One way to look at the on-demand economy is as a networked platform for services from the real world, like Uber and Airbnb. By replacing them with a reasonably transparent network that abides by market laws, algorithms, and rating systems, these businesses employ technology to lessen the workload of enormous management hierarchies. These businesses are platform-based (ecosystems). Platform companies outperform businesses using traditional business strategies in every competitive measure. Using the platform model is an effective way to grow business.
Platforms provide value sharing, connection, and interaction between producers and customers. The platform establishes the infrastructure and controls the interactions between providers and consumers. Wikipedia and a standard dictionary are two examples. With 120,000 articles, Britannica is the first universal encyclopedia published in English (Bonaccorsi et al., 2020). The encyclopedia has 4.5 thousand contributors and editors, and a set of volumes costs $2,000 (Bonaccorsi et al., 2020). On the other hand, Wikipedia is a free encyclopedia. Anybody may create content or edit an already existing article. Over 45 million articles have been produced in 295 languages, and 70 million authors and editors continuously produce new content (Bonaccorsi et al., 2020). Wikipedia is a free platform and is continually finished and updated.
Businesses that use the platform model get access to limited customer segments with a specific demand. The platform must effectively direct customers’ interests to merchants who can supply that need. Companies do not need to spend money on marketing and advertising because the platform provides these services. Companies must place their goods and services; the marketplace’s function is to direct consumers to those services. Platform firms can expand fast since expansion expenses are inexpensive (Nambisan et al., 2019). At the same time, there are numerous options for experimenting – changing a website’s interface is easier than remodeling a structure. The digital world is more changeable than the physical world (Nambisan et al., 2019). Another advantage of the site is that it does not require extensive physical infrastructure.
So the platform business model is more of a positive innovation than a negative one. With it, owners reduce risk, can grow quickly, and can provide a complete service to the consumer. In today’s world, where all human processes are going digital, this type of business is the most advantageous. However, creating a marketplace is a long, complicated process. It requires large investments, primarily in traffic and technical development of the product.
References
Bonaccorsi, A., Chiarello, F., Fantoni, G., & Kammering, H. (2020). Emerging technologies and industrial leadership. A Wikipedia-based strategic analysis of Industry 4.0. Expert Systems with Applications, 160, 113645. Web.
Nambisan, S., Zahra, S. A., & Luo, Y. (2019). Global platforms and ecosystems: Implications for international business theories. Journal of International Business Studies, 50, 1464-1486.