Traditional and Digital Markets the

Because of these factors being taken into account, the online market has gone through much more rapid market consolidation over time, as is shown in the analysis of competitors in Figure 1.

Figure 1: Market Shares of e-Commerce book Retailers

In contrast, the value chain for traditional book retailers is far more difficult to replicate from a competitive standpoint and pricing is driven my multi-tier distribution channels. The result is a much more fragmented competitive landscape as is shown in Figure 2.

Figure 2: Market Share Traditional Market

Conclusion

What differentiates the e-commerce value chain and corresponding digital market vs. The traditional market is that accuracy and speed of information use in the former (Shih, Fang, 2005).

Comparing the pricing structures of each of these industries illustrates how critical the role of multi-tier distribution is in traditional markets, and how essential the ability to tailor experiences and build trust is online (Alwi, Da Silva, 2007).

References

Syed Alwi, S., & Da Silva, R.. (2007). Online and Offline Corporate Brand Images: Do They Differ? Corporate Reputation Review, 10(4), 217-244.

Porter, Michael E., & Millar, Victor E.. (1985, July). How Information Gives You Competitive Advantage. Harvard Business Review, 63(4), 149.

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