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Network Effect Powering INNOVO

INNOVO uses a Platform Business Model for B2B trade and it benefits from the Network Effect.

The Network Effect as it relates to UBER – another business using a platform business model – as explained by David Sachs, COO PayPal using a napkin sketch.1

David Sachs Napkin

More (Riders) Demand leads to More Drivers, which leads to More Geographic Coverage/Saturation which leads to both (1) Faster Pickups and (2) Less Driver Downtime. Less Driver Downtime leads to Lower Prices, which together with Faster Pickups completes the circle to More Demand.

This network effect seen in UBER is also present in INNOVO for B2B trade: More Buyers' requests (Demand) leads to More Suppliers, which leads to More Transactions (fulfilled Buyers' requests) which leads to both (1) More Value Shared (with Buyers) and (2) More Savings Created (for Suppliers). More Savings Created (for Suppliers) leads to More Value Available, which together with More Value Shared (with Buyers) completes the circle to More Demand.

INNOVO Sketch

1 HBR webinar – How Platform Businesses are Transforming Strategy by Marshall W. Van Alstyne

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New Bridge Street House

30-34 New Bridge Street

London, EC4V 6BJ

(near Blackfriars tube station)

 

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