Research on the "Customer Scale Trap" of Group-Purchase Websites' Business Mode

Abstract

As one of the major commercial innovations in recent years, websites for group purchase have experienced a fast booming in domestic market. However, they have fell into a predicament because of the excessive competition. Analyzing the operating characteristics of these websites according to the Theory of Two-sided Markets, this paper finds out that one of the factors that limits the group-purchase websites from developing is the customer scale trap. Studying the platform mode of e-commerce in terms of network externalities, it further puts forward a new opinion, i.e., overcoming the trap through the accumulation of platform customer utility.