Merchant or Platform? The Business Model Selection Problem of an Online Intermediary

• Main Authors: Wei-Chih Chen, 陳韋志
• Other Authors: 孔令傑
• Format: Others
• Language: en_US
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/827acv

碩士 === 國立臺灣大學 === 資訊管理學研究所 === 105 === Online intermediary plays an important role in e-commerce nowadays. Traditionally, it serves as a merchant buying goods from manufacturers and reselling them to consumer. With the development of technology, more and more intermediaries choose to become platforms referring consumers to sellers. As there are more than one potential business models exist, it is critical for an intermediary to decide which model to adopt. To address this question, we establish a game-theoretic model with an intermediary and multiple manufacturers competing in selling heterogeneous products. The intermediary has the options of (1) playing the role of a merchant and buying goods from the manufacturers and (2) being a platform and allowing manufacturers to reach end consumers through it. The key difference between the two models is a merchant has the power to set the retail price, while a platform does not. Our analysis indicates that as the heterogeneity among products decreases, either at the production or the consumer side, the intermediary prefers the platform model to the merchant model. Nevertheless, if the products are highly distinct, the merchant model will be a better choice. Moreover, we further study the mixed model that combines both the merchant and platform models. Considering the first-mover advantage, the intermediary should adopt the platform model for the cost-effective manufacturer as his product owns greater commercial potential. On the other hand, we investigate the implementation of the platform model with revenue sharing. Restriction of high price hurts the intermediary''s profit when the product similarity goes up.