There are several business models developed over the centuries, including the brick and mortar models such as manufacturing, distribution, and retailing. These models then developed into licensing, franchising, and subscription models.

With a buffet of business models available, there is one that stands out particularly in our time now; the platform business model.

A platform business model is a business that matches demand and supply between buyer and seller, the owner of the platform has no inventory of stocks. As such, there is no risk involved in this business model.

Allow me to elaborate more on this particular model with examples:

1. Grab 

Grab is a South-east Asian transport platform business that incorporates private and corporate taxis, e-booking and payment together into one. It allows users to indicate their pick up and drop-off location, with transparent fares generated through algorithm for peak and non-peak period.

The fare transparency became a hit for its users as they are able to decide if the fares are acceptable. Users will then decide if they want to book, seek alternatives, or wait for the peak surge to stop.

8 years after Grab was launched, it has achieved 125 million app downloads, 4million daily rides booked, and launched over 235 cities. And most recently, they received a huge USD7 Billion funding.

2. Amazon and Alibaba

These two brands need no further introduction. They are the pinnacle of e-commerce retailing and they have one thing in common, all the products sold on their website does not belong to them.

Both companies do not own any inventory, hence, no risk of unsold products. A platform that sells products that belongs to other companies have achieved valuation in Billions of dollars.

What are you waiting for?

3. AirBnB

AirBnb is the largest hotel retailer without owning any single property. The platform incorporates private homes for rent instead of the usual corporate hotels at a much cheaper price. The selling point of this is that travellers are able to live within a community in a city and experience their culture, it is something that retail hotels are unable to provide.

Instead of paying ridiculous prices for hotel stays during peak period, travellers are able to stay in local residences at a fraction of hotel prices.

AirBnB is now available all over the world and its valued in Billions of dollars.

4. Netflix

Netflix has been operating for decades. They were previously operating on VHS

movies rental before DVDs became a norm. However, with online streaming and downloads available, Netflix’s business started to decline.

The founders of Netflix decided to incorporate a subscription platform business model into their operation and the rest is history. The brand is now well known to many for their low subscription fees with tons of content to consume.

What’s better? Consumers don’t have to follow traditional program guides and wait impatiently for the next episode to air.

Although Netflix produced original content after the business was launched, they first started with content that belongs to other production companies. Again, they started with no inventory and no risk.

5. Facebook, Instagram, YouTube

The 3 top social media applications that everybody install in their phones!

These platforms allow users to upload their personal content onto the platform and share it publicly or privately. The platform generates revenues through paid advertisements with its diverse and huge reach for brands to leverage on.

The phenomenon has also created a new movement, the influencers. Influencers are non-professional models or advertisers that generates high engagement and followers. Brands are starting to utilise these influencers to create awareness and outreach for their products.

These platforms not only allow creative content production but has also created new streams of career paths for users who are creative and savvy with these applications.

What do they have in common? All of them are valued in Billions of dollars!

Lastly, Fullerton Markets. A company that I have founded and has led it into one of South-east Asia’s largest brokerage firm. It is an online platform that allows traders to trade on currencies, CFDs (indexes and indices), and commodities.

Similarly, Fullerton Markets is a platform business does not operate on any inventory but provides instruments for traders to trade.

Are you thinking of becoming an entrepreneur? Think platform. You have no risk and no need for inventory.

Are you already running a business? Incorporate portions of platform into your business for interactions and transactions.

To your success,

Mario

 

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