Why you shouldn’t rely on one platform to build your business
If there’s one lesson to learn from the friction between startup Unlockd and behemoth Google, it’s that you shouldn’t rely on an external platform to build your business.
In case you missed it, tech startup Unlockd has pulled plans for an IPO after Google banned its advertising app from the Android marketplace.
Whatever the case may be, it demonstrates the danger of relying on one platform to build your business on.
Whether it’s Google, Amazon, Uber, or Facebook, being in just the one place is a risky game to play.
While these services may paint themselves as a completely agnostic platform for you to transact business, the fact remains that these are private or public companies with a profit motive behind them.
If it makes financial sense for them to change the terms of service on their platforms to the detriment of businesses using those platforms, then they probably will.
The YouTube drama
A whole generation of creative people are learning, very quickly, that relying on YouTube for revenue can be sketchy at best.
The way vloggers gained revenue from YouTube was to create videos that attracted an audience – then YouTube automatically placed ads within those videos, with a cut going to the creator of the video.
Everything was fine and dandy until concerns emerged over the past couple of years about ads being served against inappropriate content.
In response, YouTube conducted a wide-ranging ‘demonetisation’ project to remove ads from videos which were not deemed to be advertiser friendly – and plenty of creators were caught in the crossfire.
In the world of retail, plenty of hoopla was created when retail giant Amazon came to town recently.
While the reality hasn’t quite matched the hype (yet), Amazon’s marketplace is a place where smaller retailers can leverage the power of Amazon’s logistics network and advertising to peddle their wares.
It’s been a boon for several small businesses in the US, but former head of Amazon Services and Buy Box partner James Thomson had a bit of timely advice for small businesses when dealing with Amazon.
“Amazon is not your partner,” Thomson said.
“…it’s a provider of a sales channel platform, one where the Amazon company will also sell product in direct competition with third-party sellers.”
For many restaurants, delivery services such as UberEats have added a welcome channel to create more demand.
But as delivery services become part of the fabric of hospitality, many have questioned the margin and the actual level of service they provide.
If a restaurant is pumping out the same number of meals as they did before, with some now partitioned for delivery instead, then they’re eating into their overall margin.
But for restaurants wanting to boost demand, delivery services can be very useful in certain circumstances.
Relying on any one platform for an increasing chunk of your revenue is a recipe for disaster, but augmenting your existing revenue base can be useful.
Ideas for diversification
At the heart of concern around tech platforms being a double-edged sword for small businesses is the need to diversify.
It’s not always easy to build out a delivery network, new product line, or appear in new marketplaces – but it’s vital to make sure you’re not relying on a private service that can turn off the tap at any time.
Consider the following ideas for diversification:
- Use external tech platforms, but only for augmentation of your core business
- Use multiple platforms where possible
- Build out your distribution and sales channels to be as direct to consumer as possible. If you can cut out a third party, you can keep the margin for yourself
- Diversify your product offering. If you only sell one thing or one type of thing you ride or die based on the popularity of that thing. Instead, look to see if there are any opportunities to offer new products or services in your business so if one becomes unpopular, you can offer another one
- Use an external platform as a shopfront rather than the shop. Offer a limited sample of your wares on the external platform, using it to whet the appetite of your customers before pushing them to your owned channel