ACADEMIC ARTICLE SUMMARY
Leveraging Value Creation to Drive the Growth of B2B Platforms
Article Source: Production and Operations Management Special Issue Article, 2022 (forthcoming)
Publication Date:
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ARTICLE SUMMARY
Summary:
Some assume that Business-to-Business (B2B) platforms are similar to Business-to-Consumer (B2C) platforms. However, the needs of B2B consumers are more complex. B2B platforms create value differently than B2C platforms.
POLICY RELEVANCE
Policy Relevance:
B2B platforms operate on different principles than B2C platforms.
KEY TAKEAWAYS
Key Takeaways:
- Platforms often serve as intermediaries in matching markets, enabling interactions between two sides of a market (such as producers and consumers, providers and clients, or developers and customers) by providing an open infrastructure and governance.
- Platforms create three types of value, as follows:
- Standalone value, the value of the platform without network effects.
- Same-side value, the value created by participants on one side for others on that side.
- Cross-side value, value created for participants by third-party offerings such as apps.
- Standalone value, the value of the platform without network effects.
- For B2C platforms, both suppliers and consumers generally gain more benefits as more participants joint the platform, but B2B platforms do not enjoy the same returns to scale; B2B firms are substantially different from B2C firms.
- B2B firms tend to be specialized in narrow fields such as aviation.
- 72 percent create standalone value, and 23 percent create only standalone value.
- 72 percent create cross-side value.
- 14 percent create same-side value.
- 72 percent create standalone value, and 23 percent create only standalone value.
- Generally, the needs of a B2B platform’s customers are complex and their relationships are intricate; the more complex the customer’s needs, the more likely the B2B platform will create standalone value.
- The customers of the B2B are sophisticated and less easily swayed by advertising; the more sophisticated a platform’s customer, the more likely the platform will be industry-specific.
- Business customers are sensitive about data privacy, and might ask to be compensated for use of their data; over time, more B2B platforms are likely to be sponsored by trusted business consortia.
- As B2B platforms mature, they might put greater emphasis on cross-side value generated by standardized information flows, which make it easier for businesses to switch suppliers.
- B2B platforms use their expertise in a particular industry and existing supply chains to get started; many B2B platforms are not engaged in matching.