This collaboration in markets and on platforms is determined by the customer or by providers. The idea behind the MSPs is an integral market approach by various providers (which is why it is described as multisided). A supplier works within the platform together with other, often complementary, parties in order to gain negotiating power and market reach. This is convenient for buyers, as they only have to negotiate with one party. This far-reaching form of collaboration between parties, which characterises the network economy, has a strong influence on the market relationships. Platforms as they are now are the first signs of this. The platform and network become the market; due to the transparency and the analyses, this concept forms a strong competitor for the traditional market relationships and market parties. This changes the chain, but also a supplier’s negotiating power (making it stronger and more diverse).
The suppliers’ new negotiation position serves as a way of looking at the competition. Traditionally, suppliers look at the competition, how many are there and what is their market share; this gives them an indication of the competitive position in the market. It is only possible to observe the competition in the traditional market by looking at what customers are doing (network effects). This is a change that is perfectly in line with the customer-oriented approach of platforms and networks. Buyers and behaviour are central. In this way, it is easy to predict what users will do, as described earlier. The dominant player has an approximately 70% market share, with strong network effects. This reinforces the position of the market leaders and makes people less inclined to switch to a smaller provider. Users trust the platform as well as the providers on the platform. We see this with, for example, Aliexpress.com where customers buy from unknown, usually Chinese, suppliers. Aliexpress.com is the partner that is trusted here.
How will the negotiating power of buyers change?
The next change relates to the ‘negotiation power of buyers’. Again, observing how loyal buyers are to a brand based on the market share, the homogeneity of a product and the switching costs, is now outdated. Buyer power is no longer determined by these factors; the switching costs these days are practically zero and products can barely be distinguished from one another. A more accurate measurement of the negotiating power of buyers can be obtained by examining whether there are already strong platforms on the market that make use of strong network effects. Historically, the dominant player in modern markets would acquire a market share of approximately 70%. Network effects therefore determine how successful and large you can become. That is why buyers have, in a certain sense, a much larger responsibility in and effect on the success of companies, through their purchasing and return behaviour. This shows once more the crucial part that buyers play in the traditional market, and shows that the most important goal should be to meet all customer needs.
In all these changes, customers and customer behaviour play an important role in the strength of the network and the competitive relationships. This requires a focus on one’s own strong points, as illustrated in the model of Treacy and Wiersema (1995). This focus leads to specialisations and the creation of value, as well as, through the application of the Internet, to lower costs (operational excellence). What is more, there are also the following benefits for the products:
• a stronger market position (product excellence);
• greater distinctiveness through innovation;
• focus leads to greater knowledge of customers and customer behaviour (customer intimacy);
• this focus can also lead to a strong position in a niche market.
In a later publication, Fred Wiersema further examines these disciplines and also forms a basis for the traditional network structure.2 Customers look for certainty and guarantees for the results, not only for products. The suppliers have a value proposition, which provides all those certainties that a buyer desires. The offer is distinguishable from the competition. In the beginning of this century, this was a requirement for providers, whereby products were compared. Now on a platform it is a requirement to make the difference along with all the other providers. A network needs collaboration and teaming in view of the specific focus of each company. This means that there has to be mutual respect between the providers, and by using one another’s strengths (values) a much stronger competitive advantage will arise. Mutual trust between the participants and a willingness to work together are important conditions. This also applies to the collaboration with customers; a mutual trust and the certainty that everyone’s interests are intertwined.
Wiersema provides a number of guidelines as to how collaboration can be realised in the interest of the customer. The following guidelines also apply to multisided platforms:
• A supplier has to look for partners who want to work together on a solution; a supplier who is concerned with shared interests. This will particularly apply in long-term relationships, such as those in the software industry or with durable products or machines.
• A second focus involves responding to the specific needs and wishes of the customers. Together, providers look for new solutions and new opportunities. This is not only the case with consultants but also with software companies or other services where interaction between the customer and supplier is essential.
• A third focus is the relationship between a customer and the supplier. A supplier must become a trusted companion. Customers will not only trust the company but they will also make their purchasing plans known at an early stage. In the consumer market, the trust that a brand enjoys is important. This guarantees certainty, as well as the connection with a target group. This leads to trust in the brand, similar to the trust in a company or person that can arise through personal contacts.
• The last basic principle formulated by Wiersema (1997) is the relationship with a market leader. This certainty and trust will also be reflected on the collaboration and in this case on the platform. Particularly if certain business functions are shared, such as the case with platforms, mutual dependency and interest will arise. This applies, for example, to the business functions such as marketing, finance and logistics. This is not only a typical feature of platforms in the so-called B2B market but also with Bol.com and Amazon. Independent businesses strove towards market leadership in the old economy, while new businesses find market leadership in the network, in the collaboration.
These days it is important that we also see this ambition with platforms. The old rules of market leadership still apply, only now they apply to a platform.
A Unique Value Compared with the Other Providers
For individual companies it is important that they have a strategy for creating value that is unique compared with the other providers within the network. This is in line with the previously mentioned vision of Treacy and Wiersema, as this value-creating strategy should also be difficult to copy for the competing companies, so that there is a long-lasting competitive advantage. A value proposition that is difficult to copy is one way to obtain a competitive advantage; the other way involves the advantage of the first mover. The first mover of a new concept has considerable value. This value lies in matters such as the creation of a network for the supply chain, the creation of regular clients and the acquisition of a good reputation and brand awareness. By optimising this head start and growing quickly, these newcomers can be disruptive to