Abstract
AbstractIn the service sector, digital platforms now enable service providers to reach customers through an online marketplace and use the value‐adding complementary services offered. However, despite the widespread prevalence of digital platforms, there has been little research on the market reach and financial performance captured by service providers. We explored these service provider‐specific outcomes of digital platforms by studying a digital platform in the beauty industry. Our results show that digital platforms present a troubling paradox for service providers participating in a platform‐based online marketplace: despite increases in market reach, in terms of a higher rate of new customer acquisition, those service providers participating in the marketplace have lower sales than others. However, the ‘dark side’ of this paradox is compensated by higher sales for service providers using more of the complementary services offered by the platform. Hence, although digital platforms may open new markets and add value, service providers should be wary of their paradoxical consequences. With these findings, we contribute new theoretical and managerial insight about the service provider‐specific outcomes of digital platforms and add to the ongoing debate about firm strategies in the digital age concerning the platform economy.
Highlights
The nature of work and employment is fundamentally changing in the digital age (Stein et al, 2019)
Marketplace participator status correlates negatively with self-r eported sales recorded to the platform indicating that each service provider did not manually record all of their sales from their other sales channels to the point of sale (POS) system, and were using some other POS system in addition to the one offered by the platform as a complementary service
This study investigated the market reach and financial performance of service providers participating in a platform-b ased online marketplace in the beauty industry
Summary
The nature of work and employment is fundamentally changing in the digital age (Stein et al, 2019). In the service sector, industries have been transformed into increasingly high-tech ventures, in which digital technologies have enabled services and. -c alled, platform economy (Kenney and Zysman, 2016), digital platforms, such as Airbnb, Amazon, BlaBlaCar, Etsy, and Uber, intermediate and support transactions between independent demand-and supply-side actors, that is, customers and service providers, who, without the platform, would not be able to interact and transact as efficiently (e.g., McIntyre and Srinivasan, 2017). Acting as matchmakers between customers and service providers (Cusumano et al, 2019), digital platforms produce a broad and transparent view of the market and enable more efficient use of services than traditionally has been possible through many marketing and sales channels (Langley and Leyshon, 2017). The same old way of organizing service work and employment is very different in the platform economy
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