Digital marketplaces have revolutionised the retail sector. Today, very few retailers are pure bricks and mortar and the commercial benefits of this modern and agile approach to retailing have been considerable – from expanded customer bases and the ability to personalise customer experiences to partnerships with other brands to deliver a broader, more seamless retail experience regardless of where you might be located.
Other sectors too have been propelled to new levels of commercial agility thanks to embracing the digital world and online marketplaces. Consider the food and hospitality sector shifts in the way they now service their customers; and the travel and tourism sectors, where people can find and book not just holidays, but have a full digital experience as they prepare for their trip.
In my opinion, communications services providers (CSPs) are in a prime position to really capitalise on the new era of commercial agility – and the key is realising the full potential of digital marketplaces. To do so, CSPs can heavily leverage their commanding position of owning customer data along with a renewed and strategic move to partner and embrace more of an ecosystem and platform-based mindset.
Digital Services Portals vs B2B2X Digital Marketplaces
Many CSPs have pursued marketplaces, often owned digital portals. However, focusing on this more single-sided portal-based approach may limit their ability to drive and scale new business lines. And with the rise of hyperscalers and new competitors playing in the traditional territory of CSPs, exploring newer business models are imperative.
Take platform-based models. These B2B2X models enable value to be created through the interactions between different user groups – from consumers to software developers to advertisers – who exchange value in the form of new capabilities and experiences in return for not just the traditional currency of money, but various currencies including data and recommendations. This fuels a far richer and more continued innovation and with that incredibly diverse consumer and business solutions.
Weighing Up Your Entry Options: Buy or Build?
As CSPs consider the way forward, they can take confidence that they start from a unique and elevated position over many trying to also play in this space. As an established service provider, a CSP brings to any table a deep knowledge and rich data relating to their customer base, along with sales and service capabilities, positive brand recognition and experience in large-scale infrastructure development and deployment.
Those CSPs who prefer an initial lower-risk option with the benefits of an accelerated time-to-revenue should consider initially becoming a solution co-designer and enabler of solutions within a managed digital marketplace. In this capacity, a CSP takes on the role of fostering an ecosystem of innovation partners to help design and deliver new customer solutions using their network resources and functionalities. The CSP pays a fee or share of the solution revenue to the digital marketplace operator, who owns and operates the platform-based model – this may be a third-party System Integrator including the likes of Cognizant.
As a CSP who might be seeking greater potential returns from a deeper investment, there is the option to develop an owned digital marketplace. For those open to this option, it demands a fundamental change in mindset, culture and organisation as they develop the infrastructure and related technical capabilities for this platform-based business. With this, the CSP takes on the day-to-day operational responsibility and acts as a solution co-designer, owner and provider.
The Benefits of Unlocking Unrealised Potential
Even CSPs who chose to initially foray into digital marketplaces as co-designers and enablers, the benefits are rich and many, ultimately with your customers at your core. At the most fundamental level, the CSP addresses new and expanded needs of specific customer segments through conceiving and helping easily deliver innovative experiential products and services. There is potential to enter new markets for vertical-specific digital solutions, such as asset monitoring for the logistics sector or fleet tracking for the myriads of sub-sectors within the transport sector.
CSPs can monetise third party over-the-top content, devices and applications and generate incremental service revenue from network resources used to enable the new sets of digital products and services. And then there are all the benefits from providing added-value to customers through the B2B2X platform-based model which helps drive customer satisfaction, retention, and ongoing business.
For those who opt to develop their own marketplace, they additionally have the potential for increased margins from the marketplace’s services and products, along with more control over your customer and partner experience, and greater freedom to evolve the marketplace infrastructure and customer experience.
If I were a CSP, I would be more than dipping my toes into this platform-based future. Much of the investment that many CSPs have made, with Catalog-driven platform architectures means that the investment in time and infrastructure is not overwhelming. Rather it is a shift in mindset and done correctly will unlock unprecedented levels of future commercial agility – something all businesses today are vying for.
Scott Weir
President Communications & Media, Hansen
(This article was first published in The Fast Mode, on November 20th, 2024. It can be accessed here)
