Today, platforms have become an essential component in the global digital economy. However, Europe faces a challenge: it lags behind the US and China in terms of creating large-scale platforms. Last year, Peter C. Evans mentioned that European platforms would need to grow 16 times their current size to catch up. Strategies were discussed to address this challenge, including fostering the growth of platform startups, expanding existing incumbent platforms, embracing new opportunities like Web3, and developing dedicated super apps tailored to the unique characteristics of the European market. Additionally, investing in platform talent and leadership is crucial to this endeavor.
This year is time to celebrate, strategize and build.
Celebrating Europe’s Diverse Platforms
Europe may lack scale, but it does have a wealth of diverse platforms. From food waste reduction platforms like Too Good To Go to mobility platforms like Berlin’s Jelbi, Europe is home to a variety of innovative platforms catering to different needs and markets (Fig. 1). The region also boasts several world-class platform software providers, such as Mirakl, Commercetools, and Sharetribe, which enable the creation and growth of platforms worldwide.
Fig. 1 - Source: "Europe's diverse and growing number of platforms" | © Peter C. Evans, McFadyen Digital, 2023
Strategizing for Success: A Marketplace Grand Strategy
Large incumbent companies in Europe have a significant role to play in the growth of European platforms. Many of these companies are already participating in existing platforms, launching their own platforms, or making strategic investments in platform companies. However, to create a cohesive and integrated approach to platform growth, these companies must develop a marketplace grand strategy.
A marketplace grand strategy involves allocating resources efficiently within a firm to launch multiple platforms that create synergies and competitive advantages. For example, Bosch has developed a marketplace grand strategy that includes participation in major platforms like Amazon, Alibaba, and eBay, launching over nine platforms and ecosystems, and investing in more than a dozen platform companies through its corporate venture arm.
Fig. 2 - Source: "Timeline of corporate venture investment in marketplaces" | © Peter C. Evans, McFadyen Digital, 2023
The Fig. 2 showcases Bosch’s investments in platforms and marketplaces from 2016 onwards, reflecting their diverse range of investments. Notably, Bosch has made investments in ride-sharing companies across Europe, the United States, China, and even India (as seen with Ola). Initially focusing heavily on the ride-sharing sector between 2016 and 2019, Bosch has since expanded its presence into other domains, such as making an investment in Xometry, a 3D printing platform. Overall, this serves as a compelling illustration of a highly engaged corporate entity navigating its path in the platform investment landscape.
Building Platforms: Marrying Circular Economy and Platform Business Models
One area where Europe can gain a competitive advantage is by combining its passion for creating a circular economy with the power of platforms. By creating platforms that facilitate a circular economy, European companies can drive innovation, reduce waste, and create value for businesses and consumers.
7 Advantages of Circular Marketplaces:
Lower transaction costs
More buyers and sellers
Positive network effects
Expanded reach
Incentives for product redesign
Easier to grow community
Incentives for ecosystem innovation
Example 1: A Circular Marketplace for Used Plastics
One example of marrying the circular economy and platform business models is the creation of a circular marketplace for used plastics. Automotive companies like BMW have already committed to using more recycled plastics in their vehicle production, and a platform that connects these companies with suppliers of used plastics can help further drive this commitment.
"Companies can leverage the concept of a circular economy to create platforms that drive innovation, reduce waste, stimulate product redesign and provide value to business and consumers.", Peter C. Evans.
Example 2: A Marketplace for End-of-Life Electric Vehicle Batteries
With the growth of electric vehicles (EVs) in Europe, there is an increasing need for solutions to deal with end- of-life EV batteries. Used EV batteries can be repurposed for use in power generation and other applications, or they can be broken down to extract valuable materials for recycling. A dedicated platform for the exchange of these batteries can drive innovation and create value for both businesses and the environment.
Example 3: A Platform for Lubricant Recycling
There is currently no vibrant marketplace for the recycling and reuse of lubricants in Europe. A platform for lubricant recycling can help create a more efficient market for used lubricants, fostering innovation and reducing waste. This can benefit both the environment and the economy, creating value for businesses and consumers alike.
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Written by Bety Soca ©TheNTWK