Case Study: NutNose International Online Marketplace

Dietrik Huizing launched Nut Nose 2.0 two years ago. But the idea for an online exchange of buyers and sellers of nuts, seeds and dried fruits began with frustration.  "There must be a better way for me to add value" Dietrik thought, as he ran back and forth between buyers and sellers located in two separate exhibit halls at the same conference event in San Diego.  

That frustration five years ago led Dietrik to recognized that buyers and sellers of nuts wanted to trade with each other. The missing piece was an online platform that provided the payment, documentation, photos, after-sales service and quality assurance. These are all the things that NutNose provides today. In an industry with a 50 Billion annual turnover.  Dietrik is the Founder and CEO of NutNose.com

So what were the key steps to success and scaling?

The first thing Dietrik told us was that all new sellers were flagged to buyers, with the advice for the seller obtain a quality certificate before purchase. An SGS certificate is an industry standard government certification that proves the quality of food exports and imports. This process provides a third-party quality assurance for the buyers. New sellers were not endorsed until they were ready to supply this certificate.

OnGlobal Opinion: By leveraging their knowledge of international regulations within their industry, in this case government food import export law, NutNose created both a quality assurance mark for customers and erected a barrier to entry for competitors. New entrants seeking to copy their online marketplace model must have a deep, working knowledge of the regulations required for food trading. This limits the opportunity for others without deep industry knowledge to create a copy.

Application: Consider if industry-specific import and export regulations erect a barrier to entry or raise the opportunity for creating a trust endorsement. An example of a similar application is Flexport's founders knowledge of freight forwarding and customs processes. A startup valued at 3.2 Billion in 2019.

Secondly they do not allow transaction with a unknown seller. They manually review and approve all new sellers. Since trust is key to the platform, they didn't extend that trust until the new seller was vetted by them. They have the capacity on their platform to accept payments and act as a third party intermediary. But they don't allow prepayment to new vendor.

OnGlobal Opinion: Trust is a key value proposition component within any marketplace. While scaling globally and adding new sellers (the supply side) NutNose protected this key "trust" facet by warning buyers of a new seller. Nutnose didn't trade a critical component of their unique value proposition in exchange for speed of scaling their supply side. Which would lead to an appearance of higher global growth.

Application: It's our opinion that NutNose's measured, stepwise approach to scaling was a key factor in their global success. Carefully evaluate if your global growth strategy comprises the essence of your brand, product or value proposition. Sometime stepwise is better than blitzscaling.

NutNose's expansion into the US market is planned for later this year. For now, they are focusing on growing within Europe. Taking this traditional Europe-first approach is prevalent with Dutch companies.  However, marketplaces become more difficult to copy the larger they become. While the EU is a larger market in gross terms, there is no larger contiguous market than the US.

OnGlobal Opinion: Delaying a US market entry may be defensive play that has a large opportunity cost. Testing the US market sooner rather than later may advised. Too early and you risk running out of resources. Too late and you'll lose out on being an incumbent in the largest market in the world.

Disclosure: We provided Dietrik Huizing & Nutnose with an advance copy of this article and invited comments and feedback in advance of publishing.

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