Go niche or go home: two developments in the world of platforms

‘Can you build a new YoungOnes for us?’ We get that question at Freshheads more often. But that's not what being successful with platforms is all about. It's about custom applications: a perfect fit with a specific market and the needs of potential users. How do you increase the chance of success? These two developments are currently interesting:

Development 1: choose your niche

Now that the big platform ideas exist, something interesting is happening. New, successful ‘to consumer’ platforms focus on verticals within those existing markets. For example: Marktplaats is there for all second-hand items, while Vinted mainly focuses on used clothing. Or Buycycle, intended for second-hand sports bikes.

Whoppah, on the other hand, is for second-hand design furniture. On viaBOVAG.nl, BOVAG garages offer new and second-hand cars, bicycles, motorcycles, and camping vehicles.

Retail giants are also coming up with second-hand and/or lending platforms, see IKEA Preowned and outdoor store Bever. The sharing platform ‘Buitendelen’, taken over by Bever not long ago, has already been discontinued. This again shows that not every platform is automatically successful.

Number of transactions x value

There is something else interesting about this relatively new branch of niche platforms. The market is easier to determine. You roughly know in advance how big that market is. Targeting and reaching the target audience therefore requires less effort than a platform with a broad scope.

It is simpler to identify the needs of the target audience since the members of that group are relatively similar. The downside is that the market you are targeting is small. That means you preferably aim for high value per transaction for a viable business case. With a low value, you need very many transactions. And for a niche market, that usually means: going international.

Add extra value

You can increase the relevance of a niche platform and simultaneously raise the value per transaction. Additional services are the key to this. Look at Buycycle, which offers special boxes to ship the sold bikes in. Or Whoppah, where buyers can use a special delivery service.

Thus, a platform also reduces the likelihood of ‘leakage’. This happens when seekers and providers find each other through your platform but do not carry out the final transaction through the platform. With the special bike boxes, Buycycle makes it appealing to also complete the actual transaction via their platform. They have understood the user well and cleverly solve a barrier for buying a second-hand bike online.

Development 2: B2B – excel with ease

The examples so far all come from the consumer market. Entering that market costs a lot of money, effort, and time to reach the consumer and stay top-of-mind. It requires perseverance and deep pockets. Therefore, it is just as interesting to take a closer look at the business market.

Existing or new trade

Business transactions often still go through traditional channels. Although there is also quite a bit to platformize, making things simpler and more customer-oriented.

Take for example Quista, an online marketplace that makes trade between local food suppliers and supermarkets simpler on both sides. The business is already there, the cash flow is already there: it's mainly a matter of smart digitization and ensuring supply and demand use the platform. This only applies to a platform in an existing market.

Because you can also come up with something completely new, and thereby significantly challenge the status quo. Business platforms are also very suitable for ‘value-added services’ such as in the (B2C) examples of Whoppah (own delivery van for furniture) and Buycycle (the bike boxes for shipping). In the B2B market, it often involves facilitating ‘escrow payments’ or providing additional services (think of installation or maintenance).

Digitize in steps

Unlike consumer platforms, the business variant does not have the winner-takes-all principle because the platform is tied to a specific market or region. Our advice to entrepreneurs focusing on the business market is to simply start. Digitize processes in steps. For example, first set up a my environment where your clients can see and manage things themselves. And work bit by bit towards a platform that fits your market and users.

How does that look in practice? Take the market for painters, with many freelancers and medium and small companies. Recruiting customers and making calculations take a lot of time. Planbuilding is a SaaS tool that helps painters find leads and supports them with their calculations and business processes provides a solution.

Tools and models

A next step could be that paint manufacturers or wholesalers make custom offers based on those calculations via a marketplace model. So on one hand, you have a SaaS solution that helps the painter, and on the other hand, the paint supplier has a direct line to his potential customers. It's one of the solutions you increasingly see with B2B platforms. The SaaS component helps activate the target audience and stoke the game of supply and demand, thus setting the first step in the right direction for the platform.

However, there is a caveat: not everything works in B2B. Here too, thorough market knowledge is needed, insight into the needs of potential users, and visibility into the size of the ‘addressable market’, and the revenue model that fits.