Associate Professor of Business Administration
Andrei is an Associate Professor in the Strategy group at Harvard Business School. Andrei's research focuses on multi-sided platforms, which enable interactions between two or more distinct groups of customers, who value each other's participation (e.g. Airbnb, Amazon, eBay, Google, Facebook, PlayStation, Uber, etc.) He studies the business strategies used by multi-sided platforms across a wide range of industries: videogames, e-commerce, re-commerce, smartphones, shopping malls, intellectual property, payment systems, online TV services, financial software, etc. Andrei is using the insights derived from this research to advise companies in some of these industries.
Marketplace or Reseller?
Many intermediaries can choose between functioning as a marketplace (in which suppliers sell their products directly to buyers, e.g. eBay) or as a reseller (by purchasing products from suppliers and selling them to buyers, e.g. 7-Eleven, Zappos). We model this as a decision between whether control rights over a non-contractible decision variable (the choice of some marketing activity) are better held by suppliers (the marketplace mode) or by the intermediary (the reseller mode). Whether the marketplace or the reseller mode is preferred depends on whether independent suppliers or the intermediary have more important information relevant to the optimal tailoring of marketing activities for each specific product. We show that this trade-off is shifted toward the reseller mode when marketing activities create spillovers across products and when network effects lead to unfavorable expectations about supplier participation. If the reseller has a variable cost advantage (respectively, disadvantage) relative to the marketplace, then the trade-off is shifted toward the marketplace for long-tail (respectively, short-tail) products. We thus provide a theory of which products an intermediary should offer in each mode. We also provide some empirical evidence that supports our main results.
Strategic Decisions for Multisided Platforms
Multisided platforms such as eBay and Facebook create value by enabling interactions between two or more customer groups. This article offers an analysis of four fundamental strategic decisions and associated trade-offs that set MSPs apart from other types of businesses and that every MSP entrepreneur and investor should carefully consider. These challenges are the following: 1) the number of sides to bring on board; 2) design; 3) pricing structures; and 4) governance rules.
Do You Really Want to Be an eBay?
Most companies that serve as intermediaries between buyers and sellers face a fundamental strategy decision: Should they be resellers (like supermarkets), acquiring and then reselling products or services? Should they operate as multisided platforms (like eBay), connecting buyers and sellers without controlling or owning the offerings being sold? Or should they blend the two models?