ACCA Strategic Professional · Strategic Business Leader · Strategic choices

Kovalo Foods, a traditional grocer, launches a digital marketplace letting independent farmers sell directly to consumers, with Kovalo earning a commission and providing delivery. Which feature best identifies this as a platform business model?

The defining feature is that it mediates between two separate user groups, farmers and consumers, and becomes more valuable as each group grows, which are network effects. Commission-based intermediation is characteristic of platform models rather than traditional retailing.

1. AIt sells only own-brand products at lower prices
2. BIt facilitates interactions between two distinct user groups and benefits from network effectsCorrect
3. CIt reduces cost through economies of scale in purchasing
4. DIt diversifies into an unrelated industry using retained profits