Knowledge Tree
Relations (1)
cross_type 2.32 — strongly supporting 4 facts
Amazon's digital marketplace business model directly generates indirect network effects by creating a feedback loop between sellers and customers [1], [2]. These effects, alongside other mechanisms like sunk costs and brand loyalty, serve as a core strategy for Amazon to achieve market lock-in [3], [4].
Facts (4)
Sources
Business ecosystems as a way to activate lock-in in business models link.springer.com 4 facts
claimIndirect network effects in Amazon's digital marketplace arose because an increase in the number of sellers expanded the variety of goods available to customers, while an increase in the number of customers made the platform more valuable to sellers as an efficient sales channel.
claimAmazon's second business model (the digital marketplace) activated novelty, efficiency, and complementarity themes, eventually creating indirect network effects that locked in both third-party sellers and customers.
claimAmazon utilizes brand recognition, brand loyalty, sunk costs, direct network effects, dominant indirect network effects, and data network effects to activate lock-in themes.
claimAmazon, its suppliers, and its customers create a lock-in effect through mutual investments that lead to sunk costs and indirect network effects, making it costly and risky for competitors like Walmart Plus to entice these actors to migrate.