Fighting fire with fire: the use of an auxiliary platform to address the inherent weaknesses of a platform-based business

What is it about?

The success of various sharing economy platforms has made it attractive for many firms to adopt this business model. While adopting a sharing economy business model may generate numerous benefits, the inherent weaknesses of these models, such as unstandardized service quality, the burden of maintenance on resource owners, as well as the threat of multi-homing, have become apparent over time. Previous prescriptions for addressing these weaknesses, however, tended to solve the problem on only one side of the platform at the expense of another. Seeking an alternative solution, we conducted a case study of XBed, a successful accommodation-sharing platform in China. Based on our study, we constructed a preliminary model that illustrates how the aforementioned weaknesses can be overcome without compromising other stakeholders through the use of an auxiliary platform. Our findings also shed light on the advantages, deployment and nature of auxiliary platforms.

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