What Are The Benefits Of A Platform Business Model?
Business platforms are digital trading environments for design, engineering, and manufacturing dealings. The business model platform enables individuals from various regions to connect with manufacturers, locate commonly used components, and retain the services of temporary engineers. It also provides access to a diverse range of innovators, including individuals and corporations, who are constantly creating and offering supplementary products and services.
What Is A Platform Business Model?
In today’s fast-paced business environment, competition is fierce and staying relevant to customers is crucial to success. The emergence of the platform business model is proving to be a game-changer for companies seeking to create a sustainable edge in their market.
A platform business model is a business that creates value by facilitating interactions between two or more groups, typically producers and consumers, and often to generate network effects. Uber is a classic example of a platform business model; it connects drivers with passengers, taking a slice of each transaction.
This concept is not new, but the rise of the digital era and low-friction technology has made it easier to build platforms at scale, creating the possibility of global ecosystems that bring together a wide range of participants.
Benefits of a Platform Business Model
The benefits of a platform business model are numerous and compelling:
Offers Access To Large And Diverse User Bases
By establishing a platform, companies can tap into existing communities and benefit from the shared network effects that can accelerate growth, reduce costs, and increase brand awareness. For example, Facebook’s platform provides the following:
- A simple and familiar way for users to interact online.
- Creating a massive social network of over 2.8 billion monthly active users.
- Making it one of the most popular platforms on the internet.
Creates Two-Sided Markets Where Demand And Supply Sides Can Match Easily
This is especially relevant for businesses that require extensive engagement and coordination, such as Airbnb. By creating a platform where individuals can rent out their homes to travellers, Airbnb was able to disrupt the hotel industry and offer a unique experience that was only possible with the platform.
Accesses Large Amounts of Data on Users
The accessed data deals with preferences, behaviours, and transactions, which can be used to enhance product offerings and create more personalised experiences. Data harvests from Amazon, for example, helped the company turn insights into recommendations and customised marketing, leading to a more satisfying overall customer experience.
Significant Advantages In Terms Of Scalability And Lower Costs
Using existing infrastructure and partnerships, platforms require fewer resources to build and launch and, once fully operational, can grow much faster than traditional business models. Uber, for example, was able to roll out its service to over 900 metropolitan areas across the globe in just seven years, a feat that would have been unachievable through traditional means.
Offers Opportunities For Innovation And Experimentation
Platform owners can leverage user-generated content, adopt new business models, apply new technologies, and leverage insights to offer products and services beyond their initial offering. This level of innovation and experimentation sets successful platform owners apart, and these platforms can often quickly adapt to new market trends, customer preferences, or business opportunities.
