multi sided platform

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In the phase of building business from a Multi-sided platform which acts as an intermediary between 2 customer groups, how can we strategise to acquire customers on one group? These 2 customer groups are interdependent
As we know that these 2 customer groups visit the platform only if the other group has substantial no. of users. This scenario can be explained using a simple example: a customer buys a windows phone only if there are substantial amount of apps for the windows platform, developers build apps only if there are substantial amount of users assuming all other conditions are satisfying
In this scenario what are the different alternative strategies to build the customer base?

Comments:

Chirag Gambhir's picture

HI Dhiraj,
This is one of the first question that comes to mind whenever anyone starts with a two way business concept. This is a typical chicken and egg problem or you can say supply and demand problem. Let me take the example that you have taken and here are my two cents:
If I have to make a windows phone and wanted to create an app-marketplace from where my users can download apps and I very well know that my phone will be sold only if there are some good no. of apps on marketplace, so in this situation, I will have to invest some amount in the beginning and get some apps ready from my own in-house developers and post them on my marketplace which can be accessed by users and in this way, I might get some initial traction as well which can be used to attract developers to build apps on my platform.
So according to me, whenever in your mind you know that, there is demand, it is always better to get supply first (and that depends on you that how you do it) and that is where you process starts and then sky is the limit for you.
Hope it helps !!

Dhiraj Bonda's picture

Hi Chirag,
Thanks a lot for co-relating this with the demand and supply problem, I have another query relating with this model
my platform consists of 2 groups: one is the information provider and another the info consumer
so can you give me few tips on how exactly I need to promise or convince the information providers customer group to have a presence on my platform, this is little bit difficult for the startups because there would be no substantial no. of users in the initial phase

aditya menon's picture

Indeed, and one I believe Microsoft has failed to solve properly. I occasionally get emails about MS promotions with giveaways of Windows phones on a lottery, for developers who build apps for their marketplace. This is just not incentive enough for serious app developers to get interested. It perhaps helps flood their app store with half baked apps, but users aren't fools and won't be charmed by just quantity.

Secondly, the windows phone platform natively only supports C#. This was a major mistake, they should have supported either html5 or java: platforms with a burgeoning developer base. Perhaps this was borne out of greed. They assumed they could generate a large user base for their OS and a large dev base for their .net platform. Neither benefited.

Lessons learned? Don't underestimate anyone in your value chain. Don't get greedy. Listen to grandma and her old school common sense :)

aditya menon's picture

Dhiraj, perhaps investing time into creating your own content and marketing it well? Just extrapolating from what Chirag said. This is time consuming and won't scale of course, but you gotta demonstrate the value of your platform by biting the bullet yourself for anyone else to feel confident about doing so.

Dhiraj Bonda's picture

Hi Aditya,
Thank you for your suggestions
I was thinking mixing this model with free business model. providing free basic services for certain time period and rolling out additional benefits in time may get the substantial user base keeping the constraint that the platform has qualified to be valuable for both the customer groups
I think the best way to sell the platform is to position the value and vision of the platform through marketing....
I think initially there would be high user acquisition costs.

Chirag Gambhir's picture

Hi Dhiraj,
Now in order to solve your problem i.e. convincing information providers to use your platform, let start from very basic questions that information providers will have in their mind i.e. How will your platform create a value addition to them.
Now in order to support this you can (1) probably start with showing some real data from various search engines (google, yahoo etc.) about the searches made for that information every month and then saying, that for the information searched; there are no good results available or if available, it is in an unorganized manner and how you are going to organize it which will ultimately encourage information consumers to use your platform and information provider might get value few months later.
(2) Also if there are any monetary benefits for the information provider from your platform, you can explain that too.
(3) If there would be any fan following of the information provider, that could also be highlighted during pitching them.
So In short, you yourself have to figure out the ways to convince them in some manner based on the past insights for the information. And believe me it is very challenging and time taking task and you might or might not be successful in this activity.
Now If I say that you are unsuccessful in convincing them but you yourself is convinced that information consumers will definitely come to your platform if there is information available, I would then advise to get some freelancers on board and pay them to write the information for your platform or if you think that the respective information is available on internet but in an unorganized manner, you yourself can work hard and organize it in a nice manner and put it up on your website and then use that analytics to further get more information providers.

Dhiraj Bonda's picture

Hi Chirag, Thanks a lot!!! the pointers are of great help

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