However, I do believe there is a disconnect between the current campaign and Sheba’s overall strategic direction, at least for now.

Now, what is Sheba’s existing strategy? I have already laid it out, albeit this is my personal observation and I’m aware of the fact that I could miss important points. I would be happy to be wrong as long as this helps a discussion. There are a couple of parts to its existing model: 1) merchants/vendors/SMEs who manages servicemen 2) commission it gets from vendors 3) its concern for ensuring quality and opting for a rather manageable option despite the fact that it takes away its leverage.

Now how its on-going branding shift connects or disconnects for that matter, with its existing model. The campaign focuses on individuals – Sheba logo, as the campaign tries to position, is a symbol for everyone who loves to serve – but Sheba as a platform does not allow these individuals to use its platform, yet. For instance, in one of the ads, it used a photo of a Rickshaw Puller, unfortunately its existing model does not allow that rickshaw puller to use its platform, even if he wants to, rather it has to be someone who manages a bunch of rickshaw pullers and a rickshaw puller has to come through a middleman. Again, this is model simply does not give any leverage to Sheba.

Limitations of Sheba’s model

I have already mentioned a couple of limitations of the existing model. I think existing model causes major inefficiencies to the entire Sheba business in multiple areas.

I would like to argue that it would be easier to manage and work with individual professionals than vendors, one of the reasons why Sheba decided to go with SMEs instead of freelancers. This is because of how this service thing works. There is already a physical infrastructure how people receive service.

Let me explain. The service distribution system is a little interesting. There are service providers in every locality. In my area in Mohammadpur, there are probably several hundred electricians, beauticians, cleaners live here and if you tap them for providing service in Mohammadpur area, it should improve your service delivery time as well as quality. The work is simple. You simply convert existing service consumption and delivery infrastructure which is inefficient because of its offline nature into digital one.

Now, this might not be the case for vendors. Vendors, mostly, tend to be located in town halls and it centralizes resources which slow down the service delivery process. When it works with an SME, the process works something like this: first Sheba receives a service order then it forwards it to a vendor, the vendor then assigns it to one of its people. This makes the entire experience more cumbersome and slow and inefficient. And when you are on the internet, slow is a deal breaker. There are business repercussions as well which I intend to explore in more details in some other day iA.

On the other, going with serviceman could have helped Sheba to unleash a sort new revolution. The barber near my home could have started working independently using Sheba platform instead of working for a salon owner.

Sheba’s Opportunity and Sheba’s future

Sheba, if done right, can become the digital service infrastructure of Bangladesh that enables citizens to avail services more efficiently and with more assurance of quality. However, again, I would like to argue that the company has to work on its model in order to get there such as finding a balance between on-demand and marketplace model as well leaning toward a few major vertical that are heavy in terms of basket size, at least for a few more years.

The other priority the company should pay attention to is its technology stake. It should be able to match service providers and service seekers algorithmically which would improve its efficiency. Again, this is only possible if it works with individuals instead of SMEs.

So far I know, the company is working on these areas. Sheba is pretty young company and it has a long way to go, but it is also true that in the startup world the most important resource is time. You often run out of time, in the form of running out of money or steep competition.

I believe there is a huge opportunity in the service space. This applies to other players in the market as well such as Handymama or Poripati. Being an aggregator, it can control both supplies as well as demand, an incredible leverage that it can easily use to its own advantage. It can build the layer to enable service discovery as well as consumption. I think there is a market for Uber for x, you press a button, your electrician comes!

_______

Notes:

1) Serviceman originally means a person who either serves in the army or operates domestic machinery. However, I used the term for service professionals such as electricians, beauticians, cleaner, plumber etc. I hope it does not cause any confusion.

2) Before writing this piece, I had a lengthy discussion with Sheba CEO Adnan Imtiaz Halim and part of Sheba’s marketing team. I have not used any quote in the article as such but it does have information that I collected during that conversation. I’m grateful to Sheba team for their time.

3) Thank you Ayrin Saleha Ria and Rahatil Ashekan for reading the draft of this story.

Cover photo: Sheba Facebook page

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