Digitalization in retailing: multi-sided platforms as drivers of industry transformation
ISSN: 1746-5265
Article publication date: 24 November 2017
Issue publication date: 24 April 2018
Abstract
Purpose
Digitalization has transformed several industries during the past two decades. In this paper the authors focus on the retail sector, where new business models help retailers and suppliers meet the ever changing and demanding needs of retail shoppers. One example of this business model innovation is multi-sided digital platforms, which have become popular as they connect consumers with suppliers from around the world with a large ecosystem to support the retail platform. The purpose of this paper is to provide an overview of how multi-sided digital platforms are transforming the retail exchange logic and assess the implications and impact of these platform-based businesses on the retail sector, especially for business managers and consumers.
Design/methodology/approach
In this paper, the authors employ literature review, conceptual analysis and qualitative case study methodology. The authors provide an overview of how the platform economy is affecting the retail sector through the illustration of four digital multi-sided platforms: Alibaba Group, Amazon.com, eBay and Rakuten Group, and what differentiates them from incumbent business models in retailing.
Findings
The findings suggest that platforms transform the transaction logic of retailing as they simply intermediate transactions between buyers and suppliers rather than handling the entire supply and logistics chain themselves. The authors highlight the role of consumer understanding and Big Data as one example of how multi-sided digital platforms differentiate from their non-platform competitors.
Practical implications
The paper highlights how incumbent retailers can compete against new forms of business, such as digital platforms, and the authors demonstrate some of the managerial capabilities needed to remain relevant amidst this new digital competition.
Originality/value
Very little empirical studies in marketing and retail literature have focused on multi-sided digital platforms and their business models. The present study fills this gap with an overview of how multi-sided digital platforms transform the retail sector.
Keywords
Acknowledgements
The data for this study were collected as part of the GlobaMa research project funded by the Finnish Funding Agency for Technology and Innovation (Tekes), Aalto University and partner companies Kesko Oyj, Unilever, Posti Oyj and Solteq. This research project was conducted at the Aalto University School of Business, Department of Marketing, between January 2016 and August 2018. This paper forms part of a special section “The retail sector: technology, competitiveness, and consumer insights”, guest edited by Brent McKenzie, Steve Burt and Igor Dukeov.
Citation
Hänninen, M., Smedlund, A. and Mitronen, L. (2018), "Digitalization in retailing: multi-sided platforms as drivers of industry transformation", Baltic Journal of Management, Vol. 13 No. 2, pp. 152-168. https://doi.org/10.1108/BJM-04-2017-0109
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited