Online Platform (III)

Question 1

Sharing Economy (Definition)

Answer 1

-Extract value from the asset we already have, dividing them into space and time in order to be consumed as a service
-Platforms allow pricing, meeting and sharing

Question 2

3 Characteristics of the Sharing Economy

Answer 2

1. Digital platforms connect spare capacity and demand
2. It’s not sharing, it’s access
3. More collaborative forms of consumption

Question 3

Chicken-and-egg problem

Answer 3

Consider initial users, who face the decision to join a platform when there is no or a small number of users on this platform

Their decision depends on the standalone value of the platform.

Question 4

Solutions for Chicken-and-egg Problem

Answer 4

1 The big-bang adoption strategy

#2 The piggyback strategy
#3 The seeding strategy

Question 5

Pricing: Which side to subsidize?

Answer 5

Subsidy Side: A group of users who are highly valued (price and quality sensitive)
Money Side: The other user Group

Question 6

Goal of subsidising one side

Answer 6

Generate cross-side network effects such that after attracting enough subsidy-side users, money-side users will pay more to reach them

Question 7

3 Characteristics of WTA market

Answer 7

1. Multi-homing costs are high for at least one side
2. Network effects are positive and strong
3. Niche specialisation is low

Question 8

What is threat of _________?

Answer 8

Threat of Envelopment

A dominant platform expands into your business by offering your core features but cheaper/better - to its existing users

Question 9

Solutions for threat of envelopment

Answer 9

1 Reduce price on the money-side or enhance value proposition

#2 Change a business model
#3 Find a “bigger brother” through partnerships
#4 Regulations
#5 Sell out to the attacker or exit the field