A (no BS) perspective on PLATFORMS/ECOSYSTEMS in the Retail tech market

Apple (with iOS) and Google (with Android) have been both successful in the smartphone market because they invested huge resources fostering a robust platform/ecosystem of partners and developers built on symbiotic relationships.

It’s this robust platform/ecosystem that is so attractive to Consumers, because it fuels the following virtuous-cycle:

1) more partners/developers create more functionalities that make the platform/ecosystem more attractive to final-users

2) more final-users attract more partners/developers

3) go to 1)

 

Starting is difficult

To kick-start, maintain and hopefully accelerate this virtuous-cycle, the platform/ecosystem builder must work very hard so that the APIs exposed by the platform make life easier for partners/developers. The platform APIs make all the difference: are they valuable, effective, efficient, performing, easy to learn and to employ? Do they allow partners/developers to quickly build valuable, elegant, etc., etc. applications – in less time – that can be easily monetized?

Better platform APIs are also a significant competing factor: the better the APIs, the harder is for partners/developers to move their applications to some other rival platform.

Moreover, partners/developers do their best to market their applications, but at the same time they indirectly market the platform their applications are built on –  and that’s a (virtually free) big push for the platform.

By the way, does the platform offer application-monetizing services to partners/developers? (an Application-store, for instance).

Other valuable services? (for example, “application vetting”, to guarantee that apps work reliably and are fully compliant with the platform/ecosystem rules).

Recap: you will be successful if you create a platform/ecosystem that allows all of its members to thrive economically, that is flexible and adaptable to change (future-proof), that is easy to work with (be productive in a couple of weeks) and that is selective (to eliminate bad apples).

 

Is this paradigm suitable for Retail solutions too?

The answer is: 100% yes!

Specifically, in Retail personalization/customization is critical: having APIs that allow to add and modify functionalities swiftly (less time means more money, less investment and a quicker time-to-market) makes a really big difference.

Incumbent, traditional, not-platform-based Retail software companies may struggle to respond to a product platform/ecosystem; the incumbent’s standardized application may not be able to compete with the more innovative and more targeted solutions being quickly built by the platform community of partners/developers.

 

How does the platform builder make money?

Building, maintaining and evolving a platform is not cheap, working with partners/developers is time consuming, keeping good applications in and bad applications out (“vetting applications”) is difficult.

All the above (and many other collateral activities) can be very expensive; fortunately, there are several options platforms builders are able to make money:

  • sell services, such as training, technical support, certification or consulting
  • sell optional extensions, modules, plug-ins or add-ons (e.g. administration tools, security features, back-up services, etc.) or even vertical market products based on the platform
  • sell Developers the SDK (Software Development Kit), the subscription to the official platform community
  • put in place a revenue-sharing programme with Developers, especially if the platform includes an Application-store

Andy Cavallini  –  http://retaildom.com

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