#29-B2B and B2C platform- Value Proposition matters more than API’s and partner MOU’s

Sidhartha Sharma- Author: Digital Event Horizon

Once Platforms reach a critical mass, they no longer operate as a company- they take charge of the industry they operate in.

“Post consolidating their position in one industry they move to logical adjacencies and even new industry verticals”

Succesful platform players do that by becoming the GATEKEEPERS of User base or the Supplier base or both of the marketplace they created.

Platform business starts as an individual company initiative, but eventually, they evolve into duopolies/oligopolies in an industry or region.

1. Uber Vs (Grab Vs Gojek in SEA, vs Didi in China, Vs Yandex in Russia, Vs Ola in India)
2. Amazon India Vs Flipkart, Lazada Vs Shopee Vs Tokopedia,
3. Alipay Vs WeChat Pay, MyBank Vs Webank
4. Netflix (Vs Disney+ Vs HBO+ Vs Hotstar Vs Zee Vs Bibly)
5. Facebook Vs TikTok
6. Zoom Vs Microsoft Teams Vs Google Meet

3 Choices: Businesses are moving to platforms and digital ecosystems

1. Orchestrate a Platform (Build or Buy)
2. Join a Platform or ecosystem (Partner)
3. Facilitate or enable a Platform (make transactions easier or the platform orchestrator, ecosystem partners, or the ultimate consumers)

When it comes to platform strategy and monetization a lot of big players ignore certain key metrics.

Necessary vs Sufficient Strategy matters a lot

1. It is necessary to build or acquire a platform, but is it sufficient?
2. It is necessary to integrate multiple partners APIs, but is it sufficient?
3. It is necessary to have millions of users on the platform, but is it sufficient?
4. It is necessary to make the users transact once, but is it sufficient?
5. It is necessary to have suppliers/merchants that can meet the demand, but is it sufficient?
6. It is necessary to have the data or all users and merchants on the platforms, but is it sufficient?

The winning formula for platform businesses?

1. Profitable economics- More than 90% of the platforms are burning VC money mindlessly to acquire customers and merchants. The CAC (Customer acquisition cost) should never be higher than CLV (Customer Lifetime Value).
2. Customer experience- I personally feel that platforms that make customer experience- better, quicker, cheaper, and personalized as compared to offline ways of doing business, stand a strong winning chance to be successful. Personalization becomes easier because platforms generate a lot of user data.
3. Frictionless journey and business model- Attract > Engage> Transact > Personalize to Repeat Sale or Upsell or Cross Sell> Discover newer monetization streams
4. Non-cannibalizing partnerships- Platforms and ecosystems are more about creating value by minimizing the intermediaries and inefficiencies that exist and then sharing value within the partner ecosystem. If a platform orchestrator is cannibalizing the partners in the long run, then the ecosystem cannot survive for long.
5. Exclusive partner agreements and quality- This matters even more in B2B platforms. An exclusive network of distributors and suppliers can ensure unparalleled customer experience and product quality. This gives the ‘competitive edge’ to the platform.
6. Logistics and delivery- Every platform is moving some good an service, even though it seems like a mobile app-based transaction. The backbone of the online marketplace is the logistics and delivery network. Is the inventory systems, delivery of spare parts, machinery, and equipment faster on B2B platforms than compared to traditional ways of moving goods.
7. Payments integration- Without payments transactions and settlements, a platform is just an online catalog
8. One to many and then ‘many to many’ connections- The platforms allow its users to interact with each other depending upon its open and closed architecture.
9. Feedback loops- The parties transacting with each other should have a feedback mechanism built for quality checks. Even the platform orchestrator should not be spared from the feedback mechanism. Data privacy and cybersecurity firewall should not be taken lightly when it comes to platform management.
10. One-stop solution- Grow to evolve as a one-stop solution. Platforms always grow from core business to logical adjacencies and then into new disruptive verticals.

This evolution into a one-stop platform “allows the platform orchestrator to become the gatekeeper of the captive yet happy and loyal customer and supplier base.”

Image Credit- GE Industrial Internet Platform

Platforms are easy to launch, complex to scale, and difficult to monetize.

Do not confuse them with a website or a mobile app.

Signing a partner MOU for API integration is a good start to scale the platform, but think about the monetization potential of the partnership.

Build a hook for the consumer to transact on the core platform and buy partners' offerings present on the ecosystem. Do not incentivize one transaction, build a pipeline of future transactions by offering value to the platform users.

Most platforms are mobile apps, but not all mobile apps become platforms.

Best regards,

Sidhartha Sharma (views are personal)

Platform Strategy and Digital Ecosystem expert