The 5 Pillars of a Platform Business

Compared to traditional market, a platform business model capitalizes on the interaction between producers and consumers. There is no need for a business to physically produce a product that will be distributed. Rather, it makes use of the internet to facilitate exchanges, and consequently, create value.

AirBnB is an example of a platform business

If you’re interested in jumping into the bandwagon, you need to understand the basics that make a platform business successful. For a better understanding of a platform business and how to succeed in its adoption, you might want to consult with the professionals working at But to get you started, the following guide covers the basics; here are five pillars of a platform business:

1. Interaction

The goal of every platform is to enable interaction. In the absence of interaction, there will be no value creation. For this reason, there should be an exchange of value in the platform as this is the one that will engage users. It’s considered to be the why of a platform business. The goal is to create as much interaction as possible, which can be seen as the measurement of the success of the business adopting such model.

2. Producers and Consumers

These are two of the most important elements that should be present in a platform. Actually, without these two things, it would be safe to say that there is no business. The producers are the ones on the supply side of the economy. The consumers, on the other hand, are the ones on the demand side. Take for example the case of Airbnb. The owners with property for rent are the producers of the service. On the other hand, the ones looking for a property to rent are the consumers. The two must interact, as discussed in the paragraph above.

3. Website or Mobile Application

Platforms utilize the internet to conduct their business operations. Therefore, there needs to be a website or a mobile app that will make the platform accessible to both the consumers and the producers. It should be designed with user-experience in mind. Some of the things that should be given emphasis include user-interface and security. If it’s not easy to use and if the security of the users is put at risk, there can be hesitations.

4. Participation

One of the most important things for a platform business is to convince users to participate. Therefore, it’s not enough that the producers and consumers are present. They must participate. This is where value comes in. This is related to interaction. How can it be possible to convince participation? This can be done by offering rewards to users so that there will be more interaction. Improving the quality of service, in a general sense, will also be vital.

5. Engagement

For a platform business to succeed, another important thing is to have engagement. In the case of Facebook, for instance, the platform is valuable only when the users have a minimum number of connections. With this, the company became more focused on helping their current users connect with other members rather than attract new members to the platform. The more engaged the users are, the more interaction will be present.

For the best outcomes in a platform business model, the things mentioned above have to be present. There should be interaction, participation, and engagement among consumers and producers while having a website or a mobile app that will make value creation possible.


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