It's a strategic debate raging in many companies, large and small: do we build multiple (niche) platforms and therefore brands, or do we go for one strong central platform and parent brand?
I also see plenty of companies pivoting from one setup to the other… and sometimes back again. Usually very opportunity-driven and rarely strategically thought through.
A well-known example is the evolution of Coolblue: in the past, you had pdashop.be, laptopshop.be, gsmshop.be, all developed and run by the same company. Later, Coolblue abandoned this strategy and consolidated everything onto their central platform, coolblue.be: consolidation, reinforcement, and centralization.
But what arguments should you take into account when making this choice (or choices)? And why would you opt for one approach over the other?
Choosing a niche platform (e.g. pdashop.be)
If you judge that the way you need to offer your service or product, the way you need to speak to your target audience, and the way you need to drive conversion diverges so much from your regular business, you can opt to build and launch a niche platform.
If you want to test a new business branch, if you're not yet sure whether the new focus/activity will have a sustainable place in your strategy, you can opt for a niche approach. But is your strategy really sound then?
If the business model of your niche differs to such a degree (e.g. pricing, fulfillment, positioning), you can opt for a niche strategy.
If you plan to let the niche grow into a full-fledged activity that, over time, will stand alongside your core business, you're better off choosing a niche approach.
But…
My experience nevertheless is that the niche approach isn't suitable for every type of company.
Developing a niche platform is, de facto, developing a new platform, even if you reuse already-existing elements (e.g. CMS, CRM, etc.). And this generates additional costs. Not only for setup, but also for marketing, further development, and support (maintenance, bug fixing, updates, hosting, etc.). Can you carry these extra costs? Can you actually make them profitable?
Niche platforms make your digital ecosystem more complex. It's already hard enough to successfully launch one platform on the market — let alone to keep it on the market and grow it. Compare it to tennis balls: throw one tennis ball in the air and you'll catch it 100% of the time. Throw 3 tennis balls in the air and there's a good chance you'll miss one. Is your organization ready to handle this increased complexity adequately?
Niche platforms can also harm your regular business! You don't always notice it right away, but the algorithms of, say, Google as well as ChatGPT can get confused when they discover multiple 'manifestations' of the same company.
Strategic or operational deficit?
The question always has to be asked: are you going for a niche platform because there's a real opportunity, or are you choosing an additional platform because your current platform isn't meeting expectations? This can be compared a bit to fight or flight. Do you take the flight forward and solve a problem with a new platform, or do you take up the fight and optimize your current platform so that it does what's expected?
And once again: if you feel the need to build an additional platform or brand, doesn't that say something about your strategy?
The impact of A.I.
Today, Google and ChatGPT (and others) largely determine how visible your platform is to your target audience. More and more, the algorithms of these technologies look for confirmation, authenticity, and reliability. Because today, anyone can use A.I. to write content, build a website themselves, and therefore set up a platform. One of the most important signals algorithms look at is the reputation and renown or recognition of the brand under which a platform (and therefore content and products) sits.
And therein lies a challenge for a niche strategy: a new niche platform starts with considerably less 'brand power' than your parent brand. You'll have to put in a lot of effort to achieve the same kind of presence on your niche platform as your parent brand has.
Consolidation
With a niche platform, you fragment focus, resources, and support. If you want to do it properly, you have to do almost everything twice: hosting, maintenance, quality management, marketing, content, licenses, etc. And in the long run, especially for an SME, this quickly becomes unsustainable.
Not just because of the mounting costs, but because the 'span of control' quickly becomes too broad and uncontrollable for smaller organizations. You can compare it to a body that starts bleeding in multiple places: where do you begin cutting first to address the affliction?
My conclusion
I'm certainly not dismissing a niche strategy (and there are definitely successful cases), but try first to pass the strategic test of why it is absolutely necessary right now to launch a business activity standalone on the market. Is it really not possible to realize this under the existing brand umbrella and within the current platform architecture? Do the efforts and therefore costs of a niche approach really outweigh the expected return? Could the niche activity, with a bit of tweaking, actually strengthen your parent brand instead?
In any case: look before you leap. :)