The rate of innovation is increasing each year and every so often comes a change that requires transformation of the way business is being done on a global level. This is where digital platforms come into play as powerful tools that are revolutionising how companies operate and engage with customers in today’s increasingly connected and technologically advanced society. In this article, we provide an overview of what digital platforms are, elaborate on the two types of platforms and actors involved, and present benefits as well as challenges that businesses encounter while using digital platforms.

Features of a digital platform

A digital platform is an online interface that allows different actors to connect and interact in a variety of ways, such as, to exchange products, services, or facilitate other transactions. It can be visualised as a virtual marketplace, connecting companies to their customers, suppliers, users, and other related actors. As Ritala (2023, p. 1) describes: “Digital platforms can connect communities and groups across different markets, using a mix of economic and prosocial incentives to help scale solutions for pressing global problems.” Connecting digitally, instead of in person, offers numerous benefits, especially when companies are attempting to reach a global audience.

Digital platforms can be divided into many categories based on different metrics. In this paper, we will shortly present a split between Business-to-Consumer (B2C) and Business-to-Business (B2B) oriented digital platforms.

Business-to-business digital platforms

In the B2C context, digital platforms have streamlined the interaction between businesses and their consumers, making it easier and more effective than ever before (Ritala & Jovanovic, 2023). Ease of use is one of the biggest levers when trying to increase the number of sales and enhance customer satisfaction. A good example is that of the retail giant Amazon. Offering an endless range of products with user reviews and utilising an algorithm that makes personalised shopping recommendations is how they became the world’s largest online retailer. Thus, using a digital platform, Amazon is selling its own products and services, while connecting sellers with consumers worldwide, offering ease of communication and facilitating transactions.

Business-to-business digital platforms

B2B interactions have also been changed for the better with the introduction of digital platforms. Communications and exchanges of goods between businesses have been streamlined and automated on a larger scale. Different digital technologies are also providing easier access to various external actors, which would be much more complicated, time-consuming, and costly, in offline settings (Ritala & Jovanovic, 2023). Digital platforms are attracting and benefiting both digital-only firms, as well as firms with tangible product offerings. Based on a Research and Markets report, the estimation is that the size of a global B2B platform market will rise to over 25 trillion USD, by 2028 (see more in Ritala & Jovanovic, 2023).

One of the largest players in the B2B arena is Alibaba, a global digital platform that offers an easy connection and enables interaction between suppliers and buyers from all parts of the world. Alibaba’s platform makes it possible for a company to source the product, negotiate with the manufacturer and manage logistics, all in one place. Platforms like Alibaba enable access to a vast number of potential partners for companies of all sizes.

Another good example of a B2B platform is Shopify, an e-commerce platform that offers an all-in-one package to businesses that focus on selling products online. Shopify offers website hosting, a shopping cart option, processing of payments, as well as inventory management under its platform, which makes it user-friendly and appealing to a wide audience.

Digital platform actors

In this section, we will focus on presenting digital platform actors, as each of them has a specific role and position in the digital platform ecosystem.

The orchestrator holds one of the main digital platform positions. It is also called a keystone actor or the hub (Iansiti & Levien, 2004). The orchestrator is usually considered as a key actor in maintaining the stability and balance of a platform and its ecosystem. It brings together all other actors and provides them with the goal and an ecosystem in which they can accomplish it while working together. Orchestrators need to possess the competence to design the ecosystem of the platform, as well as to influence and shape the platform’s goals and identity (Gulati et al., 2012).

Complementors represent another important contributor to the platform. These actors’ role is to provide products, services, or any other complementary offers that contribute to the value of the whole platform (see e.g., Jacobides et al., 2018; Shipilov & Gawer, 2020). Without them, there is no platform or ecosystem. In addition, the quality of their assets will influence the platform’s functionality (Thomas & Ritala, 2022).

A user or a group of users represents an actor towards whom the product or services are being directed. This makes them legitimate actors in the ecosystem. By using and benefiting from the platform offerings, users can demonstrate the value and benefits of the platform to non-participants. Moreover, large and high-profile users that adopt a platform offering, can act as a strong legitimating mechanism for the platform and its ecosystem (Thomas & Ritala, 2022).

External actors represent the final part of the platform. These include, among others, competitors, investors, media, non-governmental organisations, and regulators. All of them have their own specific roles, with an impactful influence on the platform and its ecosystem (Thomas & Ritala, 2022).

Challenges and Benefits of Digital Platforms

Digital platforms offer a large set of benefits for its actors, but at the same time, there are some unique obstacles that need to be discussed and taken care of (see e.g., Jacobides et al., 2018; Ritala, 2023; Thomas & Ritala, 2022).

Benefits:

• Global reach and ease of access
• Broad collaboration opportunities
• Co-creation of value between actors
• Improved customer experience
• Cost savings and optimised business processes

Challenges:

• Staying up-to-date with constantly changing digital environments
• Making sure to always comply with regulations
• Division of roles and responsibilities between platform actors
• Managing trust between different actors
• Creating a strong reputation of the platform to attract new actors

Conclusion

Digital platforms have changed the nature of business significantly. The biggest impact and change can be seen in the way companies communicate and interact with each other and their customers. Thus, learning how to harness the power of new technology and digital platforms will enable companies to deliver their products or services to customers and partners in a faster and more efficient way, which in the end, benefits all actors involved.

About the authors

Dr. Nikolina Koporcic earned her Ph.D. in Economics and Business Administration in 2017, at the Åbo Akademi University. Currently, she is a Principal Researcher at Laurea University of Applied Sciences and an Academy Research Fellow at the Academy of Finland. Nikolina also holds the title of a Docent (Adjunct Professor) at the University of Turku and acts as an Associate Editor of Business Ethics, the Environment & Responsibility Journal. Her research areas include the co-creation of value, open innovation, corporate branding, entrepreneurship, business relationships and networks. In particular, she is studying the importance of Interactive Network Branding for small firms in business markets. Nikolina has published 16 peer-reviewed academic articles, 3 books, 8 book chapters, 22 conference proceedings, and 7 Laurea Journal articles. orcid.org/0000-0001-5050-3819

Mato Koporcic is a practitioner with a wide range of experience gained working for different companies in Croatia, Germany, and Canada. His interests are in circular economy and sustainability from a B2B perspective. In collaboration with Nikolina, he is regularly writing articles for the B2B Insights series they introduced in Laurea Journal.

References

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