eMarketplaces: Unlocking The Value of Platform Economy
By: Aditya Basu
Unlocking & navigating the platform economy through a nuanced ecosystem strategy are en vogue these days, both in boardroom discussions and consumer preferences. Today, the world’s 6 most valuable companies by market capitalization and around 80% of the world’s unicorn startups operate a digital ecosystem that enables two-sided market dynamics and have gained enormous market share through network effects.
Platform businesses bring together producers, sellers, and consumers in high-value exchanges. Their chief assets are information and interactions, which together are also the source of the value they create and their competitive advantage. One of the classic examples of leveraging the platform economy through achieving critical mass & network effect is through the meteoric rise of Apple’s iPhones between 2007 – 2015. Though Nokia, Samsung, Motorola, Sony Ericsson, and LG collectively controlled 90% of the industry’s global profits in 2006, by 2015 the iPhone singlehandedly generated 92% of global profits by leveraging the power of platforms through a two-sided marketplace strategy.
McKinsey forecasted that 30% of all global economic activity, $60 trillion, will be mediated by platforms and ecosystems in 10 years’ time & Gartner says that “By 2023, at least 70% of the enterprise marketplaces launched will serve B2B transactions.” Yet, only 3% of established companies worldwide have adopted an active marketplace strategy.
While the platform economy offers the most profitable & lucrative business model, online marketplaces are tough to build and achieve the “Critical Mass.” The classic chicken & egg conundrum, “To attain a critical mass of buyers, you need a critical mass of suppliers—but to attract suppliers, you need a lot of buyers.”
We are in the midst of a seismic shift in business and society. Understanding platform strategy will be vital to grasp tomorrow’s economic models.
Evolution of Brand Economy: Omnichannel to Ecosystem Play
Today’s customers increasingly expect a seamless, integrated, consistent, and personalized experience with their service providers which current multi-channel models, with their multiple silos of customer contact, are unable to provide. A fully integrated response to these new customer requirements will need to be both customer-driven and omnichannel in nature. As we speak, large conglomerates are struggling with the “IF & HOW” to leverage digital platforms and ecosystem models for their industries. The key CXO challenge today is to create a core platform that can deliver incremental growth along with the new business & operating models around customers, partners & competitors.
Digital marketplaces have been the pulse of the consumer industry, yet many brands struggle to strike the correct chord. The shift in consumer behavior during the COVID-19 pandemic accelerated digitization even further. However, the online marketplace model has persisted, driven by consumers seeking the convenience and broad assortment that marketplaces provide. In fact, online marketplaces now represent 58% of global web sales, totaling more than $2 trillion annually.
Broad Pivots of Marketplace Operations: Strategy to Execution
The typical marketplace model has millions of customers, multiple systems, and complex operations. Any brand trying to enter the marketplace will have to swim through the chaos to ace their digital marketplace strategy. We simplify the Marketplace model from the lens of 5 broad pivots of Marketplace Operator, Enterprise commerce & marketing capabilities, the right partnerships & alliances in Fulfillment, logistics & Financial services along with building a best in class Tech & Data Ecosystem, as depicted in the graphic below.
Our key capabilities encompass our methodology of Imagine, Build and Run; we develop and implement strategies for customers to grow profitably in a borderless, digitally-and-physically connected world. We lead brands from strategy to execution by setting up feasible business & operational models, defining KPIs, setting up integrated applications to enable associates, and finally delivering exceptional customer experience driven by our Stella Framework.
A few notable value drivers on Marketplace implementation include, but are not limited to;
- Revenue augmentation with multi-channel & cross-border sales
- Improved customer targeting & analytics through digital marketing, micro-segmentation & social integrations
- Cross-sell & Up-sell opportunities through tailored pricing, product bundling & increase AoV (share of wallet)
- Business process optimization
- Walking the Talk Leadership: Marketplace Implementation across the globe
Walking The Talk Leadership: Marketplace Implementation Across The Globe
Recently we were approached by one of Asia’s largest transportation hubs to become their digital growth partner, to develop & manage its next-generation omnichannel e-Commerce Marketplace for onboarding and tenant management. BORN developed an experience-led Marketplace platform to provide a personalized shopping experience for Sellers (B2B), consumers (B2C), Enterprise users (B2E). The implementation has helped them to optimize marketing effectiveness, improve operational efficiency with faster time to market, accelerate conversions, and enable topline growth through upselling & cross-sell.
For more information in regard to BORN Group’s Marketplace offerings and further case studies, please inquire here.