Management of competition among sellers and its performance implications for business-to-business electronic platforms : Dynamic analysis by VAR model

Purpose – This paper aimed to analyze the short- and long-term effects of the breadth and depth ofseller competition on the performance of platform companies, and investigated the underlyingmechanisms of customers’ two-sided marketing tactics on the structure of the competition betweensellers.Design/methodology/approach – A longitudinal research design was adopted by gathering dailymarket objective data on e-commerce platforms for 250 days, and the dynamic evolution effects wasanalyzed by using a vector autoregression model which compared the differences between the shortandlong-term effectiveness of different customer relationship management (CRM) strategies.Findings – The breadth of competition amongst sellers improves the performance of platforms, whilstthe depth of competition among sellers has a positive effect on the short-term performance. However, ithas a negative effect on the long-term performance of their platforms. In both the short and long terms,advertising tactics that attract new buyers contribute more to increases in the breadth of seller competition than those that attract existing buyers do. Subsidies for new sellers decrease the depth ofseller competition more than those for old sellers.Research limitations/implications – Further research could be undertaken to investigate thevalidity of marketing tactics other than advertising tactics, and thus expand the time windows of theavailable data.Practical implications – It is imperative for platform companies to implement effective control overseller competition to balance the interests of the sellers and of themselves.Originality/value – The dyadic paradigm of CRM research has been extended by considering theperspective of the electronic platform company, how the tactics of exploitation and exploration oftwo-sided customers impact upon seller competitive structures have been delved into and why newcustomers have a unique value to platform companies has been identified.