Asset Ownership, Business Format and Market Structure of Online Retail Market

Abstract

The domestic online retail market consists of three different business models: independent retailer, merchant and marketplace. When we look at the growth process of these business models, some interesting characteristics are found; first, the average sales amount of the independent model has been decreasing steadily for several years, and second, the market share of the marketplace model show a steady and significant growth. This paper investigaties these characteristics with a formal theoretical model. Based on the asset ownership and business format, the model explicitly considers the retail's decision on the online retail business model. By introducing several parameters to affect the retailers' decision, we found that the model's prediction is consistent with the characteristics aforementioned.