Decision-making apps on the rise

Spurred by the success of Uber, a new breed of e-commerce companies are carving out a niche using ‘direct match’ software aiming to link consumers directly with the best service for their needs.

Summary: Health, employment and transport are among many sectors witnessing a surge of new direct match e-commerce companies that either match an individual to a service, or connect people together based on employment or business opportunities.

Key take-out: A handful of new e-commerce companies are listing on the ASX, aiming to match Uber’s success in linking consumers directly with the service they need. 

Key beneficiaries: General investors. Category: Small caps.

The expectations of online consumers are changing, prompting the rise of a new company model. While the vast number of choices thrown up by the e-commerce landscape was once a selling point, we’re now seeing the rise of the ‘direct match’ software company – online enterprises that promise to connect users to a good or service instantly, finding a perfect match based on the customer’s data and preferences.

Perhaps the best known direct match company is Uber – not merely a new transport disruptor but a new verb – ‘Uber it’. Valued at as much as $US50 billion this year (according to reports of its upcoming IPO), the ride-sharing app has captured attention because of the success of its driver model, where everyone can get in on the success. But it seems that its lasting impact will be on the shift to software companies that give you what you want, exactly when you need it.

From health to recruitment to business plans, these companies aim to address the sometimes overwhelming number of choices offered in traditional e-commerce, by providing consumers with one well-matched service, from transport to healthcare appointments.

Australia is following this trend, and listed companies fall into two categories: those matching an individual to a service, and those connecting people together based on employment or business opportunities. With more companies looking set to list on the ASX soon, there are plenty embarking on this kind of software business.

Matching individuals: Reffind

Market cap: $66 million

Job referral system Reffind (ASX: RFN) matches employers to employees, addressing the productivity drain caused by reviewing job applications in the current employment climate. Companies like Coca Cola Amatil have already started using the app, which acts as a social network, letting employers flick job opportunities to current staff members, asking for referrals of good candidates. CEO Jamie Pride says the app relies on the intimacy created by a direct match. “It all hinges on the person who is referring someone else for a job – the person who sits between the company and the applicant – because they know the good bits about a company and the bad bits, and from that knows who would be a good match for the organisation,” he says. Having floated in July at 23 cents, Reffind has gone as high as 71c in September. Pride says a planned expansion to the US will further the app’s user base.

A direct service:

Market cap $5.85 million (ASX: 1ST) connects patients with health care appointments via an online booking portal, using the location and preferences of the user to arrange an appointment as soon as possible. Health practices pay a registration fee to be listed with the site, allowing users to book available appointments 24 hours a day.

CEO Klaus Bartosch says the operation tries to address the healthcare problems raised when patients avoid the calling around to find an appointment.

 “We see this as preventative healthcare,” he says. “We’ve found 62 per cent of Australians find calling up for healthcare appointments frustrating, and one quarter of those delay calling.”

The company is currently building registrations of doctors and patients, aiming to cover a national network of providers, working on the knowledge that consumers want their software to know them.

“You want an app that knows enough about you that it can give you exactly what you need, giving context for services that match your age and needs,” Bartosch says.

New listings

Start up incubators are full of app-based products, while similar models are popping up as recently listed or soon-to list. WA-based CV Check (ASX Code: CV1) listed on September 8 and allows account holders to request police and background checks and have their data provided to them online in as little as one hour.

Meanwhile iBosses is on the ASX’s upcoming list, providing users with personalised business management advice through an online portal.

CV Check CEO Rod Sherwood says his company was formed to speed up data transmission in an increasingly global employment world.

“This is a transformative company regarding thinking and working,” he says. “We can have you apply for your information in a three minute process and return that in one hour,” compared with the week-long paper-based applications of old.

A long-term prospect

US app industry body ACT’s 2014 report on the state of the app economy highlights that it is small cap and start up companies that are responsible for 75 per cent of the highest grossing apps in the US. European tech analysts Research2Guidance estimate the market for e-health app companies alone will hit $26bn by 2017.

Meanwhile Australian companies are taking advantage of consumers’ high social media use, says Deloitte Private Partner Joshua Tanchel. “There are some interesting models out there, and the best companies are the ones that have the best customer acquisition and the best design for ease of use,” he says.

However, there is always a chance that app usage will slow – a 2015 Gartner report into app use in the USA and Germany suggests that while customers are interested in using app services, 40 per cent aren’t looking to increase their use in the next year.

Investors should note that direct match services are a longer-term prospect. “These types of companies are pursuing market shares in their first years,” Tanchel says, meaning the chase for customers is initially more important than profits. “Companies like Amazon are doing this, companies like Xero – that’s their aim, to spend time acquiring market share first.”

There’s no shortage of new investment opportunities that follow the ‘Software as Service’ model, but short-term profits might not correlate to the long-term customer base, Tanchel says.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles