Agency Models in Online Platforms: A Review of Recent Developments and Future Prospects

Over the past decade, the ascendancy of the platform economy has led to a significant shift by numerous online merchants, transitioning from the conventional wholesale model to the agency model. Within the agency model, suppliers control pricing decisions, and in exchange for leveraging the online marketplace to access consumers, they apportion a segment of the revenue to the retailers. Reports indicate that third-party sellers are the primary source of Amazon's income via the agency model. This model has emerged as a prevalent distribution agreement for many physical goods within the digital marketplace. Furthermore, its influence extends to the realm of digital content distribution, as evidenced by its adoption by both Apple and Google in their respective application stores. Notwithstanding the widespread adoption of the agency model in practice, there has been a notable deficiency in the scholarly examination of contemporary advancements in this area. Consequently, this study conducts a systematic review of the agency model. Specifically, we identify and focus on three critical issues regarding the agency model in the literature: the impact of the agency model on channel distribution, how to effectively manage the operations and information management strategy when employing the agency model. Our investigation furnishes an exhaustive synopsis of the latest advances concerning the agency framework and encapsulates pertinent insights for management. We conclude this article by proposing directions for future research.