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Standing on the shoulders of giants: How small businesses can thrive in today’s platform economy

June 1, 2017

Using platforms to increase sales and grow business

We live in a platform economy dominated by one or two big companies in every industry: but small businesses should see this as an opportunity not a threat, says Steven Van Belleghem.

Our platform economy is characterised by a series of markets in which the ‘winner takes all’.

For example, Booking.com is the go-to site in the hotel industry, just as Amazon is in retail, Facebook in communication and Uber for mobility – these are the brands that stand out in the minds of consumers.

Capitalising on the platform economy

More and more however, this platform economy is not just about a single big player that dominates the market, but also a host of smaller players smartly using the bigger player’s platform to gain business. Individual taxi drivers working under the Uber banner is a great example of this.

Conversely, the biggest growth market for Amazon at the moment is not selling their own products to us, the consumers – it is their status as a platform, selling the products of the huge range of smaller businesses operating underneath them.

And Booking.com doesn’t own a single hotel: the company is simply the platform on which they sell us the services of other hotel businesses – even if they are huge multinational hotel chains in their own right, like Hilton or Holiday Inn.

So, even as consumers, we see evidence every day that the platform economy is booming like crazy. And we haven’t even looked at WeChat yet.

WeChat – China’s operating system

WeChat in China is an even more advanced platform. In the US and Europe, if you don’t participate in Facebook you may miss out on certain bits of information (and you’ll probably find yourself with more time for other things), but your life continues without too much inconvenience.

In China, you can no longer operate without being part of WeChat. That might sound like a big statement, but everyday activities like restaurant reservations, communication, navigation, payment options or buying flowers for your date – all are now done through WeChat.

It wouldn’t be a stretch to describe WeChat now as China’s operating system: less an organisation than a medium in itself. It may not have touched your life personally in Europe yet, but it is probably the most impactful platform in the world.

Another Chinese company, AliBaba.com, is the world’s largest ecommerce platform, and yet it doesn’t own a single product. Like Booking.com, it is simply a trade platform, a new style of marketplace that brings buyers and sellers together.

Don’t view platform giants as the enemy

Artificial intelligence firstSmall businesses often see corporate giants as the enemy, and these platforms are certainly viewed by many as a threat.

However, this attitude won’t help smaller businesses to thrive in their shade. SMEs should instead see the platform companies as a huge opportunity, and try to integrate them into their own selling activity.

So if your business is about selling, go to Bol.com (in the Netherlands) or Amazon (in the US and most of Europe), and try to use their marketplaces for your own benefit.

Of course you will have to pay them for the privilege, and a percentage of your profits will be lost to their machine; but compare this loss to the level of marketing spend you would need to part with to achieve the same exposure that they can give you… it would be unaffordable.

Many hotels complain about Booking.com. As a small independent hotel in a town or village away from major cities, the 15% that Booking.com takes from you for every customer sent your way can seem like a high fee that leaves a bitter taste.

View platforms as an opportunity

But it is a very, very small amount compared to what you, as an individual hotel, would have to pay out in marketing effort to reach the same global audience in order win that individual client.

So the platform is not a threat: it is an opportunity to access more customers. It is an opportunity to build and scale your business on the back of the platform company’s bigger one.

One of the first brands to really understand and embrace this trend was Kipling, a European fashion brand selling iconic bags and accessories.

Rather than worrying about the presence of Amazon detracting from Kipling’s own stores, the company’s management recognised that if they made sure Amazon was their own biggest route to market, they would receive marketing and distribution for their products on a level that no other company could provide. As a result, Kipling has grown enormously.

Standing on the shoulders of giants, we can see more and further than the giants themselves.

Every small business should take this as their mantra, with the question: how can we use the power of a big platform to scale up our own business?

About the author

This article has been written exclusively for ByteStart by Prof. Steven Van Belleghem, an expert in customer focus in the digital world, and author of the award-winning book When Digital Becomes Human, published by Kogan Page, priced £19.99. Subscribe to his videos at www.youtube.com/stevenvanbelleghem or visit StevenvanBelleghem.com

Prof. Steven Van Belleghem is a regular contributor to ByteStart, other thought-provoking articles he’s written include;