While virtually every kind of business, barring essentials and a few other industries, are showing a significant downtrend in earnings, there is one business model that seems to be going from strength to strength. This is the multi-sided platform business, and it could be your way out of the economic slowdown that is looming ahead of us.
Most importantly, with household incomes expected to come down, they will be looking for bargains, which will help them conserve valuable cash. Hence platform businesses that offer them well-priced products will be much in demand.
Uber Eats is an example of a company that doesn’t own a single car but did better than most other businesses recently. These companies are doing so well, that while other businesses are contracting, Amazon plans to hire 100,000 people soon.
The good news is that you can apply the concept of multi-sided platforms to any business, not only online, but offline as well. For example, a cake shop that has been selling its premium quality cakes until now might see a slow down in its business because people might not want to spend so much on a cake.
The best thing, in this case, is to innovate and sell smart. So the cake shop should now offer lower-priced cakes, including its competitors’ products, on its premises. Since these lower-priced cakes will still retain their original brands, the lower quality will not reflect poorly on the premium quality cakes shop but on the brand, which is making that kind of cake.
This is a win-win situation for the premium quality cakes maker. He is merely providing a platform for other businesses and his existing clientele, increasing his own business, and also attracting a more extensive customer base in the bargain.
Now suppose you have an entire set up for procuring raw materials, manufacturing, transportation trucks for distribution of your products, and even a sales team for selling. Still, your products are not selling anymore due to the COVID-19 crisis. What should you do?
Offer all these services to other businesses, maybe even your competitors! And ask them to pay a fee for your assistance. Since you have already invested considerable sums in this infrastructure, you can now begin making money on these dormant assets. Other businesses will willingly pay for this, because they don’t have to invest in the same infrastructure anymore, especially now when some of them may not even be able to afford it.
What we need to do is apply this principle as best as possible to all our businesses, and keep our eyes and ears open for more such opportunities.