Eye on innovation - introducing the platform economy and how it can help boost productivity

So, you need a product or a service, what do you do? You go to a company who provides what you want, and you purchase it from them, online or offline. The company makes money from you – and you use what you’ve bought. Then the process begins again. That’s the way the world works, right?

It’s certainly the way that many of us are used to participating in what is often described as the ‘traditional economy’. But thanks to online platforms and apps, people can now connect and transact with other people, and not just businesses.

This ‘platform economy’ is growing rapidly: according to a recent report by Accenture, platform companies represent $2.6 trillion in market capitalisation worldwide¹.

But what exactly is an online platform? One way to imagine it is like a huge virtual stage, which people can step onto or off – and when on it, can interact with others in a range of different ways.

This imaginary stage has many different areas. In the social media area, platforms allow you to interact socially. The gaming part of the stage lets people play with one another, while search platforms let users look for listed providers, a bit like a directory. Then there are video and music platforms, map platforms, news platforms… the list goes on.

At the ‘business end’ of the platform economy are marketplace platforms: they allow you to exchange goods or services with other people, whether that’s by buying or selling (Etsy or Shpock) – or by sharing (anything which could be described as ‘the Airbnb of…’). Exchanging services as opposed to goods is often described as the ‘gig economy’ (think TaskRabbit or Lyft) and exchanging money in the form of investment or loans is known as ‘peer to peer’ or ‘P2P’ finance (Zopa or Funding Circle).

But what are the benefits of these ‘peer to peer’ transactions? Spoiler alert: there are quite a few.

Firstly, they enable the re-use of existing assets, or the increased use of under-utilised assets. In other words, stuff gets used more so we don’t need to make more stuff. Call it the circular economy, or just plain sensible, the fact is, the world has too much stuff in it, and when people transact with one another rather than a business, it slows down the production of more… you guessed it… stuff.

When it comes to services, marketplaces allow people to use themselves as an asset more readily. For example, if you’re signed up to a ‘gig economy’ platform, you could share skills for free, in exchange for other people’s or to make money. The choice – and freedom – is yours.

Which leads us to another benefit: empowerment. Marketplace platforms allow us to take our destiny into our own hands. Teach Italian five hours a week, because that’s what works for you. Clear out your wardrobe and make money by selling what’s in there. Rent out your campervan instead of it sitting in your driveway. No campervan? Rent out your driveway: it’s up to you.

In the platform economy, both providers and users are empowered. As a user, it might be your neighbour you’re transacting with – and not a big company with overheads – so experiences and goods are cheaper and more accessible, democratising what previously may have been out of reach.

Borrow a Tesla car which you couldn’t afford to buy. Purchase a designer dress on a vintage marketplace that you never could have owned before. Holiday on a rented yacht in the Med. In this brave new world, everyone has a chance to be involved.

But the power of the platform economy is even more exciting than all this. Platforms connect users and providers, both locally and globally, offline and online – so that communities, often the victims of economic growth, have the chance to thrive again. And on a much larger scale.

We become networked: connected to our peers, looking up, down, sideways and around us for what we want – not just in one direction, awaiting a one-size-fits-all delivery from a big business.

The platform economy might be new, but communities are as old as we are. By empowering them again, we can repair their decline. We just need to get behind this new business model – and see its game-changing potential.

This is how GangHut came about. When a group of marketplace obsessives got together, and realised the core skill they had in common was marketing. So it made sense to create an agency with this specialism.

We can help this new economy thrive, by offering a specialised kind of marketing that understands the way that two-sided marketplaces, platform technology and blockchain work. We want to be part of the platform revolution, here in Scotland, across the UK – and around the world.

Find out more from Eleanor and the GangHut team at www.ganghutmedia.com