Digital platforms typically operate with an asset-light model, relying on the assets of others to deliver value. Yet, a growing number of platforms are adopting an asset-heavy strategy, investing in physical assets to control the customer experience and differentiate themselves. This shift often occurs in markets where quality control is crucial, such as the hospitality sector. For instance, OYO Rooms, an Indian platform, standardises properties to ensure consistent quality.
This strategy, however, is not without risks. It can lead to increased operational complexity and financial exposure. Moreover, it blurs the line between platforms and traditional businesses, potentially reducing the scalability and flexibility that make platforms attractive.
Despite these challenges, asset-heavy strategies can be successful if implemented correctly. They can enable platforms to offer unique value propositions and gain a competitive advantage. It is crucial, though, that these platforms carefully manage the balance between asset ownership and the traditional platform model, ensuring they retain the benefits of both.
In summary, the trend towards asset-heavy strategies among platforms is a significant development. It represents a new approach to platform strategy, with potential benefits and risks. As this trend continues, it will be interesting to see how it shapes the future of the platform economy.
Go to source article: https://platforms.substack.com/p/asset-heavy-strategies-in-the-platform