Part 2: The rise of platform businesses
How businesses value their long-term customer relationships is being impacted by some powerful forces. Understanding these forces is integral to an account-based growth strategy.
In this second of our series of blogs exploring the business challenges which are driving change, Tim Shercliff considers the rise of platform businesses and their impact on B2B.
What is a platform business?
Platform businesses create marketplaces that bring together consumers and producers of value united through interactions that occur on the platform. This business model facilitates interactions between two or more groups of users. Examples include Amazon, Google, Uber and eBay.
Why have platform business grown so quickly?
McKinsey estimates that 30% of global economic activity — $60 trillion — could be mediated by digital business platforms by 2025 (Chung et al, 2020).
Platform businesses have grown rapidly by enabling symbiotic relationships between buyers and sellers; the more buyers there are, the more suppliers there are.
What has been the effect on market share?
This strong multiplier effect has led to the most successful platform businesses becoming near-monopolies. For example, in the search engine market, one company, Google, holds an 86% market share (Statista, 2022).
Consequently, in many market segments there are no profits to be made unless you are in one of the top two or three spots. Everyone else loses money.
What is the impact on B2B?
These hitherto unseen growth rates resulting in an almost instant global reach, have given these platform businesses the power to change competitive dynamics within whole industries.
Despite initially being mainly a B2C phenomenon, the most rapid growth is now in B2B platform businesses.
How can this be addressed?
Marketers should acknowledge the disruption caused by B2B platform businesses in their sector. Consider how platform businesses are impacting the way B2B buyers make their decisions and ask yourself if this has changed the makeup of your top accounts.
Read more about unlocking sustainable value through extraordinary customer focus in ‘Account-Based Growth’ by Bev Burgess and Tim Shercliff, published by Kogan Page.
Find more blogs from Tim Shercliff on the Resources page of our website.