#32-API-demic of Mindless Handshakes: The rush to sign the digital partners
All industries will have a platform company that acts as an orchestrator of an ecosystem within a particular geography. There is a significant commercial opportunity for a platform driven value creation in every industry and region.
The highest returns will be realized by the company that offers superior user-experience, controls the platform, owns the access to the end customer, and the most exclusive quality partners.
There are just one or two opportunities (3–4 if you are really very lucky)in every industry to orchestrate a platform in any given region. The role of platform orchestrator is like the role of business running as a near-monopoly or duopoly.
Economics Lesson 101 Basic- tells us that do not create more supply of goods and services until the existing supply or inventory has been consumed through a corresponding demand.
Yet, we do not follow this simple time-tested principle while creating digital and internet businesses.
When multiple businesses are fighting for the attention and share of wallet of the same user base then the one who can wait out the longest due to deep pockets may eventually win, but a lot of businesses may lose.
Not all Digital Partnerships matter?
- Does the consumer really want it?
- Are you the only one with that exclusive offer?
- Cost of maintaining that partnership?
- ROI on the partnerships as well as core-offer of the platform
- Data-protection and API infrastructure investment?
- Do the partners cannibalize each other in the long run? Is the platform orchestrator cannibalizing the partners?
Key questions before you start building a digital ecosystem of partners?
- Is the orchestrator opportunity/throne available within the industry? Is there a local or global player already operating as the Orchestrator in the region? For example- HOOQ was a Singaporean video-on-demand streaming service. It was a JV of Singtel, Sony, and Warner Bros, with a presence in the Philippines, Thailand, India, Indonesia, Singapore. HOOQ filed for liquidation on 27 March 2020 and shut down on 30 April 2020.
- How exclusive will be the partnerships on your platform compared to other competitor’s platforms? If the partner deals available on your platform are not unique, then there is no reason for the consumer to download an additional app and upload their payment information on one another platform.
- What is the overall opportunity size? If you are the 3rd or 4th platform player with no ‘unique compelling proposition’, then you really need
- What is the per-unit economics? The customer acquisition cost should not be higher than the customer lifetime value (CLV> CAC ). 90–95% of the platform start-ups burn VC money in an attempt to attract users through discount vouchers/codes. The users do come, but then they leave as soon as they have availed of the voucher/code.
- Have you done consumer-behavior/adoption surveys to sense check your assumptions? Make them come, make them stay, make them buy, and make them promote your platform.
- What is the value-creation proposition for partners signing up for bringing their offers to your platform?
Do not celebrate every handshake and partnership. Instead, focus energies on refining the PER-UNIT ECONOMICS, ‘COMPELLING VALUE PROPOSITION’, USER-STICKINESS, and EXCLUSIVE PARTNERSHIPS AGREEMENTS.
Regards,
Sidhartha Sharma
Platform Strategist and Digital Ecosystem Expert
(views are personal)
