Introduction
Welcome to Undercurrents, our deep dives that explore a trend that we feel has the potential to drastically disrupt or change the way the thousands of coworking businesses run or grow.
Hector Kolonas, co-founder at Syncaroo, is your host for this edition.
In this edition, alongside industry leaders, we’ll dig into the undercurrent opportunity that e-commerce presents. Who’s doing e-commerce today? How is e-commerce impacting these businesses and their revenues? What products are they selling online, and what aren’t (yet)? What challenges did they face implementing e-commerce?
We’ll also look at their e-commerce stack, with some insights from some vendors building the software and technology enabling this next revenue boom.
We’ll then discuss some pro tips from the experts and hear some final thoughts from the sponsor of this undercurrent edition.vendors building the software and technology
Foreword
Putting together these deep-dive reports takes a literal village. One thing we all know about coworking is that it requires sustainable design.
This led us down to two options: a) sell these reports and try to break even, or b) find partners to fund or underwrite this kind of research, the interviews, the production, and the free global distribution of these reports.
We went with option 2, and that’s why each edition of Undercurrents has an underwriter.
These underwriters have no editorial rights or say about what goes into these reports, and although they may be interviewed as experts, the only information that they have any control over is the forward IE telling us why they sponsor this report, and the last word, sharing what they learn from the report before we make it public.
OfficeRnD are hugely excited about the topic of e-commerce, so we decided to underwrite this topic, because we believe that it’s the future of technology for coworking spaces, for many reasons.
First of all, we do want to see coworking spaces make more money and the end of the day, our mission is to help, operators of flexible coworking spaces, generate more revenue, grow faster, and be more profitable.
And a huge piece of this is e-commerce and selling directly.
Our data suggests that most coworking space actually sell directly, and I remember one of your reports a while ago that was saying that more than 70% of most coworking spaces actually come from their own website, and directly.
We believe that we see, see more data and we do want to facilitate it. We want to make it smooth, super easy, and just a world-class, e-commerce platform our industry desperately needs that. And that’s why probably about a year and a half ago, we decided to put huge effort and investment into this area.
We always, as a platform, had a little bit of that but it was like a feature. There was public bookings, checkout pages, signup pages, whatnot but we never really treated this with the respect that it needed. About a year and a half ago, we decided that it’s time to wrap this together into a full blown product dedicated to coworking space e-commerce.
There are so many exciting elements to e-commerce and so many exciting pieces. So yeah, we’re excited to zoom into this and see also where it takes us all.
Miro Miroslavov
CEO & Co-founder at OfficeRnD
Meet your experts.
In each edition of Undercurrents, we don’t JUST tell you what we’re seeing between the lines, behind the stories, throughout the things we’re watching and tracking on the newsletter.
We also like to bring in experts from around the coworking world to share what they’re seeing, what they’re doing, and how it’s affecting their businesses.
And this edition is no different, and we are joined by these amazing industry leaders and what we call subject matter experts:
Why now?
So why are we looking at e-commerce now?
Or better yet, what is the backdrop against which we will explore e-commerce today?
We have to start by looking at two completely separate parts of the world. First, what other industries are doing, and two, what our industry is doing.
Starting first with the other industries…
Back in 2009, Chris Anderson, assistant professor at Cornell University of Hotel Administration, coined the term “The Billboard Effect”, which he defined as the lift in reservations made through channels other than online travel agents that is created by listing on the online travel agents.
To put it more plainly, there’s a measurable impact on direct bookings, because of being listed on platforms like booking.com, Expedia, and the like.
So we’re gonna look a little bit more into this before we move on to how this is impacting our industry…
Hotels - By 2030 direct bookings > OTA bookings.
Let’s take a look first at hotels.
It is predicted by the folks over at Skift, in this report put out in November 2024 that by 2030 direct digital bookings are set to overtake those made by online travel agencies or OTAs. That’s a total of $400 billion expected to be moving through direct bookings compared to OTA’s volume of $333 billion – according to their research and findings.
So quite a drastic change when it comes to how people are booking hotels and the booking method in which they interact.
Now, obviously, there are a lot of reasons why, whether it’s loyalty points, benefits, alliances, all these things play into that picture, but it’s a fantastic number to keep in mind that more people are booking online and directly than through these online travel agencies.
Airlines - 26% search OTAs, but 55% book direct.
Moving over to the next part of travel, which is very, very well known to be booked through online travel agencies, and airlines.
According to another of Skift’s reports put out in September 2024: 26% of flight searches start on online travel agencies, but then 55% of people end up booking directly with the airline that they found.
That’s a 29-point difference between the people who find flights elsewhere, and then go to book direct.
This begs the question, if someone is finding your product and likes your product but then cannot book directly, where are they going to go?
Restaurants - 55% start at Google, 65% book direct.
The last other industry I wanted to look at, which is involved with this kind of shift is restaurants, although not traditionally booked through an online travel agency.
There are multiple platforms through which you can find restaurants and make reservations. However, according to Toast, in a recent report, even though 55% of searches for new restaurants started on platforms like Google, 65% chose to then go book directly from the restaurant’s website.
That’s a 10-point billboard effect gap. Once again, drilling home that question. You’ve found the customer; they like your product, and they choose to book directly. What happens if they can’t?
And that brings us to our industry.
Now, of course, our volume is nowhere near the global demand for hotels, airlines, or restaurants. But with the consumerization of flex space and office space in general, customer expectations are changing rapidly.
Back in 2022, we ran a survey over at Syncaroo.com, asking a bunch of operators where their best converting leads came through. Unsurprisingly, it was from direct traffic to their website.
So, putting these things together and this background of changes in consumer preferences or customer preferences… Isn’t it fair to say that folks who were happy to make inquiries for bookings or reach out and send an email – are now expecting a more fluid on-demand live process if they’re doing it in every other element of their lives?
And so with that, let’s dive in deeper. Are people searching for coworking in the context of bookings? Let’s have a look.
Search Trends
This Google Trends report shows the search volume, worldwide search volume for four terms from 2004 to the present.
So over the last 21 years, what have people been searching for, and at what volume? How many people have been searching for these specific four terms?
The red line symbolizes the search term for “book meeting room“, a pretty high-intent keyword. We see an early spike in May 2004. But then we also see a bunch of sporadic bumps all the way through till around April 2011, where we see a gradual increase until it takes its place in the table.
We then see the blue line, which is people searching for “coworking day passes“, starting pretty early in 2017 and growing gradually up and to the right.
The next color is yellow, which is a search term for “coworking space near me“. We see a gradual slow incline and suddenly spiking up, dipping down into the kind of COVID times, and then back up hitting high volume traffic. This is high-intent traffic, with people looking to make a booking right now, or at least looking to find a space right now.
And the last one is the green line, which tells the story of “meeting rooms to book“. Once again, high intent traffic, high intent search volume. We’re seeing years of steady, but now growing search volume, for that term.
All four are going up to the right. All four are showing high-intent searches. These are people who are, typing into Google because they want to get some information now.
So quite important to make sure that we put this also at the back of our head, that even though we are not processing the volumes that the other industries are, there is still growing demand for the products that you sell.
So who's "doing" e-commerce now?
So that’s the background.
Even if people find brands or spaces or communities that they like on search engines or directories or other platforms, history, and the data tell us that at some point over 50% of them would want to transact directly with the providers that they find if they could.
So which operators are implementing e-commerce today? And how is it working for them?
E-commerce is becoming a bigger part of our revenue stack over time, which is excellent because for many, many years, it was very difficult to get any revenue outside of your monthly license fees. There was always virtuals, but it was still manual in terms of the process.
Someone would call the front desk. They’d ask, “what is it? How does it work?”
They’d ask all these questions. The sales cycle was quite long, when you look at what was involved in order to close those transactions. The same on the meeting room side. And that’s not to say that we still don’t get phone calls that we manually have to go through, but we also have the ability to transact online.
So we can do transactions while we sleep. That’s amazing.
We want to do more and more of that. The more that we can move online, the better because it #1 shortens the sales cycle, but #2, it standardizes the service.
So you’re not going in and having to do all kinds of customizations. You don’t have to spend a lot of time on it and it does not draw on more resources.
One of the best things about it is when you have, let’s say you have a stabilized location, you have an expectation of how much license revenue you’re going to get to that location. Usually that license revenue will give you a certain profit margin. So let’s say for argument’s sake, it’s 10%. So that’s providing you a 10 percent profit margin.
Everything that you do in e-commerce falls right to the bottom line. Your only costs are your credit card transaction fees and your cost in terms of your website, what you have monthly recurring for the technology that you’re using. Both are very low relative to the opportunity for the cashflow.
So it’s an excellent business and we’re starting to see more and more companies focus on it. And with COVID on the other side of it, and during, we were seeing a lot of companies looking at these on-demand and virtual services. So we’re seeing more and more opportunities, which is very exciting for our industry.
This year, what we used to see back in 2023 for the year in terms of booking volume, we’re actually getting in the space of a month.
So it’s a huge uplift. And we only see that getting bigger.
There’s a clear trend I think that users are after sort of a self-serve journey – and e-commerce is that.
People want things quite quick and instantly, without filling in a form and waiting to hear back. So I think there’s a huge appetite for it.
So, in the last 2 years, we’ve seen some significant growth, due to actually engaging in, a dedicated e commerce platform.
So previously people were able to book on our site, but the experience was very clunky.
And when we found the best way to streamline that by partnering with Flexspace, we’ve seen some dramatic growth, upwards of over an additional $50,000 in the last year that we pulled in, in revenue, which is fantastic across our locations in Salt Lake City and in New Orleans.
E-commerce at AccelerateX, is really about customer enablement at the end of the day.
I mean, we’re in an industry where we’re a workplace solution, and so we’re trying to find solutions at every touch point for our customers. Our journey over the last two years has been quite interesting.
We’ve switched platforms during that time because we found better operating tool, but also better for customer engagement.
We saw an increase of online transactions by roughly 10%, which is great. Then we recently implemented Growth Hub, which is the new OfficeRnD e-commerce tool. And that was an even bigger step up. I think we hit about 13% average just by removing more friction points for the customer.
It’s quite intuitive, so like I really see the journey as being, how do we put our tools together to drive that experience, to remove the barriers for our customers, because if we do that, we win, they win.
Everyone’s happier.
E-commerce has made a big difference.
Instead of people just going to the website and just booking tours, and have to be physically in our space in order to transact, e-commerce now gives an individual the opportunity to be able to transact without ever having to even step into our space.
For us it’s been tremendous. For us it’s making a big difference in terms of the individuals that want to transact in that way with us.
What does great coworking e-commerce 'feel' like?
So we’re seeing an increase in revenue and a growing opportunity from the operators who have already implemented e-commerce.
Now, as someone who cut his teeth and web development and building e-commerce experiences, I have my own opinions about what makes an e-commerce experience fantastic.
But instead of diving into what I believe e-commerce should look like and feel like in coworking and around coworking, let’s go back to our experts and find out what they think makes a fantastic e-commerce experience for coworking.
Less clicks. That’s it. That’s it.
So, so your question was, you know, like, what do you really need to focus on in terms of your e commerce experience?
And the answer to that is less clicks. And that’s one of the things that we have hyper focused on in terms of, of creating a great experience.
Every time the customer has to click, every time that you have to do another thing to transact, you are one step closer to that customer going somewhere else. So simplicity wins.
I think we’re in a really interesting industry when it comes to defining the e-commerce experience.
I find that we’ve probably got a little bit of an older style thinking and there’s still quite a few more steps to go to get us to the level that other industries are at, and so I would define that as more seamless connections for customers to get what they’re looking for.
You don’t want to be sifting through websites and then redirected to another platform, and then have to start this profile, and then this whole multi-phase journey.
I think for us, what would make a fantastic e-commerce experience is… being able to book products very quickly and simply.
Having live availability, that’s always quite a crucial one. Then also comms that would come afterwards that support the journey.
So it’s not just about, while they’re actually in the e-commerce journey, it’s what happens after they purchase as well.
Making sure that’s quite succinct, things are branded.
I think it’s quite important that we have clear pricing, as well.
Yeah, I think what we’re always looking for in all aspects of coworking, but particularly e-commerce is as close to a seamless experience as possible.
You don’t want any random errors. You don’t want some sort of box you can’t fill, that’s actually required.
You want it to feel very easy and very smooth. And you want to, even though you might have to navigate off of your website to transact, you don’t want that to be noticeable.
So having, consistent branding, the right imagery, the right language, and being able to control those things, is very, very important.
And then once the actual transaction has been processed, they get a confirmation email, the team is notified, everything feels very smooth and they might not have ever even known that they were off your website in the first place.
And that’s what makes e-commerce such a powerful experience because it helps everyone stay looped in and feel right about not just like putting their money into the ether.
It’s gotta be all about slickness, and having the simplest customer journey possible.
People need to know what they’re getting and they need to know that they can book it quickly.
It’s a simplicity thing, the more pain points that they have, the less likely they are to actually book through you and they’ll just go somewhere else.
I think one of the things that I’ve noticed most about e-commerce, just generally and part of the coworking industry as well, is that you want to have a streamlined user experience wherever the personal touch isn’t required.
What's being sold online?
So now we know who’s using e-commerce. We know what they consider a fantastic experience, but what exactly are they selling directly on their websites?
Are they putting everything up for sale? Are they limiting their kind of e-commerce rollout to only specific types of products?
Or are they taking a more wait-and-see, or paced, approach to implementing their e-commerce?
So we, we kind of went all in.
Day passes and conference rooms are definitely our most popularly transacted items, but we also offer virtual mail, on-demand through PilotoMail, as well as through Flexspace AI, depending on how someone accesses that. As well as private offices, which is a pretty interesting addition for us.
We saw such an incredible surge of, activity around day passes and conference rooms that we figured, why not just make everything available and if someone’s ready, they’re going to pull the trigger.
And of course, commons memberships, our equivalent of a hot desk membership.
The things you can buy through our website are primarily meeting room spaces. We’ve found that is our number one online transaction point.
People want to get on, get a space, come and visit.
Then we have our day passes. Our virtual offering is something that we see a bit of uptake in as well.
But the really interesting thing is around the physical offering. So while we’ve got some of our desks and private offices listed, we find customers want more of an in-person journey for that.
So we offer all of the four services that we provide via e-commerce.
Which is our private office (and this is for individuals that are just looking for a private office to themselves where they can run their business).
Then we also offer private desks. And then membership, and then virtual mail. And individuals also have an opportunity to be able to book our conference rooms and, flex spaces.
We currently offer day passes- and various coworking subscriptions.
So that could be like a subscription where you get 10-day passes in the month.
Another one’s the full coworking experience. So they get full access to the building each month. And meeting rooms as well.
We’re looking into adding dedicated desks or day desks and things like that as we’re starting to see a bit more demand for those types of things.
What's NOT being sold online?
So it’s really interesting to see how different operators are thinking about how they’re approaching and what they’re selling through e-commerce in completely different ways.
But it did raise a question for me…
What do operators wish that they could sell via e-commerce?
Every office. Every office!
If we could offer every office in e-commerce, that would be a dream.
And I think in the, in the fullness of time, we’re going to get there. It’s on the roadmap that we’re going to start offering smaller offices online via e-commerce.
The challenge we have is that many companies will come in and say, “I need to customize this, I need to customize that”.
In some ways, private offices.
I know I said that they’re on there, but everyone wants those private offices filled. We’re fortunate to have, some really great occupancy at our locations, but I think the private office transaction, does require a human element.
And there’s a part of me that wishes it didn’t – so that we could transact on them more.
Maybe some add-ons from like a hospitality perspective where, “oh, hey, do you want us to take care of your lunch?” or “do you want coffee service?”
Like these things where you can just click the boxes and increase your revenue. I think that would be awesome.
There are other things that we would be looking at.
For example, if we were running a paid event, for example something that was a bit more special than our regular events, it would be great to be able to run ticketing through e-commerce.
You know what I think…
I would love to list each individual office space.
Like if a customer could jump online, see the specific office, and have a number of photos. But then we need something else in there for the buying experience though.
Because we find they don’t want to see just a rack rate of X amount.
It’s like, what’s the conversation around that purchase? “If we sign up for three years, can you offer a better rate?”
So like a dynamic pricing model, or even some sort of slider in there that lets it calculate and adds.
That’s where we’re heading.
Some of the things on our wishlist are like dynamic pricing.
So often it’s certain times of the day where we’re seeing lower volume of day users – to be able to dynamically price that and offer maybe a slightly cheaper rate on those days.
Another one is extras. Quite a lot of the time, especially if it’s a meeting room booking, people are quite interested in adding on F&B packages. So it may be like teas and snacks and things like that. So we’re looking into extras as well.
I think probably as well, almost something where it’s a bit like a “one-click upgrade” system.
So if you’ve got a day pass user, how can you make that as efficient for them to upgrade to a fuller offering?
That would be an excellent place to get to.
What are the challenges?
All fantastic ideas and things I’m pretty sure we’ll see added to e-commerce offerings within and around coworking in the next couple of years if not months.
But it’d be wrong to assume that all of these operators implemented e-commerce into their businesses without any challenges.
So I asked them to dig in a little bit more about the things that might have gone wrong or things and the hurdles they had to overcome while implementing e-commerce.
That clunky experience was my biggest barrier, and finding a way to overcome that was really significant for us. We ended up just preventing people from being able to buy things directly because we felt like the process turned people off.
It made people not really want to engage, and for The Shop Workspace, we’re definitely a luxury brand. We really pride ourselves on design, customer service, and hospitality.
And if you are already feeling like you don’t quite know where you are and wondering “is this a scam?”, you are not going to want to continue that transaction.
You are certainly not going to feel the way we want you to feel when you come into The Shop Workspace. We want those systems to feel as aligned as possible.
So with that experience, I felt a little burnt and I wasn’t eager or excited to explore e-commerce.
I definitely had my stubborn hat on and. Figured “like, okay, no, like we need the human element. There’s a loneliness epidemic. We’re post COVID like people need to talk to people. That’s what it takes.”
And some calls we’ll pick it up and we’ll sell them a day pass and they’ll be fine.
But it’s really striking that balance.
And I think that’s what we’ve been able to do with Flexspace because people can still call. We’ll still walk them through the process. They can tour before a conference room booking or an event. But… if you need something and you need it now, that can happen in a really fast, seamless way.
And then they’ll show up the next day, we’ll give them a cup of coffee and all will be well.
This is going back a number of years now, but… many of the challenges were around people transacting online where they didn’t quite understand what it was.
So we didn’t explain the product as well as we could, and so we started tweaking that over time so that we’re managing the expectation in terms of what are the services that we offer. Number one.
Number two. Looking at transacting online, you’d still have a lot of people calling in to ask many questions that were already online. So, what that means is that we weren’t doing a good job of explaining it. So we had to constantly go in and just retool, retool, retool, so that people would understand really what it is that they’re getting.
And so, you really have to look at like, what’s the balance between making it super sexy, but then also providing lots of information. It’s hard to put those two things together, because sexy is fast, punchy, you know, whereas has lots of information and is detailed and you know, not, and the opposite of that.
So, that’s where we constantly are going back and forth on how we do that: provide all the information, but make sure we close the transaction.
I think the biggest challenges was just teaching the team how this is going t integrate into our sales process.
Because in our sales process, for any transaction that happens that an individual’s involved in that transaction, they get a piece of the revenue or a piece of the transaction.
So now when you have a totally new system coming in and being responsible for that transaction, now team members are starting to wonder like, “Hey, what’s gonna go happen to that commission that usually goes to the team member?”
So it’s just figuring out a way to just work that. So we were able to just get Flexspace to just complete the transaction, but then send us an email where then we have a team member follow up, and then properly close that individual. And then they still get their, bonuses and commission.
The biggest challenges come with the implementation of the new tools.
Because we have something like five years of member data in there. There’s also the training element for our team, and the training element for customers as well, because it’s a different experience.
And so those jumps where you bring in those tools that to get everyone comfortable is probably the biggest.
Second to that, I would say is really understanding everything that’s in the toolbox when you get this tool and make sure you set it up so that the customer experience is what you want to deliver.
Like if you do one meeting room image per resource, for example, that’s not a great experience. ’cause the context of the room.
So actually diving into the tool and building out every feature. That is probably the second part that takes most thought.
One of the things that actually was a bit of a challenge for us was the tracking of all of it, having robust tracking through Google Analytics.
Being a digital marketer, I don’t wanna send people through this journey if I can’t track it.
So we really wanted to have a very robust system for that and to be able to look at it, identify drop-off points, see abandonment rates at different points, and realize, “What’s causing that? Can we go into some user behavior stuff that maybe we’re getting from user behavior systems and see where people are going?”
Now we’ve got the tracking, we can identify channels that are our main traffic drivers for it. So at the moment, we’re seeing a lot of organic and a lot of paid traffic going through it. So we know that our campaigns are working quite well, and also organically – people are finding us as well, for those sort of terms that we can, they can instantly book stuff.
So I think there’s probably as well SEO benefit to these things as well for people who’s looking to buy, buy day passes as well as a term, and now we people have the ability to do it, or operators. Once you get the ability to do it, you can then almost create journeys as well for that.
I think the biggest challenge is actually… going to be trying to make sure that nothing gets lost as part of that booking system.
Sorting out automations that ping people when bookings have been made the right amount of time in advance, making sure that the room is blocked out maybe for 15 minutes before the booking, so that someone can pop in there and make sure it’s ready for them because you do wanna make a very different impression.
If you are already a member of a space and you go into a meeting room that someone else has just been in, you don’t necessarily mind if there’s something else on the whiteboard, if someone’s left a mug, etc.
Whereas if you are coming into the space, you don’t know what to expect, and the meeting room that you’ve booked isn’t kind of show standard, it’s completely different.
It’s like walking into a hotel and the bed isn’t made.
Tech and vendor insights.
So… so far we’ve actually looked at some of the theory.
We looked at the background, we look at how some operators are doing it, what they’ve learned, and the challenges they’ve overcome.
Let’s take a little bit more of a practical look.
Now, there are hundreds of ways to implement e-commerce for a coworking business. Instead of trying to interview everybody across the industry, we actually asked each of the experts who participated what was in their stack.
And invited those vendors to take part and share how they’re supporting coworking spaces, what makes them different, but also what are the unit economics.
So let’s jump over to a few words from some of the vendors who are helping operators make more money through e-commerce.
So what Justin and I, my co-founder, really discovered early on from our own personal experience was that it was impossible to discover and book meeting rooms and flexible workspaces online.
We were leading and managing different teams, and we always looked for meeting rooms for team gatherings, offsites, and team collaborations.
And it was such a hassle to find and book those spaces.
We had to make phone calls, fill forms, wait for someone to get back to us, eventually actually physically going to those locations and ask if there’s an available meeting room for us to use. So that was the huge gap that we discovered – that coworking just does not have any online presence.
And that’s what we really set out to fix when we launched Flexspace AI.
Flexspace is building a dedicated e-commerce platform for coworking spaces, like the “Shopify for the coworking industry”.
What we do day-in-and-day-out is to obsess on the easiest way for customers to discover and book spaces online directly from the operator’s website.
So we transform offline inquiries into online transactions.
We optimize pricing and revenue, we drive engagement and retention, and we enable multi-channel distribution. We convert website visitors into buyers, buyers into repeat buyers, and repeat buyers into monthly members.
We started Flexspace a few years ago. Our product is in the market with hundreds of locations using our e-commerce platform on their website. We see millions of dollars in online transactions and real value for operators.
The average location, once activated, will 5x their revenue from online transactions within the first 12 months.
Our sole goal is to increase revenue from online transactions for operators, so we align our unit economics or our business model to the operator’s revenue. This means that our model is based on success, ie a success fee.
Dynamic pricing is a huge part of Flexspace’s value proposition. Just to put that in numbers, when we look at year-over-year results, we saw 74% more meeting room bookings when operators implemented dynamic pricing.
More specifically, we saw a 16% increase in four+ meeting room booking hours.
So customers are shifting to longer meeting room durations due to dynamic pricing, and overall they increased their revenue by 50% just from implementing dynamic pricing.
The concerns with dynamic pricing are primarily about the user expectations and their reactions to having different pricing rates.
We see that as a positive because instead of offering one static price, operators can instead offer multiple pricing points for the same users.
With flights and hotels, I can take the Friday afternoon flight if I want to pay more, or I can save if I wake up and take that weekday 6am flight. Same with the behavior that we see with coworking.
I would say that coworking is a highly sensitive market to pricing, so discounts and different promotions really drive conversion. But our goal is not just to discount prices.
Our goal is to offset demand from peak hours or peak days into lower-utilization days and hours so that the overall, operators will increase their revenue pie by offsetting demand from the peak usage to lower usage.
I’m part of OfficeRnD for almost six years.
Before being part of product, I was part of the onboarding team, so I have a lot of experience with a lot of different operators.
I feel like there’s a gap I’ve seen for more than four or five years. On a high level, I feel like our industry is behind the world when it comes to e-commerce. Some recent researchers are showing that more than 20-30% of all the commerce that is happening around the world is e-commerce.
And I feel like in our industry, those numbers are very, very low. And, maybe, at least from the job I have done in the past year on the Growth Hub, the main reason for that is there is no technology that is good enough to actually convince the industry and the operators that they can efficiently offer, promote and sell their products online. In the end, we’d all like e-commerce to be a more simplified and better-performing channel compared to the standard things that we’re used to like tours, phone calls, inquiries, et cetera, et cetera.
So if I need to kind of summarize it, the gap I see is mainly technology.
In the last couple of months, I’ve talked to a lot of our customers about their desire to promote and sell products online, it’s there. People want to offer, especially like low commitment, low price products like meeting rooms, virtual offices, day passes, etc, etc.
They want to be able to offer those products through a low-touch online process. It’s just that the technology was not there.
Almost every vendor offers something to address the e-commerce problem, but few of the solutions out there are good enough to convince the operator, in my opinion.
Usually the way you build software you have the core product and you then build a lot of other features around it. The way we think about the Growth Hub, and the way we’re approaching the e-commerce problem in general, is that we want to build complimentary products.
An end-to-end solution that helps operators implement e-commerce as a channel and make it successful for them. Instead of just adding features here and there, we’re dedicating an entire team that will be focused in the years to come just to build a proper e-commerce solution and enhance it on the way.
It takes time to figure out what users do, optimize conversion, abandonment, and stuff like that. The way we think about the Growth Hub is that we want to excel in four major areas.
The first one is customer experience. So we want the reservation or purchase flow, depending on what type of product the end user is exploring, to be as seamless as possible. We are trying to optimize the number of clicks until booking. So it can currently happen with three or four steps before you have your meeting room booking.
The second one is revenue growth from the operator’s perspective. So we want our solution to have all the necessary features and functionality that enable operators to optimize pricing, and conduct different kind of promotions.
That leads me to the third point, which is data and insights. In order for all this to work seamlessly, we’re optimizing our Google Analytics integration.
We will add more and more data so operators can make informed data-driven decisions in terms of where they invest their marketing budgets and how different products perform.
One other area that is probably connected to some extent to e-commerce is how operators experiment with new products and how quickly they can test new solutions and see if people are keen to purchase them.
We do that in the software development. And in my opinion, it can easily transition to how operators think about their products as well.
And probably last thing is ongoing optimization. So we’re adding all the technology we need to be able to track conversion and abandonment and handle the process of optimizing those two major points when it comes to e-commerce on our end versus relying on the operator to track and optimize on their end.
As we are the technology provider we believe this should be something that we take care of.
Initially, we’re focussing on helping operators to monetize unused inventory, like offices, that are available for a month or two between two long term rents, be able to list any kind of different products or even experiment with different products. They can create the experience they want for their, customers, on one of the viewers. So the easier, seamless, the process for the end user, the most likely it is for them to actually buy or book something.
Our first version is focused a lot on that end-user experience and how simple and straight the process is. And down the road, we’ll be looking to add more revenue optimization functionalities. From the very beginning, we nurtured a group of 20 operators that are helping us throughout the process to, build the whole thing. Six or seven of them are already using the product on their websites in production.
The data I can share a bit, I’ll say I’ll be cautious about it just because it’s very few operators, and it’s not that much. So we can like make very hard conclusions about that, but some things I can share.
We definitely see an increase in revenue for the majority of the operators that started using the growth hub. currently, we have some folks who haven’t invested in marketing a lot before the growth hub just because they didn’t have the right tools to track how the marketing investments perform. So now, with that capability, they feel more confident in investing more money in marketing, and for them, we see an increase in public booking revenue of like 200-300%. So it’s quite a lot.
And in my opinion, mainly one part of this is due to the marketing investment. And on the other hand, operators who have kind of a telemarketing investments and do not change that a lot. For them, we see roughly 40-60% increase of revenue that comes from their website.
Yeah, that’s good numbers. Although like I’ll be cautious about them just because the sample is small yet to make general conclusions.
The other thing that I can share is probably the average time of completing a booking, it varies between 2.3 and 3.2 minutes for a transaction, which is pretty good, in my opinion.
Because our main value proposition is that we can help operators increase utilization, sales, decrease cost of goods sold, and overall an increased return of investment, so we’re leaning towards a commission based fee or success fee.
Pro-tips from your experts.
Before we close out this edition of Undercurrents, I went back to the experts and asked them to share one pro tip or piece of golden advice that they would want to give to other operators exploring or implementing e-commerce within their business.
My pro tip for e-commerce is don’t be just the implementer, be the customer.
I think switching your mind and doing testing of your tool without your thinking brain on, just be like, “how can I make this purchase? I need this room”, and fully immerse yourself in that.
Then you’ll get little highlights of, “oh, this isn’t great!“
“This could be improved. This should work a bit better.”
I think we can get too stuck in our builder developer mindset and forget about the experience side of the process.
I would say just like Nike – just do it.
Because it’s an opportunity. Because you’re missing out on some clients and some revenue that some individuals when they come on the website if they’re not able to transact, they’re just gonna leave and go to another operator’s website just to check to see if they have that ability.
Because sometimes for virtual mail for example, all they’re looking for is an address in a city. There’s so many different competitors in the same city. So if they’re not able to transact at 12:00 AM when they’ve just gotten that bright idea and they’re looking to, transact, then you’ve missed the opportunity.
So I say just do it because even the revenue alone that we are getting just from individuals that decide to go that way is substantial enough.
Yeah, I think, very top-level, just try it.
I was so apprehensive. I’m so protective of the experience. I’m very customer obsessed and that’s what I want The Shop Workspace to be. So I was very hesitant to bring the robot into the conversation.
But ultimately it was such a game-changer for us.
And I also think the other kind of pro tip I have is: obsess as much as you do over your customer as you do over your e-commerce site.
So if it’s that little change, the verbiage doesn’t quite fit, if you’re feeling like the FAQ is missing something – it is well within your right to go to your partner in e-commerce and say, “Hey, we need to make this change!”.
Regularly update your imagery, make sure that everything feels right. And it’s smooth. And every now and then, buy a day pass yourself on that e-commerce platform. Create a 100% discount code, go through that process, make sure that the confirmation email that you’re getting makes sense, that there’s no typos.
You just need to take all the energy that you’re already putting into the people who are transacting in person and make sure you’re applying that to e-commerce and you’re not just setting it and forgetting it.
Because I think that’s where the trouble comes in, and the experience gets less and less smooth without that kind of.. polishing.
I would say, again, robust tracking.
For marketing it is hugely important. Because at the end of the day, if you don’t know where your purchases are coming from, you’ve got nothing to optimize on.
So one of the problems is sometimes if you’re paying all this, money on paid media, so on your Google ads, your LinkedIn ads, or whatever your paid ads are coming from, or SEO efforts… If you actually don’t know where that traffic is coming from – you’ve got no way to optimize.
Also, Google’s got no way to optimize on it because if you’re not sending data back to Google on conversions, it’s got nothing to optimize towards.
And you can’t get very granular on different things. You can’t look at, maybe different locations that people are in, or maybe there’s certain messaging that’s resonating quite well or a certain audience that you’re trying to target.
You’d have no idea about that without good data. So definitely, a huge one to get in is your robust tracking.
For anyone who’s looking at dipping their toes in e commerce right now, I would suggest that you look at, first of all, somewhat “future proofing“, I’ll throw that in air quotes.
But look at what’s coming down the, down the pipe. AI is definitely coming down the pipe. So it’s something that you should plan for.
So you should think about like, “how are you going to integrate that into your website into the future?”. When you’re looking at the e-commerce piece, look at what are some of the things that might be coming down the road.
Talk to your web designers to say, “If we were to put AI into this process through a chatbot or whatever the case may be in terms of how you’re interacting with the customer on the website, say, what platform should we use that would make this easy for us to integrate?”
Number one.
Number two, ask “If we want to make changes, can we make them quickly without a lot of costs?” because sometimes it’s very costly to make changes if you don’t have the right platform where it’s not easy, easy to make changes to.
And then number three, try and get a platform and plugins that make it really simple and reduce the amount of clicks for customers to close on those transactions.
I think, it all comes back to actually something that’s in all of this automation that we’ve been doing across our member experience as well is figuring out what exactly what it’s for.
Essentially what you want to be using it for. Because it’s so easy to go, “oh, we could, we could sell all our offices on here” and “we could sell all our event spaces”.
We’ve made such a conscious choice to say, “these are the things that, we want to take out of a kind of direct personal interaction.” Meeting rooms that are a specific size that are currently taking up a large percentage of our events managers time, and that actually they’re relatively small fry people don’t require that same kind of experience, and therefore that simple booking is the kind of easiest option.
And that’s, I think where the day pass stuff and any of those kinds of ticketed events come in.
It’s the things where people know what they’re expecting and they want to get it quickly.
And then making sure to take out any pain-points in terms of making sure everyone has the right information. I think the struggle with all kinds of kind of automations and AI in coworking is that the personal experience is what people value a lot of the time.
For example, the gym that I go to has a pod that I put a code into, and that lets me into the building because I pay a certain low amount for the gym that I go to. But I wouldn’t want to go to a coworking space where rather than someone’s greeting me at reception, I punched in a number to let me into, you know, in the same way.
And I think that personal interaction is such an important part of what we sell, that you wouldn’t want to take it away in certain situations.
So yeah, having e-commerce used in the right places I think is the most important thing. And that’s, that’s the definitely the kind of direction we’re going down.
Conclusion
So to conclude, against the backdrop of changing consumer demand, growing high intent volume and search traffic, and a shift in how technology and how other operators are implementing e-commerce, I truly expect this to be a growing line item or growing line items for coworking spaces and flex space businesses all across the world within the next couple of years.
I hope you found this edition interesting and insightful, and please reach out to any of the experts who are featured in this edition.
Last Word
Before we sign out, I’m gonna hand it back over to Miro Miroslavov, who is our underwriter for this edition, to give his final thoughts on e-commerce and the new era of financial transactions in and around coworking:
Overall, I think everyone was, was very much spot on. There is not much to add after all these amazing experts.
I can just very briefly, summarize, what’s top of mind for us.
So certainly, we want to help coworking spaces sell more.
That’s goal number one. Increase revenue, get more transactions, get more, customers through the door, sell more, meeting spaces and day passes and private offices and all the amazing products.
To get there, overall I believe there are three main components of really well-performing e-commerce solutions.
- A flawless booking engine.
- Data insights.
- An actual marketing engine.
You cannot actually get transactions without a marketing engine, whether that’s, word of mouth, whether that’s search engine optimization, or search engine marketing.
You need something, that generates interest, and get people to land on your website or online presence. With OfficeRnD Growth Hub, we’re trying help with these things, especially the flawless booking engine and the data insights.
Data insights are so important because if you do not have data, and I think Lyndon and other people mentioned that, if you cannot really see how the funnel is performing – you cannot spend money on marketing. It doesn’t make sense.
I’m super excited actually, that we are seeing, more and more, platforms and companies out there, and partners doing e-commerce.
High-quality e-commerce engines will inevitably result in more transactions, and enable coworking spaces to spend more marketing money because they have trust in their system.
So I’m excited for the future. I think we’ll see more users, more customers, higher occupancy, and utilization rates of these resources. Especially because these are super high-margin products, much higher-margin products than traditional private offices.
So I think this will help coworking spaces be more profitable and more successful, in the long term.
Before we go, thank you all so much for listening or reading, and a big shout out again to Hector and This Week In Coworking team. Amazing job!
Looking forward to the next report and the next iterations. I think Hector is onto something here. So again, thank you so much.
I’m Miro, CEO, and co-founder at OfficeRnD and we look forward to working with you all.
Thank you!
Miro Miroslavov
CEO & Co-founder at OfficeRnD
