E-Business. Traditional Merchant vs. Two-Sided Platform Mode
The digital technology economy requires the development and involvement of intermediaries, information technologies, and different market platforms. The modern digital market covers the usage of two major intermediary types such as “two-sided platform” and “merchant.” The first type means direct selling to the buyers, while “merchant” means the reselling of the goods to the buyers.
These two types are quite different, and each of them has peculiar features making it unique and effective. One of the main differences between them is that merchants take control over their selling operations with consumers while two-sided platforms have no control and leave it to sellers, determining both sides with a particular marketplace. The next difference lies in taking control of merchants overpricing. It gives an opportunity to make more profits and increase the value. Further on, in the case of making product quality enhancements, the platform mode is more preferable for the sellers as it makes sellers’ investment incentives the residual claimants.
Positives of the platform mode for sellers and consumers are the following:
- It provides contact between the sellers and the clients;
- It satisfies consumers’ demand for a variety of products;
- It is important for sellers’ investment;
- It provides asymmetric information (preferable for sellers).
Thus, the analysis of two different economic modes showed that both of them have some positive and negative qualities and can be widely used in the modern digital economy. Both consumers and sellers can find important aspects in “two-sided platform” and “merchants.”