Platform-Based Function Repertoire, Reputation, and Performance of E-Marketplace Sellers

Project: Research

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The e-marketplace is a platform for online transactions between sellers and buyers; eBay and Taobao arewell-known examples. The e-marketplace has become increasingly important in the era of e-commerce [1]. Forinstance, over 60% of online retailing in China in 2013 took place via the e-marketplace in a business worth aboutUSD180 billion. The growth of this market has been accompanied by increasingly intense competition amongsellers on transaction platforms. For example, by the end of 2013, more than 9 million sellers were competing onTaobao, China’s dominant e-marketplace. This represents an increase of nearly 50% from 2011. These sellers facethe major challenge of maximizing sales performance in an emerging, yet crowded e-marketplace.A common e-marketplace strategy for attracting and retaining customers is to use the online functions thatare embedded in or supported by the e-marketplace platform (hereafter termed platform-based functions). E-marketplaceplatform providers such as Taobao and eBay have pre-packaged a rich set of storefront functions towelcome visiting customers. These optional functions may be related to price (e.g., time-limited discounts),marketing (e.g., luxury store interface), or customer service (e.g., seven-day money-back guarantee), to name afew. These functions may appeal to customers, but each one is easily observed and rapidly replicated bycompetitors, hence they don’t offer sellers an enduring competitive edge. Thus, it is important that sellersunderstand how to use a portfolio of platform-based functions as a repertoire, in order to attract customer attentionand boost sales performance. The first objective of this study is to address the research question: how should e-marketplacesellers deploy platform-based functions as repertoire, so as to improve sales performance?A careful scrutiny of the e-commerce literature suggests that there is little prior research examining theperformance impacts of e-marketplace sellers’ use of platform-based functions as a repertoire; thus shedding nolight on the research question. Thus, we draw on competitive repertoire theory [2-4]— a theory that is novel to thee-commerce literature. Rooted in the strategy field, the theory explains firm performance as the consequence of arepertoire of competitive actions with specific structural characteristics, such as volume, complexity, andheterogeneity. Extending this theory, we conceptualize the portfolio of platform-based functions used by a selleras a competitive action repertoire, and we examine the performance impacts of its structural characteristics.The second object of this study is to account for the contingency factor that may influence the relationshipbetween competitive repertoire and performance when we extend the competitive repertoire theory to emarketplace.This is particularly pertinent because the competitive repertoire literature, as we elaborate later, isnot conclusive on direct performance impacts. Contextual factors do exist and the e-marketplace offers a uniquecontext for examining one such factor: firm reputation. In the e-marketplace, seller reputation manifests ascustomer rating; it is directly observable and highly instrumental for sellers operating in a crowded and dynamicmarket [5]. Prior research has demonstrated the direct performance impact of firm reputation [6-8]; however, westill know very little about how it influences the performance of competitive action repertoire. Thus, we examinethe role of firm reputation in changing the relationships between platform-based function repertoire and salesperformance in the e-marketplace. We ground our quest by integrating competitive repertoire theory withsignaling theory [9], which is well-suited to accounting for reputation [5].This study makes several important research contributions. First, by drawing on competition repertoiretheory and signaling theory, we contribute to the e-marketplace literature by understanding the performanceimpacts of the structural characteristics of the platform-based function repertoires used by sellers with differentcustomer ratings. Such theorizing has rarely been attempted in prior research. Second, this study contributes backto the competitive repertoire theory by identifying reputation as a boundary condition of the theory, and in sodoing, reconciling mixed findings regarding the structural characteristics of competitive repertoire and firmperformance in the competitive action literature [10-14]. Third, this study extends our understanding of the role ofreputation beyond the existing knowledge base about its direct impact on sales performance in both the ecommerce[5, 15-18] and strategic management fields [19-21], by revealing its moderating role between platformbasedfunction repertoire and seller performance, in the context of the e-marketplace. We reveal theaforementioned theoretical insights by obtaining and analyzing a unique panel dataset of Taobao sellers, includingfunction usage data and objective sales data that have not been tractable in prior research.


Project number9042413
Grant typeGRF
Effective start/end date1/01/173/12/20

    Research areas

  • E-marketplace , Performance , Competitive Action Repertoire , Reputation , Platform-based Functions