India, along with China & US to dominate digital platform economy by 2020

By : |October 4, 2016 0

According to the latest report by Accenture, India, China and the US are on the pace to dominate the digital platform economy by 2020, mainly due to the increased online population and the improvement in supportive public policies.

Accenture published a report in collaboration with G20 Young Entrepreneurs’ Alliance. Titled ‘Five Ways to Win with Digital Platforms’, the report assesses the ability of 16 G20 economies to support the flourishing of digital platforms.

The research reveals that despite the potential for small and traditional businesses to become successful digital platform companies, as few as 10 percent of new start-ups focused on digital platform business models will become profitable independent entities in the coming years.

Accenture’s report shows that the UK, Germany, China, India, and the US are at the top of the Accenture Platform Readiness Index, but other emerging markets and European economies are predicted to lag behind, lacking sufficient business and socio-economic enabling conditions.

CIOL India, China and the US will dominate digital platform economy by 2020

Paul Daugherty, chief technology officer, Accenture said, “When you think of digital platforms, think of China and India as much as the US These economies are using the power of platforms to create large scale markets very rapidly. Many European economies are in danger of missing out in the platform economy. Multi-stakeholder cooperation is required to address the fragmented digital markets and to support the greater levels of digital enterprise and consumption that successful platform businesses need.”

The analysis shows $20bn was invested in digital platforms between 2010 and 2015 in 1,053 publicly announced deals. More than half of this investment took place between 2014 and 2015. It also shows that rankings on the Platform Readiness Index strongly correlate to the levels of digital platform activity and investment in G20 countries.

CIOL India, China and the US will dominate digital platform economy by 2020

“Digital platforms are not just the preserve of digital born companies, like Airbnb and Alibaba, but are now becoming a default business model in most industry sectors, both B2B and B2C,” said Francis Hintermann, managing director, Accenture Research. “To enjoy efficiencies and high rates of growth, companies will need to transform everything from the way they co-create goods and services with third parties, tailor their offerings to customers, and price them dynamically. Crucially, they will only sustain critical mass by working with digital partners who can deliver the range of functional services that complete the customer experience.”

As the countries will grow in digital economy, the gulf between countries will also increase. To help bridge this gap, the report outlines five critical steps businesses and governments can take to succeed.

1. Prioritize data protection standards and rules: Drive the harmonization of data privacy and data security legislation. Smooth cross-border data transfers.

2. Design regulations with digital platforms in mind: Experiment with regulations alongside new technologies and business models.

3. Encourage cross-border electronic trade: Harmonize taxes and standards, consumer protection, contract laws and logistics infrastructure.

4. Invest in digital infrastructure: For example, the E.U.’s Payment Services Directive (PSD2) will empower start-ups to expand customer reach and encourage innovative business models.

5. Think small, act big: Educate SMEs on alternative funding, such as crowdfunding and peer-to-peer lending; and on data privacy and consumer protection.

Accenture report reveals that only 15 percent of Fortune 100 companies have developed digital platform business models to date Successful digital platforms will proliferate as small businesses and traditional industries follow the lead set by digital-born platform companies.

Accenture identifies five factors critical to sustaining critical mass in digital platforms, which use new technologies to create large scale markets of customers and service providers:

1. Proposition: Create differentiated platform services that extend beyond the point of transaction, and that support both customers on the demand side and service providers on the supply side.

2. Personalization: Target customers through tailored experiences across all channels, using customer data to anticipate needs and offer bespoke experiences.

3. Price: Apply new pricing models, such as pay-as-you-go, ‘freemiums’, and subscription pricing to respond to peak demand.

4. Protection: Embed trust at the heart of the platform, using both prevention and compensation techniques to attract customers and differentiate the platform.

5. Partners: Scale the platform rapidly by identifying digital partners – such as app developers and payment service providers – who can enrich the platform experience and fulfill customer needs.

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