Digital B2B platforms: Towards a sustainable and digital economy “Made in Germany“

Platforms have become a dominant business model of the digital economy. According to the Association of the German Mechanical Engineering Industry, digital platforms can be defined as intermediaries using digital technology to connect two or more market participants via the platform and simplify or even enable their interaction. Today, seven out of the ten most valuable companies in the world use platforms as a core component of their product and service portfolios. So far, platforms have been predominantly active in the B2C sector. Meanwhile, German industry is also on its way to exploit the advantages of the platform economy.

Building on Germany's industrial strength: B2B platforms secure the future viability of German industry

German industry contributed over 27 per cent to gross domestic product in 2022. Building on this very strong industrial base, the platform landscape in Germany is also completely different to that in the USA or China. In recent years, German companies - from start-ups to small and medium-sized enterprises (SMEs) and multinationals - have increasingly invested in the development of their own platforms and are now including them in their product and service portfolios. These platforms are specifically geared towards the needs of companies.

The increasing relevance of digital platforms is also reflected in a study by the digital association Bitkom: almost seven out of ten companies consider one of the key opportunities of operating or using digital platforms to be safeguarding the future viability of their own company. Furthermore, in the years 2018 to 2022, B2B marketplaces in Germany recorded a growth rate of 42 per cent.

B2B platforms intertwine digitisation and sustainability in industry

In the fourth edition (in German only, see here for the 3rd edition in English) of the BDI overview of German digital B2B platforms, we present 110 selected examples of digital B2B platforms “Made in Germany“. Digital B2B platforms, are digital intermediaries that connect two or more commercial players via a digital solution. A rough distinction can be made between data-centric and transaction-centric approaches: Platforms with a data focus generate, collect and/or store machine-generated or user-generated information and in some cases offer an infrastructure for its exchange, analysis and evaluation. In this way, they enable the development of new data-based business models and services. In contrast, platforms with a transaction focus enable or simplify exchange and trade between companies in a uniform digital environment – e.g. for buying and selling or logistics.

The publication illustrates both the variety of fields where platforms can be used in the B2B sector and the advantages they provide: The analysis of machine and plant data on Industrial Internet of Things (IIoT) platforms can significantly increase the availability of elevators, production machines and trains by reducing unscheduled downtime. Moreover, purchasing and sales can be made more efficient by utilising marketplaces. Digital, platform-based purchasing can generate cost savings of 41 percent.

But there are also ecological advantages to be gained from the use of digital B2B platforms: For example, the use of logistics platforms can significantly reduce empty kilometres of trucks and better utilise the cargo space of freight aircraft. In addition, millions of paper documents can be saved annually. Fashion e-commerce platforms can also reduce overproduction of fashion and textiles - the same is possible for spare parts for machinery and equipment via industry-specific solutions.

B2B platforms do not tend to turn into monopolies

On behalf of the BDI, the ifo Institute has analysed the characteristics of B2B platforms. Key results of the study published in 2020 are:

• B2B platforms show a higher degree of specialisation than B2C platforms.
• At present, B2B platforms do not tend to become monopolies: Due to the high degree of specialisation and service orientation of B2B platforms, scalability is limited, and network effects are less pronounced than with classic consumer platforms.
• On B2B platforms, comparatively symmetrical business partners meet at eye level. Individual commercial users have a strong negotiating weight.

In short: Operators of B2B platforms operate in a highly competitive market environment. The factors outlined above favour the coexistence of several competing platforms.

Digital platforms are ubiquitous! – Do they need to be regulated?

There has been a heated public debate concerning the question of stronger regulation of platforms both on the national, European and international level. As a result, the European Union has enacted the Digital Markets Act, which imposes certain rules on platforms with dominating market power - so-called gatekeepers.

Against the backdrop of the regulatory debate on the Digital Services Act and Digital Markets Act, Iris Plöger, member of BDI's Executive Board, emphasises: "Purely industrial and B2B platforms must be explicitly excluded from the scope of platform regulation. Otherwise, the EU Commission threatens to nip the promising development of a number of B2B platforms in Europe in the bud. Unlike consumer platforms, B2B platforms do not make it difficult for new companies to enter the market.Excessive regulation and bans would be the wrong approach. A diverse industrial European platform ecosystem is needed to strengthen Europe's digital resilience in global competition with China and the USA. Digital B2B platforms are crucial for digital sovereignty and the realisation of Industry 4.0."