5 key things to look for before launching a platform cooperative marketplace

Op-Ed: As sharing economy companies come under fire for exploitative labor practices, data privacy issues, and more, there's another movement that's been brewing to counter some of the negative impacts of these platforms. Called "platform cooperatives," these digital enterprises are built on foundations used by traditional cooperatives. In the U.S., Green Taxi, Stocksy United [a sponsor of Shareable], and Up&Go, are examples of platform cooperatives that are offering new pathways to gig work that are sustainable and democratic. But this is not to say that there aren't any potential pitfalls for platform cooperatives. Setting up successful platform cooperatives requires much work and investment in resources, not to mention being adaptable to changes in the market. Here are five key considerations:

1. Market

Platforms are successful because of network effects. The more people join, the better a platform functions. Breaking the network effect is extremely difficult because you would have to convince everyone to switch to an alternative platform. For local businesses, however, in which supply and demand are physically close to one another, this is a slightly easier undertaking. Before creating your platform cooperative, think about if the service it would provide can be localized. It's still possible to make platform cooperatives work across borders, but it takes more time, effort, and resources to tap into bigger markets.

2. Technology

Platform cooperatives have three ways of dealing with technology:

  1. Developing their own technology

  2. Joining a cooperative that provides the technology and support they need

  3. Using existing technology in their industry

Whichever mode your platform cooperative chooses to go with depends on the resources and expertise you can allocate to it. Ideally, it would be beneficial if various platform cooperatives share tech investments with one another. What's important to note is that the technology you use in your platform cooperatives should also be built on cooperative principles to maximize the benefits. For example, in France, there are three
"meta" platform cooperatives in the local bike delivery sector — CoopCycle, Applicolis, and Blockfood — which facilitate IT, marketing, and sales. The idea is for every city to have a worker co-op with the couriers, and all the worker co-ops together are owners of the meta co-op. This would ensure their security and continuity in the future. By uniting, they can serve bigger clients and take advantage of collective purchasing.

3. Government

In order to implement a more democratic playing field, local, state, and national governments can do a lot to lower the threshold for entry for new platform cooperatives. For example, they can offer a "certificate of good conduct" database or add provide tax benefits to such platforms. On top of this, governments can attempt to break data monopolies of larger players. Keep an eye on the local and national laws and policies that might help support the creation your platform cooperative.

4. Support

The power of a platform falls or stands with the grace of its users. When the supply or demand group unites, it can be done in no time. Existing associations, sector organizations, or trade unions can play an important role in supporting or setting up platform cooperatives. Look for support your platform cooperative can obtain from partnering with such organizations — and also what your company can offer them in return. They can assist with finance, lobbying, and other support.

5. Quality

The fact that an enterprise is owned and managed by a local group of workers should not compromise the quality and convenience of the app, the service, or even the price levels. Before starting a platform cooperative, take a deep look and decide whether your platform cooperative would actually be able to offer an honest alternative to the larger, venture-backed platforms before starting it.

Although there are many opportunities for platform cooperatives, it has become clear that the model is harder to realize than initially indicated. But trickier doesn't mean impossible.

Header photo by Danielle MacInnes via Unsplash