Why digital platforms are failing in emerging markets
“Only when the tide goes out do you discover who’s been swimming naked.” This vivid statement was made by Warren Buffet to describe businesses and investors that do well during boom times, but are quickly found out when economic conditions tighten.
Over the past few years we’ve seen a similar spectacle with numerous digital platform businesses from Amazon to Uber. They have achieved phenomenal success in their home markets (chiefly the U.S.), yet fail to impress when entering emerging growth markets. One of the driving reasons for this is a failure to build true brand propositions around their offers.
Characterized by being digital first, asset light and extremely user-friendly, the rise of digital platform businesses has been immense. In many cases, however, they have built their platforms while completely blind to building a brand. Still, they expect customers to find them, buy from them and love them. That’s just not how it works.
A rather popular example of this emanates from the UAE where Uber entered the market expecting to dominate. Instead it was outmaneuvred by the local player Careem, and in the end had to settle for buying a share of its rival to gain a meaningful foothold.
This has happened again and again across key growth markets, from Yandex in Russia, Flipkart and Ola in India, Jumia in Nigeria and Grab across South East Asia. All have beaten out, or at the very least held their own against, major platforms like Uber, Amazon and Deliveroo.
Coca-Cola has been imitated many times, but it’s the Coke brand that keeps it on top. Similarly, digital platforms should be using brand as a powerful weapon for digital dominance, using it to create differentiation, relevance and meaning.
Digital platform businesses are somewhat limited in being able to create unique business models. By their nature they’re easy to copy and, being asset light, there is an easy opportunity for local, copy-cat businesses to get into the game.
Yandex is an example of a player that has beaten the mighty Google, Amazon and Uber at their own game. It began life as a search engine and has since expanded into an ecommerce and ride-hailing service, as well as a plethora of other services. Its ability to succeed has been built on its clear understanding of local market needs and language, and an ability to make an emotional connection with its customers.
For Careem, it built a powerful connection with customers by tapping into local culture. For example, using the slang ‘Yalla’—meaning ‘let’s go’—to drive relevance.
Similarly Ola, the local ride hailing service In India, successfully took on Uber by setting up a digital platform, yet tapping into local needs like taking cash payments in a largely cash based society.
Landor’s brand take-outs:
There are some key lessons to be learned from this ongoing battle of the platforms:
1. Global isn’t always better
Traditionally, emerging market audiences have shown a preference for international products because they have strong brands that denote prestige and quality. Many platform brands have failed to meet these expectations, or to even build their brands at all.
2. Going global means having a global insight
Brands with global ambition must be clear that they are tapping into a universal truth in order to be successful across the planet, not merely serve up a functionally-driven, digital experience. Brand must be built on insight and understanding.
3. Digital doesn’t mean robotic
Once again global brands have focused on the digital experience without tapping into the fact that there are humans operating and using the service or product.