A platform ecosystem is a platform together with its owner, the outside firms that build on it or sell through it, and its users. The platform sits at the centre. Outside firms keep control of their own products and prices.
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Key factors
- Platform-specific investment. A marketplace becomes an ecosystem when sellers or developers invest in that platform in particular, for example by building integrations or adapting their stock and shipping.
- Customer choice. Customers join the platform first, then pick which outside products to buy and how to combine them, as phone users do with apps.
- Multihoming. If a product runs just as well on a rival platform, its maker has little to bind it to either.
- The owner as referee. Outside firms work without contracts with each other, so the owner sets the rules and settles disputes, which gives it great power over them.
Examples
Amazon. Independent sellers account for more than 60% of sales in Amazon’s store. They choose their own products and prices. Amazon sets the rules, sells them storage, delivery and advertising, and takes a fee on each sale. Many sellers send their stock to Amazon’s warehouses and pack it to Amazon’s rules, an investment that ties them to this platform.
Zalando. Fashion retailer Zalando lets brands sell directly to its shoppers through its Partner Program, setting their own ranges and prices. Partner sales make up about a third of what shoppers buy on Zalando, which also sells the brands logistics and marketing services. Brands link their own stock systems to Zalando’s, and can ship from their own warehouses or have Zalando fulfil their orders.
Frequently asked questions
What is the difference between a platform and a platform ecosystem?
The platform is the technical core and its interfaces. The platform ecosystem adds the outside firms and users who build on it, sell through it and buy from it.
How is a platform ecosystem different from a supply chain?
In a supply chain the lead firm decides what it buys and at what price. In a platform ecosystem the owner sets the rules, but outside firms decide what they offer and charge.
Who holds power in a platform ecosystem?
Mostly the owner, which controls access, rules and fees. Large complementors gain bargaining power when users come to the platform partly for their products.
Why do firms join a platform ecosystem?
Mostly to reach the platform’s customers. Building for a popular platform gives a small firm access to millions of buyers it could not reach alone, in return for fees and rules it doesn’t set.
Related concepts
Digital Platform
Complementors
Business Ecosystem
Platform Owner