March 2021 agricultural “platforms” in a digital era

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LEARNING FROM FAILURE
While it’s still too early to define what works and what doesn’t in building a successful agricultural marketplace, the business 
literature offers lessons from other sectors on why Platforms typically fail to achieve and sustain scale. As the market evolves, 
these lessons can serve as valuable references.
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Some of the most relevant to agriculture include:
• Entering the market too late
, once strong network effects have been developed by one player. In this scenario, the presence 
of a dominant Platform may limit the ability of other players to emerge and succeed. 
• Prematurely dismissing competitors and their advantages
. In agriculture this may be particularly true for existing 
players, which tend to overestimate their capabilities (e.g., a brand, physical infrastructure, or funding) and underestimate 
the power of more agile teams, a superior customer experience, and an existing network of users.
• Expanding into new geographies or products/services
without understanding them well, and thereby repeatedly incur-
ring capital-intensive start-up costs. This might be particularly relevant for agricultural marketplaces, given the localized 
and physical nature of agricultural transactions. It can also explain why relatively fewer Platforms have been set up by 
non-agriculture players, as the specifics of the smallholder agriculture sector are often quite different from the adjacent 
industries from which these players come.
• Mispricing one side of the market and/or failing to develop trust
, which discourages users from joining the marketplace 
and constrains network effects. Lack of trust continues to be one of the main barriers for the adoption of digital solutions 
by smallholder farmers, particularly by certain segments (e.g., women, who prefer to transact with local farmers, agents, 
or businesses).