Platform-Based Model

About

A platform-based business model is a strategy that connects multiple groups, typically buyers and sellers, to facilitate transactions and create value. This model leverages network effects, where the value increases as more participants join. Platforms like Uber and Airbnb do not own the means of production but instead create connections between users. They scale efficiently with low marginal costs, allowing rapid growth and profitability. Key characteristics include being multi-sided, scalable, and often driven by transaction fees. Platforms provide infrastructure for interactions, reducing transaction costs and enabling innovation. Examples include online marketplaces like Amazon and eBay, as well as service platforms like Airbnb. The model benefits both parties by offering a convenient marketplace and eliminating the need for physical infrastructure, making it a prevalent strategy in the digital age.