This year Zalando turns ten. In the decade since we first began selling shoes from a cramped basement office on Torstraße in Berlin, the retail landscape has continued to experience enormous change, with digital platforms comfortably entering our everyday understanding of retail and fashion. We catch up with VP Digital Foundation, Eric Bowman about what “platform” means to Zalando, and where it’s taking us.
What is the state of platform?
The first thing to understand about the platform environment is its dynamism. By their nature – comprised of many parts and players, driven by innovation – platforms adapt and grow to reflect any number of factors, from available technologies, to wider political forces, to customer needs, to cultural trends.
The platform environment encompasses the large and the small, the global and the local. Digital platforms are ecosystems where multiple players and parties interact, driving economies that are no longer built from zero-sum parts. Value is added for lots of different players, lifting everyone up as the tide rises. That is to say: the existence of winners does not guarantee the existence of losers. The state of platform is blue-skied and borderless.
How do “product” and “platform” intersect?
Very simply, “platform” is about taking multiple products and reshaping them to form a new product on which other products can build. It’s an aggregation mechanism that drives the kind of growth almost impossible to achieve through a single product. There are occasionally exceptional products that change the world, such as the iPhone. But even it, and the smartphone revolution that followed, is essentially due to the platform these devices enabled. An iPhone without apps would have been a novelty, not a game changer.
In the 21st century, the world’s biggest advances have essentially been the result of platform effects: never merely a single creation, but an interconnected marketplace of inventions and ideas. The economy is no longer a collection of one-to-many markets, but networks of many-to-many markets, and markets of markets.
What does “many-to-many” look like in practice?
Taking Zalando as an example, of course we have the online store, but we also make meaningful partnerships with fashion brands, whose products – together with those in our own lines – number some 300,000 items in the store. Our customers can dress themselves on any budget, and from head-to-toe, which we’ll expand on even further this year with the launch of our beauty category.
Compare this to the situation in the 70s and 80s, where if you bought a Wang computer, you got the Wang keyboard, monitor and all of their software. Companies rightly saw these vertical products as the foundation for high growth ventures, and a slew of businesses competed to own the space. But they all had to create their own versions of the same products. This limited innovation and led to too-thin investments repeated by many competitors.
In the 21st century, the world’s biggest advances have essentially been the result of platform effects: never merely a single creation.
When IBM introduced the PC platform on which the entire industry could build, innovation exploded, and we live in a different world as a result. The innovators saw opportunities to leverage the investments of others and capitalized on it. Those companies agile enough to adjust to this tectonic shift could focus on creating excellent component products that could combine in ways never dreamed of by their creators.
What constitutes a good relationship between platforms and their users?
Let’s look at YouTube. It began as a home video sharing site, but these days it’s basically the go-to platform for entertainment, news, music, fitness, and education, and it even created an entire new genre of celebrity who define their own media and who even outshine all but the biggest celebrities from traditional media in terms of earnings and reach. The founders of YouTube almost certainly did not fully anticipate this, but they listened to their user base, adapted, and made intelligent choices around emerging trends.
Be observant and agile, in other words.
Right – and proactively so. Adapt or be rendered irrelevant. When Einstein failed to embrace new advances in the late stages of his career, physicist J. Robert Oppenheimer criticized him saying, he “became a landmark, not a beacon.” The Oppenheimer quote is an excellent example of what differentiates being a player from trying to be a ruler. Rather than working to win at the expense of others, well-governed platforms help others grow together with them. We must, as an industry, abandon the idea that we can only play a zero-sum game. We can always be stronger together when we avoid grappling for control. Because a rising tide lifts all boats.