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Making sense of the platform economy

Operational models have changed significantly in recent times, resulting in fundamental changes to how a business needs to visualise its product offering.

Until fairly recently, business models that reigned supreme usually worked in a “pipeline” — a product or service is created at one end, and customers receive it at the other. While this model thrived for a long time as companies reacted to market demand with their ability to manufacture and sell a product at scale, the same organisations are now seeing a shift towards the ‘platform economy’.

This new model is based on the creation of online platforms which create and facilitate interactions with customers. Imagine the physical marketplaces, shopping malls and exhibition halls in which we do business, but revamped for the modern, online consumer.

Instead of physical infrastructures, platform-led companies develop and curate digital spaces in which a number of merchants and buyers co-exist. Not only do they have increased visibility, but additional chances of connecting and collaborating with one another. Whether we realise it or not, this way of doing business is already a part of our everyday lives.

The move to a platform economy really began with the internet’s inception 30 years ago. More than just a place for sticking ads, the internet, compounded with the general digitisation of products, services and customer outreach, has created whole new markets and industries. It has also changed our traditional methods of doing business into more dynamic ones that learn and evolve at every turn — and for good reason. The distributed nature of the platform economy has proven to be far more efficient for both businesses and consumers as it doesn’t require the same supply-side economics, but instead leverages demand-side economics.

Zooming in to Asia Pacific, we can see how this new economy has taken root. Here, the rise of the digital era and platform economy is accelerated by what appears to be an insatiable thirst for the online marketplace. According to Nielsen, about 77 percent of survey respondents across the region attest to the fact that online marketplaces can help them to buy products, services or goods that they would not otherwise find.

This demand has driven the recent wave of platform-led business models such as Uber, Kogan and Airbnb, which have transformed their respective markets by providing access to a myriad of products and services — including shopping, banking, courier services and laundry.

Media and telecommunications were the first real adopters of the platform economy, since most had started digitising their organisations long ago. Moving to a platform model enabled them to provide customers with new services such as access to additional content, apps and special offers. This has diversified again in recent times, with microservices, social media outreach and real-time product offers being driven by platform analytics.

As more of these consumer applications started popping up, B2B or business-facing platform companies also started gaining traction — most notably from the commerce sector, such as AliBaba. These platforms’ ability to connect businesses across seas and industries were such an accelerant for growth that fast forward to today, we see a whole slew of traditional sectors such as healthcare, finance and aerospace embracing the platform touch, all racing to be a part of this new economy.

Beyond harnessing the increased visibility for a one-off sale, the platform economy leads to an experience where customers can initiate conversations and feedback loops with merchants — key considerations when forming lasting and loyal relationships. It also enables the evolution of a business, since an open platform makes way for collaboration within the industry. Companies can now extend and share information, skills and technologies in varying fields across a wider ecosystem — thus giving consumers better products and services in the long run.

That said, it’s easy to write off participating in the platform economy by thinking that it’s only for industries where B2C companies are used to buying and selling online. It is important to realise that platformification can — and will — benefit all types of businesses, even those that appear to be very traditional and B2B pipeline based.

For instance, in the traditionally linear security industry, Milestone Systems launched its own platform, Milestone Marketplace, to connect buyers and sellers in a completely new way. Companies in the video technology sector from anywhere in the world can add their own products or services, and buyers can browse and connect with vendors. Platforms like this, that modernise old business models, will increase companies’ opportunities for growth while giving buyers more options and helping them better meet their needs.

Five years ago, businesses could ignore the platform economy and assume it not applicable to their industry , but in today’s world this evolution has become inevitable.

Companies that have yet to consider the movement now need to choose the role they’ll play in the new world economy. Whether this means setting up their own industry platform or participating in infrastructures that already exist in their arena, all businesses will need to discover how they can leverage the shift to grow and form long-lasting relationships, while adding their own unique value to the market. 

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Milestone Systems - IP video managementMilestone Systems
Category: IP VPNCompany about: Milestone Systems is a global industry leader in open platform IP video management software, founded in 1998 and now operating as a stand-alone company in the Canon Group. Milestone technology is easy to manage, reliable and proven in thousands of customer installations, providing flexible choices in network hardware and integrations with other systems. Sold through partners in more than 100 countries, Milestone solutions help organizations to manage risks, protect people and assets, optimize pr ...
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