A platform study by FoundersLane, Warwick Business School and ESMT
We analysed over 200 European B2B platforms and we share insights from interviews with executives on platform strategies
Eight out of 10 of the world’s most valuable companies operate digital platforms. The digital world-beaters first emerged in information-intensive sectors, but have now set their sights on industrial B2B sectors, as the global marketplace becomes increasingly interconnected.
In our study, we analysed over 200 European B2B platforms and we share insights from interviews with executives on platform strategies.
This study is particularly interesting as B2B, as a marketplace economy, remains in its infancy, with relatively few marketplaces gaining significant traction. So far, industrial heavy machinery, parts and equipment, and freight transportation are the most developed. Each of these areas have multiple startups that are growing and have notable funding or backers, with Amazon Business — already passing several billion in revenue — the wolf walks towards the door.
Thinking beyond marketplaces
There are a few critical questions that a B2B organisation needs to ask before making the leap into digital marketplaces: How can you build trust with a digital platform? Is it possible to stimulate network effects with just a few users and with complex products?
In our study, we interviewed dozens of executives and took a deep dive into what exactly they are doing with new platforms, what is working, what is not, and how leading companies are executing sophisticated digital marketplaces to generate new revenue streams.
A central theme that emerged was that coordination & co-creation are key drivers of growth. As a result, we see that marketplaces where different actors work together — even competitors — the only condition being that each supplier brings a novel source of value that others can’t provide on their own. For example, Apple and Google allow Skype into their ecosystem — providing additional communications technology for its customers.
Granted, it is still necessary to control the relationship and maintain control of the data. Thus, competitors can be complementors if the right conditions are set, in which they enrich the ecosystem and the risk of losing the relationship has been mitigated.
Questions worth asking
There are a number of questions an executive should ask, as they start out on their platform discovery journey. Only after a solid answer can be formulated to each of the following questions, can the next steps be taken — designing the marketplace.
- Which platforms are succeeding and how? It emerged from our in-depth study that traditional B2B sales often rely on personal and long-term relationships. Hence, trust is elevated to of critical importance, and as a consequence, the marketplaces where mechanisms are in place — in a structured way — to act as a catalyst for trust-building between different ecosystem players, tend to thrive.
- What sectors are most impacted by platforms? Many sectors are nascent — when it comes to platformisation — while others have reached a level of maturity, and this presents a range of opportunities. In the study, we identified the sectors most ripe for platforms.
- How mature and sophisticated are B2B platforms? Platforms grow in relation to the network of actors they orchestrate. Going from two sides towards a multi-sided model is vital to leverage the creativity and productivity of the ecosystem and its ability to offer additional services. The challenge here is given the low number of customers, how platform players can still create substantial network effects. We delve into what B2B platforms are doing to find a hack for this conundrum.
- Where in the value chain should I look for opportunities? Platforms are disrupting along every step in the value creation process, from removing inefficiencies between directly linked parties to creating new sales and relationship channels between producers and customers.
- How do these platforms create value? Platforms can create value on three layers: The network of users and transactions they orchestrate, the infrastructure they provide, and the data they harness and utilise.
- How do you capture the value you create and monetise your offer? A shallow ecosystem (two-sided vs. multi-sided) can limit the space for monetisation. Therefore, it requires a compelling benefit for the users (customers, suppliers, and partners) to see the value.
A deeper understanding of platforms
B2B is very different from B2C (fewer users, complex products, long-term relationships etc), and so successful platforms need to offer much more than simple marketplaces. Value-added workflow services and trust-building mechanisms, as well as community features, are vital to create user value, stickiness, and defensibility.
The goal of this study is to understand the status quo and critical success factors of European B2B players, identify best practices in relevant dimensions and provide a framework for decision-makers to develop and implement the right platform strategy for their company.
That’s why we set up a collaborative project to provide a broad overview of the European platform economy, the opportunities, risks, and winning strategies for B2B companies.
This preview highlights some of the guiding questions and key themes from the initial report, which will be published in early 2020, followed by additional deep-dive reports.
Collaboration partners (initiators and partners)
This is a collaborative research project between the leading business schools of ESMT Berlin, Warwick Business School, and corporate venture builder FoundersLane.
How you can contribute
If you are interested in participating by sharing your experiences, shaping new perspectives, or co-creating insights, reach out to us! We are excited for you to join us on our adventure through the platform jungle.
Get in touch
media@founderslane.com
