Abstract

Platforms create value by matching consumers with products offered by complementors, though consumer value may decline when products deviate from individual preferences. Increasingly, platform owners have entered the complementary market by directly selling products to consumers. Despite extant studies on platforms’ strategies and impacts on complementors, little is known about the value creation for consumers. Through an empirical investigation of 69,688 products in an e-commerce context, we find that consumers derive lower value from the products of platform owner’s entry, with the effect being more salient for products with a higher probability of mismatch with consumers. We also observe an increase in product sales right after platform owner’s entry, but a higher sales growth is associated with a greater decline in consumer value. Our study highlights that platform owner’s entry can be detrimental to consumer value, and contributes to the discussion on platform value appropriation that pursues higher sales at the expense of consumers. The findings based on product-consumer mismatch have important implications regarding platform entry strategies and raise concerns about the efficacy of platform information intermediation, particularly when the platform acts as a seller in its own marketplace.

DOI

10.17705/1jais.01032

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