New business trend ecosystems - Successful concept?

Ecosystems is the new buzzword in consulting. Tier one consultancy firms highlight their expertise on those systems on their website and sell approaches to their clients. But what is an ecosystem and is it something new?

Definition

A business ecosystem is the network of organizations — including suppliers, distributors, customers, competitors, government agencies, and so on — involved in the delivery of a specific product or service through both competition and cooperation. The idea is that each entity in the ecosystem affects and is affected by the others, creating a constantly evolving relationship in which each entity must be flexible and adaptable in order to survive, as in a biological ecosystem Source

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But

Can you really build an ecosystem? – The answer is no, the ecosystem exists on its own. When you think of any industry you have supply and demand. There was nothing created and companies started to buy certain things, which they get supplied by their supplier. The terminology just means the environment where companies and clients interact. There are several kinds of companies which get supplied with materials, services or even information in order to provide the product to other companies or end consumers. The system builds up on relationships, trust and interactions which therefore can be called ecosystem.

What is then the idea?

Building those ecosystems mean to make it is easier for stakeholders to exchange value within their system. One approach is that that one player creates a platform where several manufacturers can offer their services to other companies or clients. The bundled information leads to price transparency, a clear market overview and stronger competition which in the end lowers the transaction prices.

Pros + Cons

That means a big plus for consumers of those services and products because they receive it cheaper than before. The market is more visible and it is rather easy to compare different offerings.
For producer and service provider it provides the opportunity to easier compare themselves with other market player. But the biggest plus is that there is a marketing potential to sell their services. Companies can save huge amounts of marketing spending in order to connect with customer.
The downside of platformization can be found on the supply side of the service because more market transparency leads to a decrease in prices. Customer can easily access price information on a platform when there are several suppliers. Other supplier will enter a market when they see that a stand-alone player can ask for every price he wants to.

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Example Amazon

Customer are rather satisfied with Amazon services. Prices are “low” and the services around the offering are great. Do not nail me on this message, but you understand what I am saying. There is not really a downside for a customer on Amazon besides not physically experiencing the sales process.
For retailers Amazon is a thorn in the eye. Regular consumables won’t get bought in their stores anymore and people turned to online platforms to receive their goods. The situation is not good at the moment but it also offers also an opportunity for entrepreneurs and local stores. – Improving the shopping environment and adding services so that customer has an unique experience.

Conclusion

Not every business word is a brand-new thing. Ecosystems is a new buzzword which describes to compromise supply and demand on central platforms. This method forces the environment to change – if its good or bad, I don’t know – but we are not able to stop it anyway. I would be glad to hear your insights or thoughts on this topic.

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Cheers,
M