Online Advertising, Retailer Platform Openness, and Long Tail Sellers
It becomes increasingly popular that some large online retailers such as Amazon open their platforms to allow third-party retail competitors to sell on their own platforms. We develop an analytical model to examine this retailer marketplace model and its business impact. We assume that a leading retailer has both valuation advantage that may come from its reputation and information advantage that may come from its brand awareness. We find that the availability of relatively low-cost advertising through social media or search engine can effectively reduce the leading retailer's information advantage, and thus be an important driving force for its strategic decision to open its platform. Not only does the advertising option directly make small sellers more visible to consumers, but also incentivizes the online retailer to open its platform and dramatically increases small sellers' exposure, indirectly contributing to an even more prominent long tail phenomenon in e-commerce.
Online Platform, Platform Openness, Online Advertising, Long Tail
Databases and Information Systems
Information Systems and Management
2015 INFORMS Conference on Information Systems and Technology
City or Country
CHEN, Jianqing and GUO, Zhiling.
Online Advertising, Retailer Platform Openness, and Long Tail Sellers. (2015). 2015 INFORMS Conference on Information Systems and Technology. Research Collection School Of Information Systems.
Available at: http://ink.library.smu.edu.sg/sis_research/2926