Cannibalization or synergy? The effect of marketplace sales on a retailer's own channels
Erik Maier & Jaap Wieringa
Online retailers are increasingly using marketplaces as alternative sales channel to their website. While cross-channel sales elasticities have been established for many sales channel combinations (e.g., adding bricks to clicks), we lack insights on the effect of using two competing online channels (own website, marketplace). A marketplace might either cannibalize a retailer's existing sales (e.g., because channel capabilities are similar) or complement a retailer's offering (e.g., as new customer segments can be acquired). The present research investigates this phenomenon using time series of categorical sales data from one of the largest global marketplace sellers. Using vector autoregressive modelling, we find that marketplace sales generally increase visits to a retailer's website. Additionally, we find that this effect depends on a category's assortment characteristics: Inventory effects cause a cannibalistic marketplace effect in categories with smaller choice sets and more expensive products, while the relationship is complementary in categories with more choice and lower prices.
More information on Jun.-Prof. Dr. Erik Maier can be found at: https://www.hhl.de/faculty-research/jun-prof-dr-erik-maier/