Software and internet platforms
Multi-homing
When users or sellers use several competing platforms at the same time.
Facts checked against sources onWhat does Multi-homing mean?
Multi-homing means using more than one rival platform for the same need, such as a driver working for two ride-hailing apps, a restaurant listed on two delivery apps, or a shopper comparing two marketplaces. When multi-homing is easy and cheap, network effects protect a platform less, because users can switch in seconds, so platforms compete with incentives and price and struggle to raise their take rate. Example: if 70 percent of restaurants on app A are also on app B, app A cannot raise its commission much without restaurants pushing orders to B. Exclusive deals, loyalty programs and bundling are ways platforms try to reduce it.
Where does it come up in case interview prep?
- Network effects: when each user makes it betterLesson in Why some businesses win: competitive advantage and the economics of strategy
- How internet platforms, marketplaces, and digital ads workLesson in Internet platforms, marketplaces, and digital advertising
- Internet platforms: players, super-apps, trends, regulation, and how to crack the casesLesson in Internet platforms, marketplaces, and digital advertising
Related terms
- Network effectsA product becomes more valuable as more people use it.
- Switching costsThe cost or effort for a customer to change supplier.
- Take rateThe share of each transaction's value that a platform keeps as revenue.
- Delivery aggregatorAn app that lists many restaurants and delivers their food for a commission.
- Annual recurring revenue (ARR)The yearly value of all active subscription contracts at a point in time.
- Net revenue retention (NRR)How much recurring revenue a group of existing customers brings in a year later.
- CAC payback periodHow many months of gross profit it takes to earn back the cost of winning a customer.
- Rule of 40A software company's growth rate plus its profit margin should add up to at least 40 percent.
Learn it in context
See Multi-homing at work in a lesson from Why some businesses win: competitive advantage and the economics of strategy, with checks as you go.
Spotted something wrong or out of date? Report a mistake. We check every report and correct the page.