E-commerce aggregators

Last summer I found myself on the Explore ferry to Waiheke. Not because I particularly needed to visit the island, but because it was a sunny day and my partner had bought a pair of tickets online for ‘a bargain’! Like 1.6 million other New Zealanders he’s a member of the daily deal website GrabOne, and those tickets were too tempting to resist: 50% of the price compared with buying directly from the ferry company itself.

E-commerce aggregators are now a feature of our lives, from the small local operations like GrabOne to the global giants of Amazon and Alibaba. They all assemble and organise information about goods and services provided by third party suppliers, which they furnish through a website or mobile app for consumers to compare prices and features.

Aggregators operate across a range of industries, including:

Though attractive to cost-conscious shoppers, there are complex tensions between the interests of aggregator sites and their suppliers. Are aggregators a welcome extra sales channel? An unnecessary parasite? An anti-competitive problem?

How aggregators are affecting my own industry

My interest in aggregator sites was sparked by my work providing software solutions to the global cinema industry. In New Zealand, while aggregator sites like BookMyshow do exist, we tend to buy our cinema tickets directly from the exhibitors, either through their branded website/mobile app, or on-premises at the cinema itself. But in Asia, the situation is very different. In China especially, e-commerce aggregators TenCent, Baidu, and Alibaba are the go-to sales channels for the movie-going public, with tickets regularly available at half the price of a theatre-sold ticket. Given the popularity of this distribution model, sales software can no longer be a closed system — it must increasing provide open application programming interfaces (APIs) to integrate with dynamic and growing numbers of aggregator platforms.

(BTW — if you’re wondering how the Chinese aggregators make any margin on such heavily-discounted tickets, here’s the secret: they don’t! The aggregators lose money on cinema tickets sales, treating them as a loss-leader to entice consumers onto their own platform. With aggregators it’s all about building the customer base!)

Issues to explore!

In this series of posts, I’m going to examine a number of e-commerce aggregators and explore the following issues:

  • The aggregator business model: how does it work? What are the tensions between interests of the suppliers and the aggregator?
  • Social issues — including regulation and charges of anti-competitiveness.
  • Legal issues — In a transaction facilitated by an aggregator who is the merchant exactly? Tax and liability issues for e-commerce aggregators.