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Buyer / supplier power

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The dynamics between buyers and suppliers shift as a market evolves. In early phases, buyers often hold power due to limited supply and undefined standards. As commoditisation kicks in, suppliers gain power through economies of scale and switching costs.

You can strengthen your position by vertically integrating, building dependency (e.g. data gravity), or owning key distribution channels. The goal is always to reduce others’ options while increasing your own. For example, make yourself a chokepoint. Open ecosystems often work here as Trojan horses: they look neutral but tilt buyer/supplier power towards you.

Considere buyer/supplier power across all layers of your value chain, not just the visible ones.

  • Raising barriers to entry (Defensive): Often the downstream result of accumulating supplier power.
  • Defensive regulation (Defensive): Can solidify an advantaged power position.
  • Creating constraints (Deaccelerators): A power play that changes the rules of the market to your favour.
  • Tower and Moat (Ecosystem): Holding positional dominance often grants supplier leverage.
  • Standards game (Market): Can invert power dynamics by creating dependency via standardisation.