Move to Depth: Buyer-Provider Interactions in Online Service Marketplaces

Extant literature characterizes the ties between buyers and sellers in online goods marketplaces–such as eBay or Amazon–as discrete transactions. In such transactions, parties are effectively strangers, and exchange goods under the assumption that they will likely never again meet in the marketplace. The rapid rise of online service marketplaces (OSM), however, warrants a thorough examination into the applicability of these conclusions to buyer-seller relationships in the nascent markets. We examine the buyer-provider interactions over buyer’s experience in the market using data collected from a leading online job auction site. The results suggest that buyer activity in the marketplace consists initially of discrete transactions whereby the inexperienced buyer gains exposure to a large number of potential providers. However, increased experience in the market leads to a convergence towards “service relationships” as buyers seek trust, reduced risk, and close partnerships through repeated exchanges with a same provider. Our results provide partial support for the moderating effects of key parameters differentiating deal hunters from relationship seekers, price sensitivity and degree of communications. The results will shed new light on the nature of buyer-seller relationships in OSMs.