{"id":75139,"date":"2023-03-17T08:50:24","date_gmt":"2023-03-17T07:50:24","guid":{"rendered":"https:\/\/visionarymarketing.com\/?p=75139"},"modified":"2023-03-17T09:24:43","modified_gmt":"2023-03-17T08:24:43","slug":"platform-business-models","status":"publish","type":"post","link":"https:\/\/visionarymarketing.com\/en\/2023\/03\/17\/platform-business-models\/","title":{"rendered":"Understanding Platform Business Models Now and in the Future"},"content":{"rendered":"

Platform business models facilitate the exchange of goods and services between two or more interdependent groups, often producers and consumers. They are responsible for totally new ways of doing business.\u00a0<\/em>In our interview with Beno\u00eet Reillier from Launchworks.co<\/a>, we discuss his book entitled Platform Strategy, from which he derived a cartoon version. In this book he delivers his predictions on the future of platform business. To him, platform business models will not replace all kinds of traditional business. They should inspire rather than scare, as they offer boundless opportunities for mixed business models in the future.<\/em><\/p>\n

Platform Business Models Today and in the Future<\/h2>\n
\"Platform
Platform Business Models, beautifully illustrated by Louise Plantin is also available as a full-fledged book.<\/figcaption><\/figure>\n

Understanding Platform Business Models<\/h3>\n

According to Beno\u00eet, some examples of companies that follow the Platform Business model are Airbnb, Uber, Google, and online marketplaces such as eBay, and Amazon. However, as the age of social media progresses, content from companies such as YouTube, TikTok, and other social platforms is now making up a sizeable part of the platform business.<\/p>\n

\"Platform
Uber is the epitome of platform business models but there are many more of that ilk.<\/figcaption><\/figure>\n

Looking at consumer behaviour, there are different ways platform businesses can be deemed successful. Depending on how they fulfil the different needs and wants of a customer. This includes travel websites like Expedia which make it easier to book an entire trip on one website or others like Tinder when one is looking for a romantic partner.<\/p>\n

Beno\u00eet explained that platform business might not be seen as a straightforward concept, as it may have multiple definitions.<\/p>\n

What makes that kind of business different from other types of businesses is that their organisations are entirely built around a business model that attracts participants, matches them, connects them, and enables them to transact.<\/p>\n

Beno\u00eet Reillier added, \u2018Marketplaces create value by allowing people to be connected.\u2019<\/p>\n

Now thanks to Beno\u00eet we have a much clearer definition of what Platform business is.<\/p>\n

Platform business model means no Value Chain<\/h3>\n

As depicted in Beno\u00eet\u2019s Platform Strategy cartoon opus, platform businesses do not derive their competitive advantage from the quality of their value chain like traditional business ventures.<\/p>\n

\"\"
The business model of platforms is definitely different from that of value chains<\/figcaption><\/figure>\n

This is because traditional firm dynamics starts with buying material things and adding value to them. An example he gave, is that of a car manufacturer that builds and creates a car out of raw materials or semi-finished goods.<\/p>\n

Traditional business models are based on linear processes that are resulting from their internal abilities to turn these manufacturing processes into value for the benefit of their customers.<\/p>\n

Platform businesses are entirely different, Beno\u00eet Reillier stressed, since they, \u2018are merely orchestrating their ecosystems\u2019.<\/p>\n

\"\"
We\u2019ve asked Midjourney to\/imagine the difference between traditional and Plaftorm-based shopping and it came up with that\u2026<\/figcaption><\/figure>\n

Platform businesses do not have to worry about inventories. They aren\u2019t buying anything from anyone. All they do is connecting people who own something with people who want to buy it.<\/p>\n

Platform Business models are underpinned by principles that are not applicable to traditional businesses, Beno\u00eet Reillier found out.<\/p>\n

There are two main rules, the network effect and price elasticity.<\/p>\n

The Network Effect<\/h3>\n

\u2018Networks are characterised by positive externalities. All the members of the network benefit from it. The more there are new members joining that network, the bigger its value for all its members.\u2019<\/p>\n

That\u2019s what Beno\u00eet calls the network effect. A major underlying principle that confers value on the platform.<\/p>\n

\u2018At the outset, it\u2019s very hard to convince new people to join a new network,\u2019 he added. If there is a network with just the two of us, it won\u2019t fare very well. We\u2019ll then have to recruit new members, relentlessly.<\/p>\n

\u2018Yet, once you\u2019ve reached a certain critical mass, maybe thousands of members, what happens is that people will start to spot that network and its value, and it will then start to grow organically.\u2019<\/p>\n

Price Elasticity<\/h3>\n

It may appear to some that setting prices may be easier for platforms than traditional businesses. This is because they are masters of their own ecosystem, or so it seems.<\/p>\n

However, Beno\u00eet warns us that appearances may be deceptive.<\/p>\n

\u2018Even though they seem to have full control over their pricing structures,\u2019 Beno\u00eet added, \u2018platforms are walking on eggs when they decide to change them. Because these network ecosystems are complex systems, changing the way you charge one of your members may have a serious impact on all the others.\u2019<\/p>\n

In other words, if a platform business is a tad too inconsiderate when changing its pricing structure, it can start losing members.<\/p>\n

\u2018If your platform business creates too much friction, it might become less attractive to newcomers,\u2019 Beno\u00eet emphasised. \u2018Traditional firms do not give too much thought to price elasticity. But platforms need to be more circumspect in that regard.\u2019<\/p>\n

The Future of Platform Business<\/h3>\n

As platforms gain ever more popularity, there have been concerns about platform business models taking over traditional business models and disrupting the economy.<\/p>\n

Thus, Airbnb has attracted much criticism about its disturbance of the hospitality business in many places. It happened in New York, London or Paris for instance.<\/p>\n

There are many other examples such as Amazon. The Seattle Internet company has raised fears of disruption of retail business by ecommerce. And more recently, the foray of the retail behemoth (now employing over 1.2\u00a0million staffers worldwide) into food retailing has triggered even more concerns.<\/p>\n

However, Beno\u00eet doesn\u2019t believe that platforms will be the terminators of traditional shopping.<\/p>\n

\"Platform
Platform strategy<\/a> by Laure Claire and Beno\u00eet Reillier\u2009\u2013\u2009Routledge – 2017<\/figcaption><\/figure>\n

\u2018In the future, many organisations will mix different types of business models. Value chains will still be around in 30 years\u2019 time, and platform business models too. Businesses will undoubtedly combine several business models. Depending on the industry and the product, platforms will be the preferred business model, and for other industries or products, value chains will still be instrumental in organising the business.\u2019<\/p>\n

\n

Maybe some companies will conduct part of their business in the Metaverse, but other more traditional business models will persist<\/p>\n<\/blockquote>\n

\u2018Considering all the technologies that are cropping up now,\u2019 Beno\u00eet concluded, \u2018including Web3 and the immersive Web, this mix of different business models will enable us to manage distributed organisations in a much better way, through the combination of all these business models.\u2019<\/p>\n

Fears that Uber and other platforms will do away with any other types of businesses, as we thought barely 10 years ago, were probably exaggerated. Platform business models could on the contrary be one more string to the bows of traditional businesses who had better think how they could reinvent themselves. Major platform business best practices should inspire rather than scare you.<\/p>\n

\"Platform<\/a><\/p>\n

You may download the illustrated version of the book from the Launchworks.co<\/a> website.<\/em><\/p>\n

https:\/\/media.blubrry.com\/visionarymarketing_les\/agence.visionarymarketing.com\/files\/podcasts\/2023-03-02-Platform-business-benoit-reillier-RAW-mixdown.mp3<\/a><\/audio><\/div><\/div>

Podcast (english): Play in new window<\/a> | Download<\/a> (Duration: 38:15 — 20.0MB)<\/p>

Subscribe: Apple Podcasts<\/a> | Spotify<\/a> | Android<\/a> | RSS<\/a><\/p>","protected":false},"excerpt":{"rendered":"

Platform business models facilitate the exchange of goods and services between two or more interdependent groups, often producers and consumers. They are responsible for totally new ways of doing business.\u00a0In our interview with Beno\u00eet Reillier from Launchworks.co, we discuss his book entitled Platform Strategy, from which he derived a cartoon version. In this book he …<\/p>\n","protected":false},"author":2,"featured_media":75145,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4069,4071],"tags":[],"class_list":["post-75139","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital-marketing","category-featured-articles"],"yoast_head":"\nPlatform business models now and in the future<\/title>\n<meta name=\"description\" content=\"Platform business models facilitate the exchange of goods and services between groups. 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