The beauty and scalability of platforms
Web-based platforms are becoming increasingly popular and gaining huge traction for loads of businesses, from startups to well-established corporates, who are adopting this as a business model.
These platforms are also referred to as web apps, or mobile apps and in some instances, these companies are referred to SAAS (Software as a service) businesses.
To give you a few examples of companies that use tech platforms to run and scale their business a few obvious examples that everyone should be familiar with are the likes of Uber, AirBNB and Docusign.
Why would companies make use of web platforms?
This is a great question and there are so many great reasons why. Let’s jump right into it!
Exponential scalability
The truth is that technology enables these web-based platforms to grow and scale at an exponential rate compared to traditional businesses, brick and mortar shops and industrial businesses. That does mean that these types of businesses do not hold value and can grow but not at the exponential rate that these tech platforms can scale at.
You may be asking what “what do you mean by scaling”? When we refer to scaling we refer to the ability of the platform to grow and handle more and more (in most cases) users and transactions.
Let’s illustrate this with an example. Let us compare a traditional business, a company that makes widgets vs a web-based platform.
The business making widgets needs a factory, workers, managers, electricity, insurance, etc. To operate. At some point, the factory will reach the maximum production output, suppose this is 1 000 000 widgets a year. Now, if the company wants to increase production they would need to set up another factory which comes with all kinds of costs as well as needing to hire more staff and incur other indirect expenses. The cost of scaling is expensive and the time to scale is timely. Also bear in mind that the second factory will take a long time to get to maximum output, therefore the cost to produce those widgets greatly increases.
Now let’s look at a tech platform in terms of scaling. Let’s use AirBNB as an example. The company will obviously need to invest substantially to initially design and develop their platform or in this case their website, together with all the underlying functionality. This can be a costly and time consuming exercise to get it to the point where they are ready to launch.
However, once users start to transact on the website, the need to be doing loads and loads of development is not there. Yes, there are always new features and improvements to existing functionality that needs to be developed but this is minor compared to the initial design and development of the web platform.
Fast forward a few years and the website is booming and there are loads of people booking accommodation and transacting. Now with the increased usage and popularity of the platform, it needs to scale to be able to handle more and more web traffic, transactions and new listings.
Here’s where the beauty of the platform comes in. Scaling it is fairly easy as they don’t need to develop another version but rather increase hosting infrastructure and make other enhancements.
The difference between the scaling of the factory vs that of the platform is vastly different and totally in favour of the one that uses technology as a driver.
Increased Accessibility
A nifty benefit of platforms is that they are accessible from any location and any type of device (desktop, laptop, tablet and mobile phone). Users just need a web browser and an internet connection to connect to the platform.
With more and more people coming online and getting access to the internet through cheap smartphones, this opens up previously inaccessible markets (especially in Africa and other emerging markets), pushing engagement of the platform and ultimately increased transactions and revenue.
Another great benefit to these platforms is that they are available 24 hours a day and 365 days a year, which means no downtime and effectively your business is open nonstop. Isn’t that what every founder and business owner wants to hear?
Yes, if your industry and target market is more seasonal you will have busier and quieter times but your web platform is constantly available.
Reduced Time To Get To Market
By making use of platforms means that there is a reduced time to get to the market as well as reduced cost compared to traditional brick and mortar businesses.
If we had to compare a traditional retail shop vs an eCommerce store (which isn’t the best example of a platform), we can easily determine that the retail shop will take much longer to launch as its needs to be fitted, signage needs to be installed, loading the products etc. vs the setup of an online shop.
Integration Gives Your Platform More Power!
Being able to integrate your platform with other 3rd party services, means that you can offer more to your users by leveraging the powerful solutions that they offer. You might be thinking “Man! What do you mean by the integration of systems? This is all confusing me!”.
Don’t worry old sport, we’ve got your back!
The easiest way to explain this is by means of an example: let’s look at the payment processing on your platform. Let’s say that you have a platform that allows for the booking of hotel rooms for dogs (yeah it’s leftfield we know!). Now you need to allow the owner of the dog to make a payment. You don’t want to develop a whole payment processing system as that will take ages and with that comes a cost. So you do the clever thing and integrate your platform with a Payment Service Provider (EG: Stripe or Paypal). By integrating you’re able to get to market quicker (as mentioned above) and not have to reinvent the wheel, but rather partner with companies who specialise in certain solutions that will benefit your platform.
For those of you who want to know how we do the integration, this is typically done via an API (Application Programming Interface). Read more about APIs here.
New Releases Of Your Platform Are Instantaneous
Your platform will most likely constantly evolve with the release of new updates and features. The great thing is that once these are released, your users will have instantaneous access to the new functionality that has been developed.
How this happens is that as soon as your users logon to your platform they’ve literally got the latest version. Not like those horrible old school days where you needed to download and install new updates which took forever and sometimes failed, nope!
Upselling On Your Platform
Marketing and sales gurus often say that selling to your customers is easier and quicker than to a new customer. Well, they’re right and this is possible too on platforms. It’s called upselling.
If you are to introduce new products or services, these can be sold to your existing customers that are already using your platform. For example, if you offered another tier of pricing that provided users with additional features that they would be happy to pay for.
There is no need to get them to re-sign up - they simply upgrade, quickly, easily and most importantly seamlessly as the technology handles this process. All the business logic and any payment processing that needs to happen.
Oh and by the way, this all happens in a matter of seconds - now that’s something to brag about!
Automation For The Win
Automation is a term that is thrown around a lot these days and we get to throw it around too as one of the major benefits of platforms. We mentioned it in the point above about upselling.
One of the best things about platforms is that they are able to run and process transactions and give users access to functionality without the need for human intervention. The beauty is that users who sign up don’t need to wait for an office to open and staff to process their application before they are able to start interacting with the platform.
So you can literally make money while you sleep.
No Hardware Jose
Platforms run off servers that are located in the cloud. No hardware maintenance is needed to be done by the platform owners as it’s all cloud based and hosting service providers handle this for you.
Attractive Payment Processing Solutions
Let’s not kid anyone, platforms are designed and developed to make money for the business.
By using technology and integrating with Payment Service Providers (also known as Payment Gateways), platforms can offer loads of payment options, such as recurring billing for businesses that offer a subscription-based model.
Once-off payments are also easily available where payments are made via credit or cheque cards. One-click payments are payments where a user has previously loaded their credit card details into the platform, and then makes payments lightning fast as the user only needs to perform one-click to pay (as the name suggests).
Other forms of payment can be included such as discounts, loyalty programs, scan and pay, etc. This gives the user many options and entices them to use the platform.
Digital Marketing Drives Online Sales
As we know, platforms are web-based, meaning that to get new customers we need to attract users and convert or entice them to pay for the service or product that the platform offers.
Targeted digital advertising using clever marketing campaigns can drive traffic to your platform, to generate sales. You are also not limited to your local market, meaning you can attract customers worldwide. Taking your business to the next level!
This type of marketing can run 24 hours a day and 365 days a year as your platform runs and serves new customers constantly.
Overall it may be said…
Platforms are changing the world and have been doing so for the last few decades. We’ve seen a sharp increase and the adoption of platforms and almost all of us have used some of these platforms, which make our lives better!
Companies looking to scale their business or launch a new business need to look at platforms as a business model that can bring them huge returns and success. Many venture capital companies (VCs) are solely investing in tech platforms because they understand that they can have a massive impact, can scale dramatically and provide them with huge Return on Investment (ROI).
Make no mistake, having a solid business idea and then launching it through a platform is no easy task but with the right web and mobile development partner this is possible.
So whether you’re a startup that is looking to launch a new product or service or an established business that is looking to pivot and go the tech platform route, this is a wise decision and the benefits of these platforms can result in your success!
The truth is that the platform is the major asset of the business and it does all the heavy lifting, often accompanied by strong back office and admin teams to run the operations behind the scenes.
Here at Elemental, we’ve built loads of innovative, successful and profitable platforms that continue to scale and evolve. We see ourselves as tech partners to our clients and we walk the journey with them by designing and developing web and mobile platforms that are integral to their businesses and to their success.
If you’re considering developing some sort of platform, we’re always keen to get involved and bring our expertise to the table and see how we can help you through this exciting journey!
