It takes a certain chutzpah to look at the world’s largest online consumer marketplace and decide that it needs a rival.
Cas Paton defied scepticism from VCTs, angel investors and even his friends and family, to found online marketplace OnBuy. Initially, it generated just £100,000 in 18 months, but soaring growth has now seen it complete its first round of Series A funding.
How it started
Cas says he was an entrepreneur before he realised what it was. “I always thought an entrepreneur was someone who’d already made it. I thought I was just trying.” It started young, collecting seashells and trying to sell them by the sea (he ran into some supply and demand issues). An early venture into potpourri to fund a ticket to Disneyland was disappointing: “It turned out that not enough people want potpourri from a seven year old.”
However, by his teens he had learned how to build a rapport, to get people to believe in him and trust him. He was working in a supermarket and saw they could improve their stock rotation and pricing by installing a barcode system.
“The system worked because storekeepers were poor at looking at their operating costs. They started out by buying a tin of tuna at 50p and selling at 80p, but over the years the cost of tuna goes up, but the selling price stays the same. It’s a classic small supermarket mistake and it’s the way margin erodes over time.”
Once he’d done it successfully for one business, he carved himself a niche, helping small shops with their stock control with his barcode system. They would invest a relatively small amount and watch their margin recover.
Other early ventures into retail also taught him valuable lessons, notably on how to connect with the consumer. During a brief spell selling jewellery, he realised that to be successful he had to understand what motivated the buyer: what did they want the jewellery to do for them? This helped him tailor his responses and add value. He adds: “When I was selling barcodes. I didn’t say ‘do you want a barcode solution?’ It was about saying ‘I know you’ve got this problem and I can make this change’”.
Cas spent four years in the military from the age of 17. He was selected as an officer candidate, but decided he wanted to improve his education and left to do a law degree.
He found university slow-paced and set up a limited company while still studying. The business focused on bridging the gap between technology developers and business people. He realised there was a huge gap in understanding between the two sides, which created real problems in the solutions delivered. “I could speak both languages, so I grew the company quickly, developing solutions for big businesses,” he says.
The big idea
However, it was during a period as a retail ecommerce consultant that he hit on the idea that was to become OnBuy. Initially, he had encouraged businesses to sell on marketplaces such as Amazon, believing it was good for their businesses. By 2012, he was advising them to be careful – Amazon was effectively a competitor for many of these businesses because it was also a retailer.
He saw the opportunity for a hybrid, a platform that sat somewhere between eBay and Amazon. It shouldn’t be a retailer, competing with the retailers on the platform, but should retain the user-friendly buying approach. “It was about allowing retailers to sell on one platform, while doing their own logistics and customer servicing if they wanted”.
Cas invested everything that he’d made from his previous companies and began the build. OnBuy eventually launched in 2016, offering competitive selling fees on the goods retailers sell, alongside two rolling monthly subscription packages, which allow sellers to list as many products as they want. The platform takes a commission from the transactions, but doesn’t sell its own goods, so works hard to create sales for retailers.
Cas was convinced that the idea could work, despite knock backs from VCTs, angel investors and even his friends and family. Nevertheless, early progress was slow. “It was a catch-22 – if you’ve got nothing to sell, you don’t have customers and if you don’t have customers, no-one wants to put anything on the marketplace to sell. It took me 18 months to get £100,000 in sales.”
Since then, however, OnBuy has rocketed. “I got to £10m turnover in nine months and £160m in a year. In June 2020, we raised our first Series A. If I believe we’ve got something, I’m just going to find a way to do it.”
The business is now well-established.
He has a new chief financial offer, chief marketing officer and 130 staff. He’s closing deals with major retailers such as AO.com and many more. His next ambition is to take the platform internationally and has already built a partnership with a logistics group. “There’s a lot going on. It’s very exciting.”
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