5 Advantages Of The Platform Economy

What Is A Digital Platform?

The so-called platform economy is part of the current digital transformation and thus a key challenge for the future.

The task of a platform is to mediate transactions between customers and providers. Basically, therefore, they are marketplaces and exchange points. The higher the user numbers, the more one speaks of a "platform." In addition, a platform can focus on end consumers or cooperations of companies. Therefore, a distinction is made between B2B and B2C platforms.

Well-known examples of this development are social networks, online trading places, travel and mobility platforms. In addition, digital platforms also exist in other areas.

The central user of a platform lies in the greater transparency of offers and needs of customers and providers. By bundling offers and providing a transparent and intuitively functioning marketplace, enormous added value can be created for customers. Such added values bind customers to the digital platform in the long term.

What Is The Relevance Of Digital Platforms?

Looking at the rapidly increasing overall economic importance of digital platforms, the world's five largest platform companies (GAFAM) speak a clear language: a market capitalization of more than 4.5 trillion euros. Comparatively, Germany's gross domestic product in 2019 was around 3.44 trillion euros.

To profoundly illustrate the relevance of digital platforms, a Bitkom study from 2020 reveals interesting facts: Retailers in particular recognize the importance of digital platforms. More than half of the companies surveyed say they already have a platform strategy in place. 60% of respondents in the retail industry see the impact for their company rather or exclusively as an opportunity. The study also makes clear that digital platforms are a matter for the boss in more than 80% of cases and are thus assigned a high priority.

Looking ahead, more than 70% of respondents agree that digital platforms will not only have relevance to the global economy in 10 years, but will also impact individual industries and companies.

5 Advantages Of The Platform Economy

1. Increase in revenue: IT and cloud platforms enable high scalability and thus an increase in revenue.
2. Market access: via digital platforms, companies gain access to previously unreached markets or customer (groups). The platform-dependent network effects further enlarge potential customer groups.
3. Performance portfolio: Digital platforms offer the opportunity to provide customers with new services that were not previously available.
4. Customer understanding: Data can be collected via digital platforms and thus customer behavior can be better analyzed.
5. Future viability: Digital platforms make it possible to ensure the future viability and innovative strength of companies without a high level of in-house IT performance.

Photo by Carlos Muza on Unsplash