This post is sponsored by BORN Group.
Unlocking and 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 six most valuable companies by market capitalisation and around 80% of world’s unicorn startup operate a digital ecosystem that enables two-sided market dynamics and gain 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 and network effect is the meteoric rise of Apple’s iPhones between 2007 to 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 (US$60 trillion) will be mediated by platforms and ecosystems in 10 years time and 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 platform economy offers the most profitable and lucrative business model, online marketplaces are still tough to build and achieve the critical mass. The classic chicken and 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 pay
Today’s customers increasingly expect a seamless, integrated, consistent and personalised 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 and how" to leverage digital platforms and ecosystem models for their industries. The key CXO challenge today is create a core platform that can deliver incremental growth along with the new business and 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. A marked shift in consumer behavior during the COVID-19 pandemic, accelerated digitisation 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 US$2 trillion annually.
Marketplaces sprang up half of global online sales, US$2 trillion on the top 100 sites. Almost 60% of these marketplaces are continuing to change the way consumers shop. More than 25% consumer searches now begin on any renowned marketplace.
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 five broad pivots of marketplace operator, enterprise commerce and marketing capabilities, the right partnerships and alliances in fulfillment, logistics and financial services along with building a best in class tech and data ecosystem.
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 hand-held brands from strategy to execution by setting up a feasible business and operational model, defining KPIs, setting up of integrated applications to enable associates, and finally delivering exceptional customer experience by our STELLA framework.
A few notable value drivers on marketplace implementation include, but are not limited to
● Revenue augmentation with multi-channel and cross-border sales
● Better customer targeting and analytics through digital marketing, micro-segmentation and social integrations
● Cross-sell and up-sell opportunities through tailored pricing, product bundling and increase AoV (share of wallet)
● Business process optimisation
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 and manage its next-generation omnichannel eCommerce marketplace for onboarding and tenant management. BORN developed an experience led marketplace platform to provide personalised shopping experience for sellers (B2B), consumers (B2C), enterprise users (B2E).
The implementation has helped optimising marketing effectiveness, improve operational efficiency with faster time to market, accelerated conversions and enable topline growth through upsell and cross-sell.
BORN has also implemented and designed a multi-brand curated marketplace on luxury brands, for a salt to steel conglomerate in India helping them across differentiated experience strategy, omnichannel experience and efficiency across business functions.