Traditionally in Western markets, companies implementing ecosystems have never taken off on a large scale. In Asia however, ecosystems are extremely prevalent, domineeringly so. In economies where the majority of the population have only recently been acclimated to modern technology, it proves useful for newcomers that everything that they need is available on a singular platform. The end consumer is typically the demographic for these ecosystems , but it also applies heavily to businesses as well. It allows fledgeling businesses to address supply chain issues by providing efficient infrastructures whilst allowing the business to focus on its product or service offering.

Pioneers in this space are notably Tencent and Alibaba with their Chinese super-apps being the role model for a lot of contemporaries in other economies, as well as setting the ceiling on what is achievable using this system. Moreover, in emerging economies such as Vietnam, we see the emergence of corporations that regularly enter into different markets, resulting in frequent disruptions and hierarchy shakeups of industries. One of the key factors in allowing for these ecosystems to flourish is the prevalence of data, and the effective analysis of user data. Being able to influence user decision and transform a simple food order into an order for household appliance with the utmost convenience is only achievable with consumer spending behaviour data and effective algorithms. A consumer isn’t single-dimensional in their purchasing habits, and capturing these varying tendencies using a wide catalogue and intelligent suggestions is vital in ecosystem value creation.

The golden example for such an implementation would be Alibaba Group’s comprehensive capturing of the mainland Chinese market, both B2B and B2C, specifically in the fashion industry. Taobao itself is an app that offers local businesses and independent designers a platform to display their offerings to mass market, eliminating the troubles of effective supply chain management and the capital to develop digital infrastructure. Many businesses are then able to place focus on design and production quality, scaling to heights unattainable thanks to the cultural norm of shopping for clothes on Taobao. This mainly applies to local small to medium sized businesses, however, another successful part of the Alibaba Ecosystem is the equally far-reaching Tmall which deals in Chinese name-brands, global designer fashion labels like Rick Owens, and even fashion e-commerce giant Farfetch. Taobao engages with purchases that are typically made in shorter intervals, whereas Tmall delves into more periodical purchases. In addition, Taobao also provides access to suppliers and factories, similar to Aliexpress, individuals new to the industry would not have known about otherwise. This comprehensive fishnet over the fashion retail market has cemented Alibaba’s position as the triumphant platform for most clothing purchases, B2B and B2C.

Ecosystem success currently relies on a few key factors, constant technological innovation being one of them. In a sea of many similar ecosystem offerings, companies must remain competitive by virtue of relative advantages like more aggressive R&D into machine learning leading to a more effective turnover rate in the platform and higher user retention. A good strategy to increase these advantages and R&D function is to engage in more frequent mergers and acquisitions, more commonly present in Western markets. The technical capability of a business increases, expanding its expertise to make market entry into a new industry a lot more effective. Furthermore, it may also present further synergy with incumbent processes within the business. User retention can be increased as new updates and increased functionalities extend the likelihood of constant ecosystem engagement. Leveraging the human tendency towards routine behaviour, businesses should aim to make their ecosystems the first option in the mind of the consumer for several categories.

The case for more mergers and acquisitions also applies to market exit, should a business want to exit a market that isn’t profitable or desirable to them. The acquisition of that arm by a competitor is beneficial for both parties. The pre-existing infrastructure allows the acquisition process to be more smoothly integrated, and the company selling off the arm is able to have an increase in cash flow as well as avoid the troubles of employee layoffs. For the end consumer, the acquisition simplifies their decision-making process as there are fewer options, however reduced competitiveness may fluctuate prices.