Platform Coopetition and Strategies of Third-Party Complementors: Evidence from an E-Commerce Market

Abstract

Platform ecosystems are characterized by a coopetition tension between platform owners and complementors. In this study, we first document a large difference between the performance of first- and third-party complementors using data from JD.com, a leading e-commerce platform in China. Building on the coopetition framework, we propose and empirically evaluate two strategies third-party complementors can take to close the performance gap. The first is to collaborate with the platform owner by making platform-specific investments such as using the platform’s logistics services, which will increase the common benefits on the platform and show their commitment. The second is to affiliate with high-end brands, which have both the incentive and capability to maintain a balance between the digital platform and agents in their established distribution network. We further examine how the behavior of third-party complementors changes as the coopetition landscape between first- and third-party sellers alters. We hypothesize and find evidence that third-party complementors offer greater price discounts when competing with first-party complementors in the same product space, but are less likely to do so under greater threat from the platform. Contributions to the platform and coopetition literature are discussed.