Purpose Digitalization has transformed several industries during the past two decades. In this paper the authors focus on the retail sector, where new business models help retailers and suppliers meet the ever changing and demanding needs of retail shoppers. One example of this business model innovation is multi-sided digital platforms, which have become popular as they connect consumers with suppliers from around the world with a large ecosystem to support the retail platform. The purpose of this paper is to provide an overview of how multi-sided digital platforms are transforming the retail exchange logic and assess the implications and impact of these platform-based businesses on the retail sector, especially for business managers and consumers. Design/methodology/approach In this paper, the authors employ literature review, conceptual analysis and qualitative case study methodology. The authors provide an overview of how the platform economy is affecting the retail sector through the illustration of four digital multi-sided platforms: Alibaba Group, Amazon.com, eBay and Rakuten Group, and what differentiates them from incumbent business models in retailing. Findings The findings suggest that platforms transform the transaction logic of retailing as they simply intermediate transactions between buyers and suppliers rather than handling the entire supply and logistics chain themselves. The authors highlight the role of consumer understanding and Big Data as one example of how multi-sided digital platforms differentiate from their non-platform competitors. Practical implications The paper highlights how incumbent retailers can compete against new forms of business, such as digital platforms, and the authors demonstrate some of the managerial capabilities needed to remain relevant amidst this new digital competition. Originality/value Very little empirical studies in marketing and retail literature have focused on multi-sided digital platforms and their business models. The present study fills this gap with an overview of how multi-sided digital platforms transform the retail sector.

Retail is undergoing a series of major transformations as platform-based multi-sided marketplaces, like Amazon, Alibaba, eBay, JD.com and Rakuten, are challenging incumbent retailers. From the thriving brick and mortar stores and the development of shopping centers, malls and retail chains throughout the 1900's, retail has become increasingly digital as multisided marketplaces are uniting the online and offline to create more sophisticated and personalized customer experiences. We assimilate these ongoing changes with a service systems perspective into a conceptual framework of how multi-sided marketplaces are integrating their front and back stage processes to create more personalized, convenient, and speedy shopping experiences.

The retail sector has gone through major changes over the past three decades. These changes have been made possible by advances in information and communications technology that have enabled new business models, communication tools, technologies, and supply-chain practices to emerge and shape the behavior of actors across the retail value chain. For example, from its initial incarnation as only a separate, albeit small, channel in the retail and marketing mix, e-commerce is now a critical part of a firm's multi-and omnichannel strategy. In this paper, we synthesize current knowledge drawn from academic retail literature and discuss potential directions for future research. This study contributes to research by developing five research propositions, based on our literature review, to guide researchers to better grasp the technological and digital developments across the retail sector over the next decade or so.

In 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.

Digital transaction platforms now intermediate a large number of transactions between end-customers and independent sellers and service providers in many parts of the economy. In retail, for example, Amazon.com now intermediates transactions between end-customers and hundreds of thousands of independent sellers worldwide, while Etsy.com connects artists, crafters, and collectors with buyers of a large range of niche and rare products. The growing popularity of digital transaction platforms, therefore, has significant implications for retail, marketing and distribution scholars as the existing interaction patterns in the value-chain are increasingly replaced by new digital intermediaries. The purpose of this review is, therefore, to examine, through an extensive and rigorous review of research on digital transaction platforms in marketing journals, what we know and what opportunities lie ahead to expand the theoretical and empirical understanding of digital transaction platforms. The review shows that despite increasing multi-disciplinary and managerial interest towards digital transaction platforms, they remain largely unexplored in marketing journals, and the existing research and theorizing attempts remain fragmented. Therefore, there are many opportunities for marketing, retail and distribution scholars to, for example, collaborate with industry and practitioners in order to gain new perspectives and access to novel data sources, and for example, meet the emerging funding requirements of many universities and governmental funding agencies for multi-disciplinary research on digital markets and digital business models.