Dynamic Competition in Online Marketplaces

Optimizing Product Offerings to Enhance Competitive Power on Online Marketplaces

Meihua Zuo, Spyros Angelopoulos, Carol Xiaojuan Ou, Hongwei Liu, Zhouyang Liang

Whilst brands on online marketplaces constantly face the challenge of identifying the market structure and analyzing the competitive power, the topic of dynamic brand competition has received scant attention. To address this lacuna, we model the competitive power of brands on online marketplaces through consumers’ consideration sets. Grounded on network theory, we use a large empirical dataset from one of the biggest online marketplaces in China. We explore the relation between network position and competitive power of brands through the local and global centrality and closure, and depict the redistribution of market-share of related products after adjusting the length of the production line. We show that on the context of online marketplaces the span of structural holes of a brand negatively influences its competitive power, while betweenness and degree centrality demonstrate a positive impact. We further show that intra-brand relations have a significantly greater impact on competitive power compared to the inter-brands ones, while intra-brand relations represent the main reason for the fluctuation of competitive power over time. Our study contributes to the literature on dynamic brand competition on online marketplaces, while we also draw an agenda for future research on this topic.

Zuo, M., Angelopoulos, S., Ou, C.X., Liu, H., and Liang, Z, Optimizing Product Offerings to Enhance Competitive Power on Online Marketplaces (Revised February 2022). Available at SSRN: https://ssrn.com/abstract=3598889