Software and internet platforms
Multi-homing
When users or sellers use several competing platforms at the same time.
Last reviewedWhat 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.
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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.