مطالعات مدیریت کسب و کار هوشمند (Mar 2023)
A Business Model for Platform Businesses in Market Entry Stage in Iran’s Digital Platform Markets
Abstract
The popularity of the platform BM in recent years, but the failure of platforms in various industries shows the need for field studies about the elements of the platform BM. This research was first carried out with a multi-case study strategy conducted 23 semi-structured interviews with managers and collected 11 archival reports related to the issue using theoretical sampling from three platforms of Tapsi, Snap, and Carpino, and data were analyzed by thematic analysis. As a result, 8 themes as elements of the BM in entering platform markets were identified. After this stage, 12 questionnaires were collected from experts, using snowball sampling, and then a model of the relationships between these factors was presented by the ISM method. The findings show that the competitive conditions of the platforms as the first element of BM have a high influence on other elements of BM. The most effective element in entering the market was the value proposition to users, which needs to be optimized according to the competitive conditions.IntroductionLooking at the top businesses, it seems that 16 of the top 25 global companies are platforms and use the platform business model, including Facebook, Alibaba, Amazon, and Uber. The development of supporting technologies and the spread of mobile devices has paved the way for the development of platform businesses in recent decades (Qadri et al., 2019).In Iran, along with the development of platforms at the global level, the platform markets have been expanding in recent years. DigiKala, an Iranian Marketplace, reported 4.5 million daily visits through its website and application and 12 thousand daily new customer acquisitions in 2018 (Khalilnejad et al., 2019).But the story of startups in general and platforms, in particular, stands more than a story of success and includes the failure of many entrants to these markets. Blank and Dorf (2020) estimated the success rate of startups as one in twelve in their famous book, "Startup Owner's Manual " (Blank & Dorf, 2020). According to a survey conducted on the Ecosystem news site, researchers found that out of 225 failed startups, about 30% use the platform business model (Ecosystem news site).Research Question(s)The distinct organizational features of platforms create many complex challenges compared to traditional organizations (Kretschmer et al, 2020), so the main research questions are: what are the elements of the platform business model for entering and starting activities in platform markets and what are the relationships between them.Literature ReviewStoian and Tohanian (2021) define a platform as a technology that enables transactions between a collaborative network and its users in a way that contributors and users have mutual and interdependent cooperation within the framework of the platform ecosystem. In a multi-case study, Stoian and Tohanian (2021) investigated the model of platform businesses in technology-oriented industries in a competitive framework and affected by the Corona epidemic, which shows that platforms innovate in their business several times from the time of entry to maturity. And they emphasize that platforms can identify and use innovation opportunities in their business model by establishing strategic partnerships with technology-oriented companies that are close to their core business model (Stoian and Tohanian, 2021).Ardolino et al. (2020) presented a three-level framework for describing digital platforms, which includes business model dimensions, variables of business model dimensions, and the definition of these variables based on their items. The dimensions of the business model in this model are value proposition, platform side, platform revenue model, platform control, platform competition, and platform architecture (Ardolino et al., 2020).Tura et al. (2018) have also provided a framework for platform design using the research background, which includes four elements of platform architecture, value creation logic, platform governance, and platform competition (Tura et al., 2018).MethodologyThe methodology adopted in this research work is exploratory and the multiple case study is used as the main approach. This research has been done in two stages. In the first stage, using multiple case study strategy and through semi-structured interviews with executive and operational managers and related archival reports using theoretical sampling, we gathered from three case studies (Snapp, Tapsi, and Carpino) in which we conducted 23 interviews and used 11 archival reports and we used theme analysis to analyze data. For the narrative of the interview questionnaire, we presented it to three experts and applied their advice for reliability, we used retest and intra-subject methods that showed acceptable reliability.In the second stage, 12 questionnaires were collected from experts, using snowball sampling, and then a model of the relationships between these factors was presented by the ISM method. The narrative reliability of the questionnaire was presented it three experts and we applied their advice.ResultsThe findings of the current research are the result of cross-analysis of the main themes of three case studies in the form of comparing and confronting these themes with each other in three cases and identifying similarities and differences among them, which are presented in the form of categories in Table 1.Table 1: The results of the theme analysis of case studiesThemeConceptsTotal signsCompetitive conditionsMore platform competition on the supplier side25More competition during peak travel requests10User preference for platforms with more users5Stability in the platform competition market5Multi-homing6The limited number of actors due to the importance of scale in the Iranian market16Buyer value propositionTrip quality assurance104Affordable trips31Availability25Ease of use18Standard service delivery5Faster access to the traffic plan26Higher safety and security compared to taxis and inter-route passenger cars35Supplier value propositionEasy and quick access to passengers20 Receiving benefits and bonuses23 Utilizing surplus capacity6 The optionality of being on the platform3Network effect strategyProviding free trips in the form of passenger referral schemes31Referral rewards for drivers12Marketing channels strategyUtilizing above-the-line marketing methods for user base growth14Utilizing below-the-line marketing methods for user base growth25Focus on the cozy spots of the market33Earning modelEarning strategy by receiving commission from the supplier side57The strategy of how to be flexible in the costs of users52Customer loyalty strategyImplementation of modern customer loyalty models (two-sided)12Setting up a drivers' club and making games forDriver performance8Launching a customer club and making games for customers to use the platform more5The strategy of attracting partners and providing joint servicesCooperate with partners who provide support services(such as an app, payment system, etc.)5 Cooperation with partners to increase the scope of services3 Total620After identifying the elements of the platform business model in the internet taxi platform market by studying the active platforms in this market using interpretative structural modeling, relationships and the level of variables were extracted in the form of Figure 1 model.Figure 2: Relationships and The Level of Platform Business Model Variables ConclusionThe final results of this research show that, before entering the market, it is necessary to get a proper understanding of the competitive conditions of the platform market by platform owners, as a result of which the value proposition would be defined in harmony with the market conditions. This proposed value defined using efficient and effective marketing methods should be communicated to users and users will be attracted to the platform, while in parallel the network effect created by the platform will be governed to a more optimal state in terms of network effects. be established on the platform and prevent the formation of a network effect on the platform. The revenue model should also be defined in consideration of other elements of the business model in order to create a financial flow for the survival of the platform, and along with these issues, the platform designers need to create a loyalty strategy from the beginning and increase the cost of migration for users. Both sides of the platform should think of solutions so that the effect of multi-homing does not cause the loss of users and reduce their activity on the platform. Finally, defining the goals and implementing the strategy of attracting partners to improve the value proposition of the platform is something that platform owners should not neglect.
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