1 s2.0 S0167811619300059 Main

International Journal of Research in Marketing 36 (2019) 367–384
Contents lists available at ScienceDirect
IJRM
International Journal of Research in Marketing
journal homepage: www.elsevier.com/locate/ijresmar
Full Length Article
Branding in the era of digital (dis)intermediation

Katrijn Gielens ⁎,1, Jan-Benedict E.M. Steenkamp 1
University of North Carolina at Chapel Hill, Campus Box 3490, Chapel Hill, NC 27599-3490, United States of America
a r t i c l e i n f o a b s t r a c t
Article history: Marketing academics are keenly aware of the seismic shifts in today's marketing environment
First received on August 21, 2018 and was caused by digital (dis)intermediation. In this article, we discuss four types of digital (dis)interme-
under review for 1 month diation, and how they affect branding activities of incumbents and new firms. First, we discuss
Available online 15 February 2019
digital transaction intermediation, a development that is closely tied to the rise of ecommerce re-
tailers. A second type is digital transaction disintermediation associated with the rise of
Keywords: ecommerce D2C models. These first two types of digital (dis) intermediation are primarily top-
Branding down processes, where firms are developing new ways to sell their brands to consumers. The
Digital
next two types of digital (dis) intermediation are of the bottom-up kind — the consumer is in
Intermediation
the driver's seat. Digital marketing intermediation and the rise of D2C brand-building models is
powered by crowdsourcing. A final development is digital marketing disintermediation, which
is closely tied to the rise of C2C models. We present issues in need of future research for each
type of digital (dis)intermediation. We conclude with an appeal that marketing takes the lead
in developing overarching, indigenous theories of digital (dis)intermediation to make sense of
the rapid changes in the marketplace.
© 2019 Elsevier B.V. All rights reserved.
1. Introduction
Digital disruption is changing the world in which brands interact with their consumers (Bakos, 1998). New technologies have
created new markets that, in turn, create new consumers and new competitors. These new consumers and competitors lead to
new expectations, and ultimately change the way value is and should be created by brands.
One of the main digital disruptions many brands face is the changing nature of intermediation – often even resulting in
disintermediation – allowing manufacturers to switch or eliminate intermediaries whose added costs may exceed the value
they provide. For example, the emergence of online marketplaces connecting consumers and manufacturers has eliminated the
need for manufacturers to include (some) retailers in their value chain, allowing brand manufacturers to directly transact with
their consumers (Kahn, Inman, & Verhoef, 2018). This direct access to consumers leads to previously unobtainable valuable infor-
mation that may result in better service and products. However, at the same time, in these transparent marketplaces, the role of
brands as guarantor of quality may be diminishing. This, coupled with disintermediation, creates a threat for brands that needs to
be addressed.
Moreover, not only manufacturers are taking advantage of disintermediation. Retailers like Amazon are working on reducing
the number of intermediaries in the supply chain, thereby decreasing costs and ultimately consumer prices, while at the same
⁎ Corresponding author.
E-mail addresses: katrijn_gielens@unc.edu, (K. Gielens), JBS@unc.edu. (J.-B.E.M. Steenkamp).
1
Order of authorship is arbitrary. Both authors contributed equally to this article.
https://doi.org/10.1016/j.ijresmar.2019.01.005
0167-8116/© 2019 Elsevier B.V. All rights reserved.
368 K. Gielens, J.-B.E.M. Steenkamp / International Journal of Research in Marketing 36 (2019) 367–384
time offering online one-stop opportunities. For consumers, these digital storefronts provide omnipresent, 24/7 access to a large
product selection, added service, and improved information (Riemer, Gal, Hamann, Gilchriest, & Teixeira, 2015). For brands, digital
retailers represent a new, additional gateway to their consumers. Yet, over time, these digital retailers have developed into new
power players in the value chain. Making use of unique digital information that allows for mass personalization of product offer-
ings and prices on the one hand, and recommendation and review tools on the other hand, these new digital juggernauts are in-
creasingly pushing their private labels, thereby turning into brand competitors, rather than “mere” facilitators (Bond, 2018). The
question can therefore be asked to what extent these digital channels are yet again another threat to manufacturer brands.
Still, there is no denying that digitalization and disintermediation have created unprecedented opportunities for all kinds of
companies, branded manufacturers included. Digital services also allow brands to organize non-transactional services to customers
in innovative ways (Peterson, Balasubramanian, & Bronnenberg, 1997). The changing role of digital intermediation not only affects
how manufacturers sell their products to consumers but also how they interact with them. Direct-to-Consumer (D2C) models
allow brands to directly engage with their customers using social, mobile, and digital channels. The goal is to more directly en-
hance the customer journey, adapt to changes in customer behavior and differentiate the brand experience. This leads to the dis-
placement of traditional paid media, and results in research and development tools delivering better innovations and customized
offerings. In the end, digital disintermediation may result in marketing functions such as communication and R&D (partially) leav-
ing the firm in favor of execution by the consumer. Once again, the question remains how and when the digital disintermediation
of marketing functions truly leads to enhanced brand value.
Ultimately, taking it one step further, digital disintermediation may not only lead to the elimination of marketing functions
within the manufacturer but even to the elimination of the brand manufacturer altogether by enabling Consumer-to-Consumer
(C2C) matching markets and facilitating transactions between private individuals. For consumers, these matching markets offer
convenient ways of finding the right provider of a service or good. For providers, they are a way of securing business by being
matched to the right customers (Riemer et al., 2015). Key in these markets is the existence of matchers to effectively organize
the matching process through search and filtering features, as in the case of Airbnb, through auction mechanisms such as eBay,
or through algorithmic solutions, as is the case with Uber. Matchers are becoming brands in their own right, while disrupting
existing branded providers. How to respond to the entry and presence of these matchers remains a major challenge to most in-
cumbent brand manufacturers. At the same time, becoming a brand in its own right provides a major challenge to matchers. In
sum, digital (dis)intermediation and disruption to brands takes four forms (Fig. 1):
1. Digital transaction intermediation: the rise of ecommerce retailers

2. Digital transaction disintermediation: the rise of ecommerce D2C models
3. Digital marketing intermediation: the rise of D2C brand-building models
4. Digital marketing disintermediation: the rise of C2C matching models
Surprisingly, despite the widespread belief that each of these four digital intermediation evolutions is potentially disruptive as
well as value-creating to brand manufacturers, the academic literature has spent relatively little attention to the implications, op-
portunities and threats for brand building. So far, most attention has been directed to the incumbent, brick & mortar (B&M), re-
tailers and how they have to adapt to digital evolutions (e.g., Brynjolfsson, Yu, & Rahman, 2013; Verhoef, Kannan, & Inman, 2015
Top-down Bottom-up
(Brand in the driver’s seat) (Consumer in the driver’s seat)
Rise of ecommerce retailers Rise of D2C brand-building models
Intermediation
Online price management Crowdsourcing of new product ideas

Online category management
Online visibility Crowdsourcing of the marketing mix
Online presentation
Online relationship management Global crowdsourcing
Online private label competition
Rise of ecommerce D2C models The rise of C2C matching models

Disintermediation
D2C brand website management Leveraging consumer motivations

Established-brand websites
De-novo-brand websites Developing C2C brands
D2C marketplaces Competing with C2C brands
Fig. 1. Branding issues in the era of disintermediation.

K. Gielens, J.-B.E.M. Steenkamp / International Journal of Research in Marketing 36 (2019) 367–384 369
for a comprehensive discussion on the challenges of omni-retailing). Fig. 1 highlights what in our view, are the key branding issues
in this new age of (dis)intermediation and constitutes the organizing framework for our paper.
2. Digital transaction intermediation: The rise of ecommerce retailers
Many consumer brands have aligned with the times and fully embraced digital distribution channels. Although certain con-
sumer product categories have made substantial online progress, online retail for many consumer goods is still relatively limited.
Nevertheless, it is an important growth contributor for most consumer good brands. Even more so, for categories in which online
presence is high, including consumer electronics and apparel, online retail is likely to be the main, if not the only, growth engine in
years to come. A well-thought-through digital retail channel strategy suited to the brand's product portfolio is therefore not op-
tional but a must.
As in a typical B&M setting, in a digital reselling channel, the retailer takes ownership and control over products from branded
manufacturers and decides how to sell them. The online retailer functions as an intermediary and has complete control over mer-
chandising practices, such as the retail price, assortment, page display and layouts and hence brand imagery. Typically, these on-
line retailers aggressively engage in marketing activities designed to enhance their own profits with little or no regard for the
brand manufacturer interests. This may happen even to such an extent that some fear that online retailers may lead to a down-
ward spiral of brand equity (Lieber, 2017). Fabrizio Uguzzoni, president of Luxottica's North American wholesale division, for ex-
ample, described Luxottica's online retail presence as “a race to the bottom that was not sustainable long-term” (Simon, 2017).
We will use Amazon.com's business model (see Fig. 2) as a running example throughout this discussion to explain the main
challenges brands face when taking this route to market. Not only is Amazon's model the benchmark for most other e-retailers,
but it is also the best documented, allowing us to gauge insights into their business practices.
The core of the typical Amazon-like store hinges on the endless aisles model, whereby the retailer's main aim is to add to its
catalog and create boundless selection options. To that extent, vendor managers are tasked with finding a way to select specific
brands. For example, based on their databases of search and purchase behavior, Amazon knows which brands are critical to con-
sumers. The vendor will contact the brand to discuss a direct sourcing relationship. If not, the vendor finds distributors – autho-
rized or not – who are willing to supply, even if this would include sources such as gray markets or international markets (Lieber,
2017). Once sourced, Amazon will aggressively reprice to other online and offline channels. Although Amazon can help brands
reach new customers by providing access to about 100 million customers in the U.S. alone (and over 300 million world-wide),
traditional brands often cannot translate their offline market share into a similar online market share. Moreover, it may ultimately
hurt the brand through the aggressive price setting and account management practices.
Lower Cost Lower

Structure Prices
Selection &
Convenience
Prime
Membership
Customer Free Fast Fulfilment
Sellers Experience Video/Music

Growth
Alexa Service
Traffic
Fig. 2. The Amazon flywheel.

2.1. Online pricing management
Extant literature demonstrated that online retailing increases competition for like-for-like products (Brynjolfsson, Yu, &
Rahman, 2009) and price matching by B&M retailers (Jing, 2018; Mehra, Kumar, & Raju, 2018), resulting in downward pressure
on prices (Brynjolfsson & Smith, 2000), and international price convergence (Gorodnichenko & Talavera, 2017).
Firms that have worked for decades to build premium brands thus may see their products marked down because of online re-
tailers' pricing methods. Even if online retailers do not price-match when lower prices are offered as part of a promotion, other re-
tailers decrease their own prices in response. As a result, the online retailer's dynamic pricing algorithms decrease prices, and after
the promotion has ended, the price may be the same or even lower than the original promotional price in order to offer consistently
low prices, which increases price pressure on offline retailers (Fig. 3). Even if the online retailer does not want to mark down, it has to
compete with the same items on gray markets, and therefore, the pressure to decrease price is real. In addition, online retailers' dy-
namic pricing can cause spikes in demand causing stock outs in both online and offline sales points (Von Koeller, Dawe, & Pittman,
2017), which may once again result in brand erosion (Breugelmans, Gijsbrechts, & Campo, 2018, Verhoef & Sloot, 2009). Ultimately,
this intense price competition distorts consumers' price perceptions, potentially jeopardizing premium brands in favor of economy
brands and private labels, akin to the effects observed in price-wars in the grocery sector (see, e.g., Sotgiu & Gielens, 2015).
As a possible solution for this potential vicious circle, some brand manufacturers are enforcing minimum advertised prices to
make it harder for online sellers to undercut local merchants. Luxottica, for example, launched a minimum advertised pricing pro-
gram that restricts the price at which its sunglasses can be advertised (Simon, 2017). Still, little insights are around about how
effective these programs are or whether all brands can easily impose this type of practices on their online retailers.
In addition, dynamic pricing practices may interfere with the brand's promotion calendars in its offline channels (cf. Guyt &
Gijsbrechts, 2014) where, unlike the online world, brands typically spend months to work with retailers preparing for promotions
(Wierenga & Soethoudt, 2010). Even more so, consumers may start using the lower online prices as new reference benchmark to
evaluate the attractiveness of the offline promotions, potentially reducing the sales lifts of the store-based promotion. Given that re-
tailers often claim that they stand to win less from price promotions than brand manufacturers (Srinivasan, Pauwels, Hanssens, &
Dekimpe, 2004), this puts even more pressure on the already strained relationships between manufacturers and their B&M retailers.
Although it is fair to assume that these aggressive pricing strategies may not serve a well-established brand, little is known
about the extent to which the brand's (online and offline) performance and equity are harmed after being listed by online players.
Nor, do we know how online pricing practices may alter the effectiveness of typical price promotion instruments in the B&M
realm. Finally, little is known about which brands stand to lose or win more. On the one hand, premium brands may lose more
if price erosion affects their brand image. However, confronted with overall price erosion in the market, economy brands may
lose their edge on the price dimension, leaving them vulnerable.
2.2. Online category and shelf management
2.2.1. Online visibility

Whereas in the offline world brands are visible to all consumers facing the shelf, this is not necessarily the case in online set-
tings, where retailers typically have a much broader and deeper assortment of offerings. For example, in the U.S., Amazon offers
Offline retailer
runs a price
promotion
Protection of
market share Competition
effect
Other offline
Online retailer
retailers
keeps lower
decrease price
price
Strategy of offering Dynamic pricing

consistently low prices algorithm
Online retailer
decreases price
Fig. 3. Vicious price circle.

12,000 SKUs for cereals alone, representing N1300 brands (ATKearney, 2017). The sheer size of the assortment undoubtedly brings
consumers to the site and creates traffic for the category (cf. Iyengar & Lepper, 2000), but standing out as an individual brand or
product is hard to achieve.
In these online settings, with endless aisles and assortments, it becomes essential for most brands to gain first-page presence,
or above the fold (ATF) visibility. ATF items tend to generate greater sales (Xu, Cai, & Kim, 2013) and being first on the screen
increases the probability of being chosen (Breugelmans, Campo, & Gijsbrechts, 2006; Smith & Brynjolfsson, 2001). Other visual
cues that may drive choice are being presented near out-of-stock items and near certain focal items (Breugelmans et al., 2006).
Outside the ATF regions, consumers may simply never encounter or see the product or brand. Obtaining and maintaining the
right ‘shelf’ or page position are, however, not an easy feat online.
At Amazon, for a brand to feature highly on a page, the brand needs to meet several criteria that are not necessarily related to
its market share outside of Amazon. To gain the ‘Amazon Choice’ label, the brand needs to score at least four out of five in con-
sumer reviews, the total number of reviews needs to be high (exceeding 600), and the return rate needs to lower than competing
products. Further, all else equal, lower-priced items are preferred (Andrews, 2018). Interestingly, this implies that favored brands
in the online space are not necessarily the top selling brands in the marketplace, i.e., the ones that are typically given best shelf
locations in the B&M world. At the very least, the brand should try to improve search results by key word optimization, proactively
managing consumer reviews, and managing product pages so that reviews pages and photos and videos are correct an up to date.
To avoid online clutter altogether, brand manufacturers may consider participating in the online retailer subscription models
(Reinartz & Linzbach, 2018). Amazon Dash allows consumers to request immediate replenishment at the source of consumption.
Whereas these models allow the brand manufacturer to retain their consumers more easily online, they hamper the brand in of-
fering cross-selling opportunities or enticing consumers to try new products, thereby reducing the net present value of their loyal
consumer base. For more innovative brands, the question can be raised to what extent these programs are a blessing or a burden.
Moving forward, voice-supported technology may further diminish brand visibility. For example, someone who would ask
Amazon's Alexa to buy batteries could very well accept whatever it selects at a given price. Taking into account that in certain
product categories consumers search more by ingredient than by name (e.g., for beauty, there are fewer searches for the brand
Olay and more searches on the ingredient retinol) (Young, 2017), a higher burden is placed on brands to strategize their market-
ing so consumers know to ask for a specific brand. In the end, the question can be raised whether as more consumers use voice-
supported tools they will become brand agnostic, or whether generic brands may stand to gain from these devices.
2.2.2. Online presentation

In addition to the sheer online variety or clutter, the manner in which assortments are organized online differs dramatically
from offline shelf presentations (Parker & Koshman, 2018). Whereas a brand's products are typically grouped together on the
retailer's shelf, the actual set of surrounding products online is the end result of the consumer's search term, or the interactive de-
cision aid, used by the consumer allowing to sort alternatives (Shi & Zhang, 2014). However, for consumers, key word searches are
only useful if the consumer already has an established preference or ideal point (Chernev, 2003). For brands, the drawback is that
they make it yet again easier to compare prices. Still, if consumers do not use a brand-related search term, the brand's product is
surrounded by a greatly varying set of products, differing in brand name, type and price tier. In large assortments, such level of
disorganization once again benefits the perceived variety of the assortment (Broniarczyk & Hoyer, 2010) but may inhibit the con-
sumer from making an actual purchase (Iyengar & Lepper, 2000).
Moreover, standing out in such an overly competitive and disorganized environment is hard, especially given the lack of point-
of-purchase material online. For example, on Amazon, the page for a standard Adidas shoe features no Adidas branding aside from
the shoe itself – no logos, colors or other brand signifiers. All Adidas is allowed to do, is to showcase the name, some photos, and a
short description of the product (Keats, 2017). By restricting product page customization, uniformity is created across the platform
that makes for a smooth customer experience. Still, from the brand's point of view, this intentional lack of customization is limiting
as outward appearance is everything, making it quite difficult for brand manufacturers to build a meaningful relationship with
their consumers online.
To improve its online presentation, a brand can develop a store-in-store concept to better control the online assortment and
look and feel, which may be especially attractive for high awareness and loyalty brands. For example, by maintaining an official
store on Amazon, l'Oréal enjoys more freedom to promote its innovations, has more control over how its products are displayed
and has more access to consumer data. Still, does the brand truly benefit from been taken off the ‘shelf’? Is it easier to shine with-
out having other brands around or not? Whereas this model has been studied in offline settings (see, e.g., Jerath & Zhang, 2010),
little is known about how the concept affects brands' online performance. Nor do we know whether online store-in-store models
may attenuate potential negative effects of the brand's online presence.
2.3. Online relationship management
Although online retail still represents only a relatively modest share of most consumer goods' revenues, online retailers are rap-
idly growing in size and are becoming retail giants in their own right (Table 1). Moreover, online sales grow much faster than
offline sales in almost any industry. As a consequence, ecommerce retailers like Amazon, Alibaba or JD.com have emerged as pow-
erful channel members, as well as powerful brands in their own right.
Moreover, according to branding consultancy Kantar Millward Brown (2018), Amazon is the third most valuable brand in the
world with a brand value in 2018 of $207.6 billion, Alibaba is number 9 ($113.4 billion), and JD.com is number 59 ($20.9 billion).
Table 1
Top 20 largest ecommerce players in 2018.
Retailer Country of Value ($bn.) Retail roots Main product categories E-commerce CAGR (%)
origin (million $) 2014–2018
General merchandise, grocery 382,601 34.4

Alibaba China 113.3 Digital of which… general merchandise 382,500 34.4
grocery 101
Amazon U.S. 207.6 Digital General merchandise 322,300 23.9
General merchandise, grocery 199,831
JD.com China 20.9 Digital of which… general merchandise 194,136 57.1
of which… grocery 5695
eBay U.S. 14.8 Digital General merchandise 62,744 3.2
Subscription entertainment and electronics 33,941
Apple U.S. 300.6 Brand manufact. of which… subscription entertainment 23,176 15.4
electronics 10,765 3.7
General merchandise, grocery 31,461 11.7
Walmart U.S. 34.0 B&M of which… general merchandise 24,025 24.7
grocery 7436 13.5
Suning China 3.4 B&M General merchandise 19,415 40.6
Home Depot U.S. 47.2 B&M DIY & Gardening 8392 23.7
Best Buy U.S. n.a. B&M Electronics 7865 18.8
Casino France b0.5 B&M Grocery 7763 4.9
Zalando Germany b0.5 Digital Clothing & Footwear 7433 19.9
Otto Group Germany 0.9 Mail order Toys and games, general merchandise, clothing and footwear 7257 −1.3
of which… toys and games 881 7.8
general merchandise 5700 0.5
clothing & Footwear 676 −29.5
Costco U.S. 18.3 B&M General merchandise 6475 20.2
Rakuten Japan n.a. Digital General merchandise 6378 12.0
Inditex Spain 26.9 B&M Clothing & Footwear 5931 34.8
General merchandise, grocery 5899 1.6
Tesco U.K. 9.1 B&M of which… General merchandise 703 −3.9
Grocery 5196 2.4
General merchandise, grocery 5828
Sainsbury U.K. 2.7 B&M of which… General merchandise 3814
Grocery 2014 3.6
Dell U.S. 5.8 Brand manufact. Electronics 5827 −3.0
Target U.S. 7.5 B&M General merchandise 5077 27.9
Lowe's U.S. 13.1 B&M DIY & Gardening 4849 33.8
Note: B&M = brick and mortar; n.a. = not available. When CAGR is not reported, the product category was included in the last five years. Brand value is taken
from various Kantar MillwardBrown BrandZ. Brand value for Inditex refers to Zara. Source: Planet Retail, Kantar MillwardBrown.
In the US alone, half of all product searches begin at Amazon. If a brand does not appear on the first pages of a product search,
this cannot but negatively impact brand choice probability. Online retailers can directly influence what consumers buy purely
based on the products and brands they list. As such, online retailers are like the ‘department store of old’ where consumers go
and only consider the products they carry (Williams, 2018). As a result, brands often cannot translate their offline market share
into similar online market share. For example, in the organic granola category, nine out of the top 10 brands on Amazon are
niche brands (ATKearney, 2017). In order to solve this, kitchenware company Lifetime Brands uses a companywide mandate called
the ‘5-star experience,’ forcing every product unit to work on getting positive reviews because they are critical to page position,
conversion, and growth (cf. Ludwig et al., 2013). These observations call into question how to evaluate the power balance in online
relationship. Typical metrics such as market share and number of alternative retail partners do not reveal the true impact of online
players. New metrics, taking into account, for example, search share and review strength, should be developed.
Because of their growing market power, online players are developing significant leverage over suppliers, leaving many brands
uncertain how to establish trusted relationships with these new players. Whereas, most consumer brands have long established
relationships with B&M retailers, their ecommerce relationships are not nearly as mature. Brands struggle to find the relevant
shopper and transaction metrics. Moreover, online retailers are often not the most supportive retail partners, being overly focused
on arms-length statistics like sales and profits, rather than on building relationships. If Amazon begins to lose money on a product,
it will tell the manufacturer to make up for the loss or lower the procurement price. In addition, if a manufacturer wishes to re-
main a major partner it is often forced to take on more of the freight cost between warehouses, or to buy more ads on Amazon
(Bond, 2018). Moreover, compared with traditional retailers, online retailers have far fewer interactions with suppliers, making it
harder for brands to monitor how they fare on the online platform. For example, a common situation at Amazon is that one person
oversees P&L of 300 brands. Many brands do not even talk to Amazon on a monthly basis unlike a traditional retailer where each
buyer has an account (Lieber, 2017).
Nevertheless, even these online retailers need to build trusted relationships with consumer good companies. To solve their ful-
filment issues and their ever-rising costs of delivery, online retailers are increasingly interested in closer cooperation with brand
manufacturers. As a first step towards developing closer relationships, more and more manufacturers are co-locating with their
online retailers. A 2017 survey revealed that 20% of the high brand performers at Amazon are locating teams of digital and func-
tional specialists at Amazon, while an additional 60% plan to do so within two years, allowing them to gain better real-time access
to Amazon's tools for marketing and consumer analytics (Bashkin, Joshi, Pacchia, & Ungerman, 2017).
On the assortment side, online retailers need to work more closely with brands to develop better-tailored propositions for cer-
tain customer segments like Amazon Business or exclusive online products to help them compete online and offline. Especially the
latter may offer great potential for win-win opportunities for retailers and brand manufacturers. Not only are retailers more and
more interested in listing exclusive products to offer a unique selling proposition (Gielens, Gijsbrechts, & Dekimpe, 2014), but also
insights from the offline world have demonstrated that exclusivity of product assortments can be a viable long-term strategy to
counter showrooming (Mehra et al., 2018) and hence to reduce intra-brand competition and price erosion. More insights are re-
quired to substantiate whether this retailer-manufacturer collaboration may be equally effective in the online world to fight
webrooming.
2.4. Online store brand competition
Prior research suggests that the online environment may be more beneficial to high-equity brands than to weaker brands (Ho-
Dac, Carson, & Moore, 2013), even more so than in traditional channels (Degeratu, Rangaswamy, & Wu, 2000). In online settings,
any opportunity to interact physically with the product, which is an important source of information, disappears. In contrast, on-
line consumers have access to product descriptions and can view the products, but cannot touch or feel them physically. This in-
tangibility, innate to online purchasing, forces consumers to pay more attention to other indicators of quality and product
performance. Therefore, the role of the brand should become more relevant, to compensate for the absence of physical contact
(González-Benito, Martos-Partal, & San-Martín, 2015) and brand loyalty may be higher (Arce-Urriza & Cebollada, 2012; Chu,
Arce-Urriza, Cebollada-Calvo, & Chintagunta, 2010; Danaher, Wilson, & Davis, 2003).
Does this imply that online retailers are limited in building successful store-brand programs? Many product categories in con-
sumer packaged goods and beyond contain relatively few search attributes, and thus, physical inspection does not provide much
information. For such products, store brands can make the online selection process simple and smart, especially when they already
trust the retailer. If consumers already trust the retailer they are patronizing, they may extend their trust to the retailer's own
brands (Ailawadi, Pauwels, & Steenkamp, 2008). On the 2017 National Most Trustworthy Brand Survey from The Values Institute,
Amazon got high marks for meeting customer expectations, quality, joy, satisfaction and trust (Howland, 2017), offering the online
retailer a platform to launch store brands. Yet, the question remains whether online retailers will be equally equipped as B&M re-
tailers to build a portfolio of private labels that covers the entire price-quality spectrum (Geyskens and Gijsbrechts, 2010). Espe-
cially with private labels going premium, online retailers may have to consider more opportunities to present their goods in a
physical (showroom) environment.
In addition, online retailers can exploit their knowledge, generated by optimizing word-search algorithms, analyzing sales data,
and customer-review networks, to steer shoppers towards their private labels. Amazon typically allows sample products to spend
anywhere from six to eighteen months on the digital shelf before making any decisions. By releasing a variety of products in quick
succession, Amazon collects a large amount of data quickly, helping it to determine which products generate the most consumer
interest after which Amazon follows-up with a mass release of new products. This is typically supported by strong advertising, in-
cluding email campaigns, front-page advertising and promotions to generate awareness of the expanded product line, resulting in
an immediate lift in sales to match the increase in the number of items. For example, for its private baby care brand Mama Bear,
Amazon initially minimized the investment by producing only a small number of options and released a variety of products in
quick succession. During this stage, Amazon often utilizes a promotion to kick-start a new product line (Todd, 2018). This gives
a private label an initial boost, and whether or not this generates a long-term lift, is a major indicator of the potential profitability
of a category.
Moving forward, as consumers increasingly shop using voice technology, the playing field becomes even more tilted. For in-
stance, if you were to ask Amazon's Echo to buy batteries, Echo will suggest (at least at the time of this writing) Amazon Basic
Batteries even though plenty of other brands are selling on the site.
In sum, it is fair to assume that online retailers are able to carry private labels successfully. Still, it remains to be seen to what
extent they can push their lines into the premium tiers. Moreover, in this endless, ‘elastic’ aisles environment, the impact on na-
tional brands is less straightforward. Whereas in the offline world listing private labels implies delisting national brands, this is not
necessarily the case in the online sphere, where offering a vast selection remains a key traffic driver. Will online private-label com-
petition be less of a zero-sum game? Will the new lower-priced alternative take some of the price pressure away from national
brands? Moreover, can online private labels help national brands and, especially premium private labels, shine online as economy
private labels may help to provide a convincing counterpoint as tends to be the case on physical shelves (Geyskens & Gijsbrechts,
2010). All of these questions are unresolved and need further investigation.
3. Digital transaction disintermediation: The rise of ecommerce D2C models
To counter the growing power of online retailers, many consumer brands are exploring ways to reach online consumers di-
rectly through digital channels looking to engage with their consumers in highly personalized, consistent interactions. In 2016,
the number of manufacturers selling directly to consumers exceeded 40% of all U.S. manufacturers and over a third of U.S.
consumers report buying directly from a brand manufacturer's web site, with D2C innovation coming from a wide range of indus-
tries (Diorio, 2016).
In general, D2C digital transaction channels can take two forms — own brand websites and brand stores on online market-
places. In both models, the full ownership and control rights shift back to manufacturers, allowing them to regain direct control
over non-contractible decisions, such as setting the retail price. This helps the manufacturer to improve the overall profitability
through reducing ex-ante transaction costs otherwise charged by the intermediaries and reducing double marginalization.
This shift of control rights from retailers to manufacturers in the marketplace is altering the balance of channel power in the
manufacturer-retailer relationship, wherein a higher share of channel power is associated with higher channel profits (Kadiyali,
Chintagunta, & Vilcassim, 2000). In addition, by setting up either a store within the marketplace or a direct e-commerce brand
website, brands attain direct access to their end-users, leading to another enormous advantage. Specifically, the brand can directly
interact with consumers and attain proprietary knowledge of consumers, which is otherwise mediated by retailers. This, in turns,
enables the brand to create new products with specific, unique features that distinguish itself from the competitors and therefore
increase the barriers for retailers to switch to the alternative brands.
Although own brand websites and brand stores on online marketplaces both follow the D2C model, they differ drastically op-
erationally (Bei & Gielens, 2018b). In the own brand website models, brands have to do everything themselves, from building a
retail space to acquiring new consumers and traffic, from maintaining the retail space to handling logistics. In contrast, on online
marketplaces brands share a small portion of their revenues with marketplace owners and these marketplaces will help them
achieve the same tasks at a much lower cost by exploiting the economies of scale (Hagiu & Wright, 2015). Below, we discuss
in more detail how either option may impact branding activities.
3.1. D2C brand websites
Digital D2C channels offer opportunities to both established and new-to-the-world brands. Below, we discuss the opportunities
and limitations of D2C online channels for both.
3.1.1. Dedicated websites for established brands

Until recently, most consumer brands have mainly been using their own websites as a means of sharing information and con-
tent, to engage with their consumers, and to showcase their product portfolio (Steenkamp & Geyskens, 2006). More and more,
brand manufacturers are transforming their branded websites into true sales channels (European Commission, 2017). Whereas
some brands get into this D2C game by scooping up new entrants (e.g., Unilever's $1 billion acquisition of Dollar Shave Club),
others launch their own direct routes to market.
At the very least, own brand websites allow manufacturers to create platforms for their consumers to voice their opinions and
preferences, and to gain a more comprehensive view of consumer behavior. It also offers a realistic – transaction based – test mar-
ket for the brands' innovations, not just in product development but also for other commercial levers such as pricing and online
merchandising (Bashkin et al., 2017). Such channels can thus help a manufacturer to reduce its reliance on (online and offline)
retailers (Geyskens, Gielens, & Dekimpe, 2002).
Some of these D2C brand websites achieve massive sales, but currently, these are more the exception than the rule. Not sur-
prisingly, the top revenue-generating brand website is owned by one of the world's most valuable brands — Apple (see Table 1).
One of the main obstacles in building branded websites into true sales channels is that often these brands do not have top-of-mind
awareness, scale, and financial resources to drive traffic to the website. The D2C channel may be only effective for brands that can
rely on a large and loyal customer base. In addition, brand websites often sell at higher prices than retailers (Wang, Bell, &
Padmanabhan, 2009).2
To overcome these obstacles, brands try to increase the appeal of their websites by offering a broad and unique assortment,
featuring exclusives, premium products, and personalization, combined with special services to distinguish itself from online re-
tailers. Some of the most important ways marketers are taking advantage of direct customer engagement include delivering per-
sonalized experiences and facilitating easy consumer choice. Direct interaction provides an excellent way to turn big data into
delighted customers. We foresee an exponential expansion of product ranges to meet consumer's diverse needs and taste around
the world. Companies used to exploiting the mass market, will have to learn to exploit the market of one. Interestingly, some be-
lieve that by offering more customized assortments in a D2C setting, the paradox of choice (Diorio, 2016) – that offering more
than three choices will paralyze customers rather than delight them – may be alleviated. The real issue is the type of choice
you offer. How options are presented and configured, so customers can understand the differences in value, is the main challenge.
Finding the relevant ways to personalize consumer assortments with recommendations and easy to refine options, is the ultimate
balancing act.
Ultimately, mass-customization through D2C channels should result in better-designed products, lower cost of sales, and more
effective price promotion programs. The results of a well-executed D2C strategy may even carry over to traditional channels as
satisfied consumers may be willing to buy more of the brand they are loyal to. As such, these websites may serve as a billboard,
and attract new and existing customers whose interest and exposure to the brand may also spill over to online and offline retailers
2
A personal anecdote to illustrate this, one of us is the co-author of a book (Steenkamp with Sloot, 2019), that at the time of this writing was 31% cheaper on Amazon
than on the publisher's own website.
(Avery, Steenburgh, Deighton, & Caravella, 2012). Nevertheless, Van Crombrugge, Breugelmans, Cleeren, and Neslin (2018) show
that the own website of a kitchen appliance brand still ended up stealing business from the retail network leading to retaliation
and increased retail prices, harming the brand's relative price positioning.
Another challenge brands face is whether or not to outsource website activities and management of the customer relations.
Most consumer brands do not have any in-house experience with direct-customer relations. Hence, outsourcing of all website re-
lated activities is popular, but brands need to be wary that this way they do not lose touch with the end-consumer and undermine
service offered through the D2C channel (Kalaignanam, Kushwaha, Steenkamp, & Tuli, 2013).
So far, surprisingly little empirical work is available on how these own brand websites impact brands. Whereas some insights
are available about the potential for cannibalization or demand generation in established channels, little is known about the extent
to which these channels manage to lift the brand and can be used as a channel coordination mechanism rather than a channel
conflict generator.
3.1.2. De novo brand websites

Not only established brands stand to benefit from D2C transaction channels. A wave of de novo companies are trying to build
premium brands at discount prices by cutting out middlemen and going straight to consumers, offering everything including nail
polish (Julep), tech accessories (Monoprice), men's shoes (Beckett Simonon), and shaving supplies (Harry's) (Miller & Clifford,
2013). This typically results in cheaper products for consumers and higher profit margins for the brands. As with private labels,
these new digital brands break the price-quality relationship, creating yet another layer of competition for established brands.
Eyeware brand Warby Parker, for example, got around the price-quality notion by establishing the brand as a trendy alternative
providing the same, if not higher quality (Kahn et al., 2018).
Still, the problem is that many consumers equate high price and famous brands with high quality (Steenkamp, 1989). They also
frequently want to see and touch the product before buying. This requires de novo brands to add a B&M presence to the D2C
channel. Bell, Gallino, and Moreno (2015, 2018) demonstrate that adding bricks to clicks can increases overall demand and effi-
ciency by increasing conversion in the online channel and decreasing returns, which continue to be a major concern in all online
operations (Petersen & Kumar, 2009). Although these store additions will undoubtedly increase demand and may have a beneficial
effect on supply chain costs, the question has to be raised how these B&M stores will add to the overall cost structure and whether
(lower) price levels can be maintained. As the D2C concept evolves beyond the own website, will prices increase? If the D2C brand
wants to stay true to its original premise, can a careful balance be found between channel management and price strategy?
3.2. D2C marketplaces
So far, most own brand websites have not turned into truly efficient and effective direct gateways to reach the mass-consumer
market (Steenkamp, 2017). With the advent of online marketplaces, D2C access to the mass market is, however, becoming a re-
alistic option for brand manufacturers (Abhishek, Jerath, & Zhang, 2016). An online marketplace is a website that facilitates shop-
ping from many different sources. The marketplace platform acts as an agent and thus does not purchase any goods from the
various brand manufacturers and holds no inventory. A marketplace's goal is to present other people's inventory to consumers
and facilitate a transaction.3 Using online marketplaces, manufacturers can sell directly to their consumers for a fee, and make de-
cisions regarding key factors such as retail prices, without having to invest in retail space and logistic infrastructure; a combination
that can rarely be achieved through any existing online or offline retailer (Bei & Gielens, 2018a).
Online marketplaces are gaining popularity, as their share of global retail sales is expected to rise to 15% by 2022, adding more
than $860 billion in sales and accounting for 58% of global ecommerce sales (Planet Retail, 2017). Not only consumers are finding
their way to these new purchase ecosystems. Countless brands in categories ranging from luxury handbags to electric vehicles,
from premium cosmetics to generic pharmaceuticals, and from high-end sneakers to sweet biscuits, are moving into marketplaces.
Essentially, online marketplaces work as a complex digital ecosystem consisting of local and international brands, payment ser-
vices, cloud services, social media, and logistics services — all with the goal of making it easier to buy anytime and anywhere
(Planet Retail, 2017).
Unlike own brand websites, online marketplaces encompass millions of brands from thousands of categories to offer the widest
assortment possible. By exploiting economies of scale, online marketplaces aggregate sellers and buyers, and cut operation costs
(e.g., stocking and logistics fees) to a much more affordable level than that of any standalone brand website. Consumers are ex-
posed to brands that are not available in their local stores. From the perspective of consumers, the shopping experience in this
ecosystem exceeds the typical endless aisles offered by online retailers (Bei & Gielens, 2018b). As an ecosystem, online market-
places are not only a platform of transaction, but are expanding their businesses beyond retail to become integrated into more
aspects of consumers' lives, including payment, social media, and entertainment (Planet Retail, 2017).
Through marketplaces, brands are gaining multiple touchpoints. Setting up a store on online marketplaces thus provides brands
an unprecedented opportunity to expose themselves to a gigantic consumer base that they cannot reach otherwise. In addition,
consumers on online marketplaces are far more than passive message receivers; they become content generators. Online market-
places allow consumers to leave feedback and disseminate brand-related information which serves as a new element in the
3
Some online retailers also run marketplace operations. For example, Amazon also acts as an agent through Amazon Marketplace and thus offers a hybrid model of
both the traditional transactional and agent-based options.
marketing communication mix and works as free “sales assistants.” Essentially, online marketplaces create a superior gateway for
brands to develop interactive consumer experience and positive customer relationships.
The question can therefore be raised to what extent the superior brand experience and awareness accumulated through online
marketplaces transfer to channels outside of the ecosystem and benefit the brand as a whole. Using brand store openings on Tmall,
China's largest online marketplace, Bei and Gielens (2018b) provide first evidence that this online platform presence may lead to
positive spillover effects for B&M channels, thereby lifting not only brand shares but also category sales. Further research is re-
quired to see under which conditions – and to what extent – brands truly benefit from online marketplace operations, not only
in emerging but also in more mature markets.
A particular challenge brands face is that marketplaces not only ease the brand's direct access to consumers but also facilitate
gray markets. Unlike counterfeit products, gray-market goods are branded products initially sold in a market designated by the
brand manufacturer, but then resold, usually at a sharp discount, through channels not authorized by that manufacturer into a dif-
ferent market (Autrey, Bova, & Soberman, 2015). Gray-market activities are problematic for manufacturers as they result in
discounted prices, erosion of brand image, and lower manufacturer profit margins (Autrey et al., 2015). Especially in emerging
markets, poor channel regulatory systems make gray-market activity a severe issue (Antia, Bergen, Dutta, & Fisher, 2006). On
the other hand, it has been argued that especially in emerging markets, marketplaces help to close down these gray channels.
Manufacturers usually deter gray-market activities by ensuring distributors' compliances with resale restrictions, including fines,
litigation, social ostracism, and termination (Antia et al., 2006). However, cultural distance limits the usage and effectiveness of
these traditional tools that govern the relationship between most firms and the marketplace operator. Marketplace initiatives re-
garding gray market operation may therefore help brands safeguard their brand value. Nevertheless, more research is required to
get a better understanding of the interplay between gray market activities and marketplace success.
4. Digital marketing intermediation: The rise of D2C brand-building models
Hand in hand with the ability to transact digitally with consumers, firms are becoming more savvy in integrating consumer
voices in their branding strategy and tactics thanks to the integration of direct digital channels. Input on, and execution of, ele-
ments of the marketing mix are shifting to the consumer, leading to increasing digital disintermediation of the branding program.
So far, most academic and managerial attention has been focused on co-creation (both pre-digital and digital) in the realm of new
product development (NPD). Firms hope they can improve their innovation performance by tapping into customers' knowledge
around needs and solutions at various stages of NPD. Co-creation with customers is found to be mostly positive, except for
when used in the development stage. Moreover, co-creation effectiveness strongly depends on the firm and brand context
(Chang & Taylor, 2016).
Until recently, co-creation was mainly a business-to-business practice, where small numbers and existing relations facilitate the
ability to engage customers. Digital D2C channels, however, now enable consumer brands to solicit inputs from far more people.
This gives rise to a new marketing tool called crowdsourcing. Crowdsourcing leverages the digital infrastructure to tap into the
heterogeneous pool of knowledge, resident in the general population of consumers, for innovative ideas (Bayus, 2013).
Crowdsourcing extends the basic practice of co-creation into two directions. First, it is increasingly used for multiple components
of the brand strategy, from NPD to brand positioning and advertising. Second, crowdsourcing enables soliciting ideas from con-
sumers around the world and improve the brand's global strategy. We will discuss how crowdsourcing in product and advertising
practices can benefit building consumer brands.
4.1. Crowdsourcing of new product ideas
Historically, firms relied on the creativity of their brand managers and their advertising agency to develop ideas about the
brand strategy that resonates with the market. This is vividly illustrated by the hit TV series Mad Men. However, firms are starting
to experiment with crowdsourcing to come up with creative ideas. Unilever operates an open-innovation website, Unilever
Foundry (www.unilever.co.uk/about/innovation/open-innovation). As stated on its website, “We have a vision of a better future
for our world and our business – and we want partners to share it. If you have a new design or technology that could help us
grow our business and solve the challenges we've set ourselves, we'd like to work with you through Open Innovation.”
Dell reported that by June 2018, the crowd has submitted N28,000 ideas to its IdeaStorm site (www.ideastorm.com), attracting
around 750,000 votes and 100,000 comments. Over 550 ideas have been implemented. Danish toy-maker Lego employs a four-
step procedure to create new Lego sets (https://ideas.lego.com). Anybody can create a model of their liking, which is then posted.
If the idea gets at least 10,000 supporters, it qualifies the project for review by the Lego Review Board of set designers and mar-
keting people. Projects selected by the Board go into production and are released for sale around the world. The inventor is fea-
tured in set materials, receives a royalty on sales, and is recognized as the product creator.
Yet, does crowdsourcing lead to better outcomes than traditional in-home development? Although experience with
crowdsourcing is still limited, initial evidence is encouraging. User-generated product ideas can be more novel than product
ideas developed in-house (Poetz & Schreier, 2012). This is important because, for many brands, lack of good ideas, rather than
an overabundance of high quality ideas, is common (Goldenberg, Lehmann, & Mazursky, 2001; Steenkamp & Gielens, 2003). Fur-
ther, user-generated new products can generate better financial results (Nishikawa, Schreier, & Ogawa, 2013). However, the effec-
tiveness of crowdsourcing of actual product development – as opposed to crowdsourcing of new product ideas (Chang & Taylor,
2016) – depends on the quality of the initial product idea. If the quality of the initial idea is high, the firm might be better off with
in-house product development. For the best ideas, crowdsourcing of product development may be less beneficial, because the chal-
lenges associated with processing and assimilating new and diverse design and engineering solutions may outweigh potential ben-
efits (Allen, Chandrasekaran, & Basuroy, 2018).
Although, research has demonstrated that crowdsourcing can be beneficial to generate new ideas, little is known about how to
market these products. Should you mention this at all? Does the label ‘developed by consumers like you’ generate more willing-
ness to try the innovation? Or, may the lack of expert input raise suspicion, especially for more radical innovations, and even lead
to cynicism as to the actual novelty of the product? Also, to what extent can user input claims allow for a higher price point? Are
consumers willing to pay more for user-designed product? Or, do they feel that a lower price should be charged since obviously,
people like themselves do the heavy lifting?
Crowdsourcing of such a vital and closely held corporate function of NPD also raises some organizational questions. Not every
firm has the organizational resources and oversight capabilities of such an initiative. How can the firm engage external help with-
out compromising its own competitive advantage? Does it need outside parties to sign confidentiality agreements? If yes, then
maybe co-creation is not appropriate. After all, at an early stage, the competition can glean insight into the firm's plans.
4.2. Crowdsourcing of other elements of the marketing mix
Firms are starting to apply crowdsourcing techniques to other elements of the marketing mix, including brand positioning and
advertising. Kraft struggled in its efforts to give Mini-Oreo cookies their own identity versus regular Oreo cookies. It decided to
engage crowdsourcing firm eYeka to get ideas from consumers what they saw as unique to Mini-Oreo.4 Kraft received N500
ideas from 42 countries and identified ten potential ideas for its new brand positioning. Several of the crowd's creations were
of a high enough quality that Kraft could consumer-test them immediately. Their work inspired the new value proposition and
global campaigns for Mini-Oreos around “Bonding Moments” (Steenkamp, 2017).
Creative advertising ideas are scarce, and therefore, firms such as Unilever, Procter & Gamble, Danone, and Hyundai are turning
to crowdsourcing. For example, Hyundai was looking to bring to life its global brand campaign “live brilliant” with fresh creative
expressions that show that a car can create special experiences beyond transportation. Working with eYeka, it developed a contest
inviting consumers to come up with an original, unique, and engaging story where people have a brilliant, memorable experience
with a car, in the form of videos and print ads. The winning print ad design depicts a man sitting in his Hyundai, stopping by a
majestic tree who decides to draw a tree house on the car window to complement it. It was adapted by Hyundai and its adver-
tising agency into a series of ads showing how a cloud can turn into an ice cream when you hold a cone up to the car.
While these are success stories, evidence is anecdotal. What is the success rate of crowdsourcing of marketing mix strategies?
Little to nothing is known about when, and for what brands, this D2C input is truly enhancing the brand. Is it limited to experi-
ential brands, or can more functional brands benefit from this as well? Is this a source of input that is especially valuable for
newer, more dynamic brands or can mature brands benefit as well to revive the brand with insights they may have overlooked?
What is the contingent role, if any, of the marketing mix element in question, brand strength, product type, or marketing capabil-
ities of the company? Since crowdsourcing takes up management time with uncertain outcomes, is it worth the effort, or should
we consider it a hype?
Crowdsourcing of NPD and other brand strategy elements rectifies the existing imbalance between established and new firms
to some degree. By calling in the creativity of the masses, new firms reduce the resource advantage in R&D and marketing. Take
advertising. Big brands get preferential treatment (best creative people, best ad execution managers) by the world's best advertis-
ing agencies, and new brands are left with the breadcrumbs. By crowdsourcing advertising ideas and execution, new brands level
the playing field (Steenkamp, 2017).
4.3. Global crowdsourcing
With the global reach of the internet, there is no compelling reason why the firm should limit crowdsourcing to one's home
market. International crowdsourcing has three advantages (Steenkamp, 2017). First, the firm taps into a larger pool of ideas. Sec-
ond, receiving inputs from people around the world allows the firm to develop truly geocentric branding strategies, as opposed to
the more usual ethnocentric strategy where the firm tweaks the domestic strategy for overseas markets. Third, sourcing ideas from
a particular overseas market helps the firm in developing a more effective local strategy in that market.
Crowdsourcing on an international basis raises the question whether internationally gathered insights can simply be rolled out
uniformly. Using “wrong” input from the “wrong” market can badly harm the brand. What we know is that there are systematic
differences between countries in 1) the likelihood to engage in crowdsourcing and 2) the usefulness of creative output (Chua,
Roth, & Lemoine, 2015). Creativity research has traditionally emphasized the importance of divergent, out-of-the-box thinking.
This suggests that firms are advised to target their crowdsourcing efforts to countries where the national culture stimulates crea-
tive thinking. In order to maximize crowdsourcing quality and quantity, brands should direct their efforts to engage consumers in
“loose” cultures, i.e., cultures that are characterized by weak social norms and high tolerance of deviant behavior (Gelfand et al.,
4
eYeka specializes in crowdsourcing creative business problems, such as generating ideas for new products or services, product designs, brand positioning, and ad-
vertising campaigns. It draws upon a community of over 280,000 members from N160 countries. Every project is organized as a contest with one or more potential
winners.
2011). In these cultures, individuals are less encouraged into convergent thinking, which typically stimulates not standing out,
consensus seeking. Convergent thinking is generally regarded as detrimental to creativity (McCrae, 1987). However, some scholars
have argued that convergent thinking has a critical role to play as well. Specifically, convergent thinking helps a firm evaluate
ideas with an eye to practicality and implementation (Goncalo & Duguid, 2011). So, brands on the lookout for truly novel ideas
should focus on input from divergent-thinking countries, but to ascertain if these ideas are useful for a given context, they may
prefer input from convergent-leaning (“tight”) cultures (Cropley, 2006). Still, when using input from different cultures, brands
have to take into consideration that individuals from a tight culture are less likely than persons from a loose culture to engage
in, and succeed at, foreign creative tasks. Moreover, the greater the cultural distance between crowdsource participant and the
brand's home country, the stronger the negative impact of cultural tightness. In addition, brands from tighter cultures are
less likely to turn ideas proposed by foreign participants into a success (Chua et al., 2015). Cultural heterogeneity of crowds
(participants) and brands (clients) thus affects participation and performance in global creative problem solving. Brands have to
be cautious in considering crowds as homogenous, and should allocate crowdsourcing efforts in function of the cultural tightness
of the participant and target countries, and whether the creative task is local or foreign.
Global crowdsourcing holds the promise of genuinely geocentric brand strategy development — the Holy Grail of global brand-
ing (Steenkamp, 2017). But are these goals achieved in practice? Evidence is limited to one study (Chua et al., 2015). Much more
evidence is needed before we can be confident whether, and under which conditions, global crowdsourcing leads to successful
geocentric branding strategies. Development of geocentric branding strategies requires input from around the world. However,
participation in creative tasks systematically depends on culture. Therefore, almost by definition, there is sample selection bias
in global crowdsourcing. Yet, billions of consumers live in tight cultures. The extent to which ideas of participants in loose cultures
resonate with consumers in a tight culture is unclear.
Another issue is the interplay between (global) crowdsourcing and organizational culture. If the firm lets outsiders in, it gives
up some control over its brand, while there is no guarantee that all effort put into crowdsourcing will lead to viable brand prop-
ositions. How comfortable are managers in firms with a hierarchical organizational culture (Deshpande, Farley, & Webster, 1993),
and in firms hailing from high power distance societies, with giving up control? Does this put them at a competitive disadvantage
versus firms that are more open to crowdsourcing input? Or, can they come up with crowdsourcing models that are more aligned
with their (organizational or national) culture?
5. Digital marketing disintermediation: The rise of C2C matching models
Taking it one step further, digital consumer interactions can make traditional brands obsolete. Digital C2C platforms increas-
ingly allow individuals to act both as providers and consumers of products and services. The emergence of C2C online platforms,
also known as the “sharing economy,” has enabled people to collaboratively use underutilized inventory through fee-based sharing
(Zervas, Proserpio, & Byers, 2017). A plethora of new platform brands has been established. For example, Uber, Lyft, Careem, and
Didi Chuxing are active in chauffeured transportation (ride-hailing), BlablaCar in ride sharing, DriveNow in car sharing, and Turo in
car rentals. TaskRabbit matches freelance labor with local demand, Monjoujou rents out toys, Peerby organizes tool sharing, Airbnb
and HomeAway are active in C2C short-term lodging, Etsy and eBay are C2C marketplaces, and Craigslist is a classified advertise-
ments platform.
C2C transactions have been around since the dawn of mankind. However, historically, they were largely confined to one's fam-
ily or social network. What is new in the digital era is the ability to interact and transact with “strangers” (Frenken & Schor, 2017).
A second defining element is the role of the online platform, which facilitates transactions among people who do not know each
other. The combination of transactions with strangers and online platforms is what makes the C2C matching economy a powerful
new phenomenon. A variety of technological developments that allow people to connect directly, irrespective of geographical dis-
tance, including 4G networks, Web 2.0, and apps, have made large scale activities feasible.
In this section, we evaluate how and when this evolution will give rise to new brands and how traditional brands will be af-
fected. We first briefly reflect on individuals' motivations to participate in C2C markets, as it will be important to understand when
and how C2C brands can truly offer value to consumers and hence be sustainable over time.
5.1. Consumer motivations to use C2C platforms
The literature identifies three main motivations for consumers to be active on C2C platforms: economic, environmental, and
social (Böcker & Meelen, 2017). Participation in C2C markets is obviously a source of income for providers, while for their con-
sumers, the transaction may be cheaper than obtaining the same goods from a traditional firm. Also sustainability, reducing
waste, cutting out “Big Business,” or even anticonsumption motives (Hamari, Sjöklint, & Ukkonen, 2015) come into play, as C2C
markets are considered less resource intensive. Consider, for example, that most people do not use their car 95% of the time. In
an ideal world, the same transportation needs could be fulfilled with a fraction of the current car park. Participation might also
be driven by social motivations. Interactions between users and providers of goods are part and parcel of many C2C platforms.
Take ride-sharing service BlaBlaCar. There is a clear economic motivation: drivers share the costs of their trips and riders often
pay less than they would have using public transportation. However, people may also enjoy the social interaction with fellow pas-
sengers. An article in the New York Times quotes a driver who offers car-sharing services through BlaBlaCar. She drives twice a
month from Paris to Alsace: “As it's a long time to spend in a car, traveling with people also makes the time go faster” (Scott,
2014).
The relative importance of these motivations in consumer willingness to engage in C2C markets depends on the type of service
or good (Böcker & Meelen, 2017). Transactions of expensive goods like a house or a car are predominantly economically moti-
vated. Environmental motivations are relatively important for ride sharing, while social motivations are dominant for meals. Youn-
ger and low-income groups are more economically motivated to use and provide shared assets. Younger, higher-income and
higher-educated groups are less socially motivated, and women are more environmentally motivated.
So far, very little is known about the extent to which C2C platforms deliver significant societal benefits. Do they really contrib-
ute to greater sustainability? What are the effects on local taxes and job security? While legacy firms such as hotels and taxi com-
panies are an important source of local taxes and provide benefits to its employees, C2C firms often fly under the radar. More
research looking into the welfare implications of C2C platforms is required to address these questions. Moreover, can each of
these three motives offer potential to build brands for the long run? Are C2C platforms that primarily appeal to environmental
or social motives viable in the long run? Or, as the first wave of enthusiasm for C2C platforms fades away, may participation in
them primarily come down to economic motives? After all, this would not be the first time. Recall that many half-baked digital
companies crashed in the early 2000s after the collapse of the dot-com boom.
5.2. C2C platforms as brands
Brands are essentially about trust — the belief of consumers that the brand delivers what it promises (Rajavi, Kushwaha, &
Steenkamp, 2018). If a consumer trusts a brand, this will reduce transaction costs. High brand trust reduces perceived purchase
risk, which decreases consumer information-gathering and processing costs (Erdem & Swait, 1998). C2C participation entails a
high degree of risk. Think about renting your house to a total stranger. Absent a branded digital platform, interactions would in-
volve vetting each person before entering in an agreement (‘contract’) with them, entailing prohibitively high transaction costs.
Branded platforms dramatically reduce these transaction costs. Consumers now find it much easier to locate goods and services
they want, and market-based transactions are regularized by the platform via standard contracts and online payment systems. The
digital platform makes transactions less risky and more appealing because they source information on users via the use of ratings
and reputations. This further lowers transaction costs and reduces risk (Frenken & Schor, 2017). However, these benefits only ac-
crue to brands that are trusted, suggesting that C2C platform brands are characterized by strong network externalities. Consumer
inertia and risk aversion means that there is a built-in tendency towards a natural oligopoly (if not a monopoly) favoring early
movers and brands with a large installed base. Taken together, these observations suggest that C2C online platforms offer excellent
opportunities for branding.
Table 2 provides information on some of the largest C2C players, revealing some interesting aspects of successful C2C brands.
First, it highlights how the digital world has accelerated international spread of brands. In the pre-digital age, it would take de-
cades for a brand to achieve significant international coverage. Contrast this with Dubai-based Careem that has operations in 80
cities in the Middle East, North Africa, and South Asia after a mere six years. BlaBlaCar is available in many European countries
as well as in Mexico, Brazil, Turkey, and India, and has 60 million members in its community. Airbnb has over 4 million lodging
listings in 65,000 cities and 191 countries while HomeAway has two million vacation rentals in 190 countries, operating through
50 websites in 23 languages.
Second, several brands have become valuable corporate assets. We could locate four C2C brands on the brand evaluations list of
either Brand Finance or Kantar MillwardBrown. According to Kantar MillwardBrown, Uber is no. 81 on the list of the world's 100
most valuable brands in 2018 (ranked 89th in 2017) and eBay is ranked no. 88. Airbnb is ranked no. 316 in Brand Finance's top-
500 brands. Third, and relatedly, a number of these companies are already very valuable. While it is difficult to say with confidence
how realistic these firm valuations are given their short track record, it does indicate that investors are confident in the value-
Table 2
Valuation of select C2C companies.
C2C company Founded Industry Home country Number of countries Firm value ($bn) Brand value ($bn)
Uber 2009 Transportation U.S. 84 68 16.0

Didi Chuxing 2012 Transportation China 1 56 1.3
Airbnb 2008 Hospitality U.S. 191 29.3 5.5
eBay 1995 Marketplace U.S. 27 27.8 14.8
Lyft 2012 Transportation U.S. 1 11.5 n.a.
Etsy 2005 Marketplace U.S. 83 6.5 n.a.
HomeAway 2005 Hospitality U.S. 190 N 3.9 n.a.
Craigslist 1995 Advertisements U.S. 70 N3 n.a.
BlaBlaCar 2006 Transportation France 22 1.5 n.a.
Careem 2012 Transportation UAE 13 1.5 n.a.
Turo 2009 Transportation U.S. 4 0.7 n.a.
DriveNow 2011 Transportation Germany 9 0.5 n.a.
TaskRabbit 2008 Freelance labor U.S. 2 0.1 n.a.
n.a. = not available.

Note: Data refer to 2018. Some companies (e.g., eBay, Craigslist) are not pure C2C players). Firm value estimates are approximate as only eBay and Etsy are publicly
listed, and come from Bloomberg, the New York Times, Forbes, and TechCrunch. In 2015, Expedia acquired HomeAway for $3.9 billion (20% premium over closing
price). It is likely that HomeAway's value is considerably higher now. Brand value comes from Brand Finance, except eBay's, which comes from Kantar
MillwardBrown.
generating potential of C2C. Finally, the most valuable C2C firms are predominantly in three industries — transportation, hospital-
ity, and marketplaces. The first two are industry specific. Owning the asset involved is very expensive. We can reasonably expect
that incumbent transportation and hospitality brands will be the ones that are most affected by the C2C matching models. Further,
all three are industries where C2C behavior is primarily motivated by economic considerations (Böcker & Meelen, 2017). This of-
fers greater potential for value creation than C2C platforms in categories where economic motives are less important.
More research is needed on the temporal dynamics of C2C platforms. Etsy, eBay, and Craigslist started as pure C2C players but
now also allow manufacturers and retailers to use the platform to reach consumers. Does this kind of brand extension dilute
or build brand equity? The one firm for which longitudinal evidence on brand value is available is eBay. According to
Kantar MillwardBrown, the value of the eBay brand was $13.2 billion in 2006 (the first year it published its top-100 list) versus
$14.8 billion in 2018. The increase in brand value over 12 years is even less than inflation. However, a single firm does not provide
compelling evidence. Academics could employ the “classic” tools of brand extension research to shed light on this issue. Further,
theorizing and research is needed on the competitive and industry conditions that impact the viability of C2C brand building.
5.3. Competing with C2C brands
The rapid global spread of car hailing services and the emergence of C2C car-rental platforms like Turo, which is around 35%
cheaper than traditional rental companies, will render car ownership increasingly less attractive, especially for people living in
large cities. For existing car manufacturers and established car-rental brands such as Enterprise, Hertz, and Avis, much is at
stake. In 2018, Uber's brand value exceeded that of well-known car brands like Ford, Honda, and Volkswagen, according to Kantar
MillwardBrown. Realizing the potential new market for car sharing, BMW started Drivenow, which is a paid car-sharing service
where a user may book any of the designated cars randomly distributed throughout the city. When the user is finished, they
may park the car anywhere within the assigned city area.
C2C platforms in the hospitality industry exert a profound impact on incumbent hotel chains. One study showed that a 10%
increase in Airbnb listings leads to a 0.39% decrease in monthly hotel revenue (Zervas et al., 2017). Lower-end hotels, and hotels
that do not cater to business travelers, appear most vulnerable to increased competition from C2C rentals. Non-Airbnb users also
profit from Airbnb's presence through increased price competition. Historically, hotels could exploit peak demand by charging
higher prices. This is much less the case after Airbnb became a significant presence in local markets. The Airbnb platform has
near-zero marginal cost, in that a new room can be incrementally added to (or removed from) the platform with negligible over-
head. Because of this, Airbnb can scale supply in an almost frictionless manner to meet demand (Zervas et al., 2017).
Incumbent firms take tentative steps to tackle the threat of C2C platforms by acquiring rival C2C platforms, launching their own
C2C platform, or by acquiring other incumbents. This can be seen most clearly in hospitality industry. Incumbent hotel groups are
taking tentative steps to tackle the threat of Airbnb and HomeAway, acquiring rival home-sharing start-ups and launching their
own digital initiatives. The surge in merger and acquisitions in recent years in the hospitality industry can be traced back to
the emergence of home-rental companies.
Up to now, there has been little academic research on the effects of C2C firms on established firms, the one exception being the
Zervas et al. (2017) study, but their study is restricted to the Texas hotel industry. What is the cross-elasticity of C2C expansion
(increase in number of Uber/Lyft cars, Airbnb hotels, etc.) on revenues of traditional firms? What proportion of C2C revenues is
caused by an increase in primary demand versus a shift from traditional firms to C2C firms? A related issue is, who gets hurt
the most? Do these findings depend on industry, service quality, and other factors? We illustrate this with an anecdote. In the
Chapel Hill area, four taxi companies compete with Uber. One taxi company has upgraded its service – better cars, uniformed
chauffeurs, and 100% punctuality – while also charging around 10% higher price. The other three have not changed their strategy.
The market share of the former company is expanding, while the others are losing business to Uber. Nevertheless, the biggest issue
is what can incumbent firms do to thrive in the C2C economy? Is increasing size – as witnessed in the hotel industry – the more
effective approach? Should incumbents embrace C2C models in the spirit of Schumpeterian creative destruction? What business
models would work best?
6. Conclusion
Marketing academics are keenly aware of the seismic shifts in today's marketing environment caused by digital (dis)interme-
diation. In this article, we discussed research on digital (dis)intermediation, and how it affects branding activities of incumbents
and new firms. We argued that digital (dis)intermediation and disruption to brands can take four forms. First, digital transaction
intermediation is a development that is closely tied to the rise of ecommerce retailers and has significant ramifications for brand
building. Ecommerce retailers like Amazon, Alibaba, and JD.com have become indispensable sales channels for almost any con-
sumer goods industry and have become powerful brands in their own right.
Second, digital transaction disintermediation is gaining momentum. For many decades, brand manufacturers have tried to cut
out the middleman, but with limited success. The rise of ecommerce D2C models presents the best chance brand manufacturers
have ever had to achieve this. For world-class brands, or niche brands with a loyal following, D2C brand websites are the most
attractive option. For all other brands, opening a web shop on a marketplace is a more viable option to directly reach consumers.
These first two types of digital (dis) intermediation are primarily top-down processes, where firms are developing new ways to
sell their brands to consumers. The next two types of digital (dis)intermediation are more of the bottom-up kind — the consumer
is in the driver's seat. The rise of D2C brand-building models is powered by crowdsourcing, offering new opportunities for brand
Table 3
Research agenda.
Digital transaction intermediation: Ecommerce retailers

Online price management
- How to avoid price erosion, online and offline when listing online.
- What types of brands, premium or budget, stand to lose more/less from brand erosion?
- How does online pricing interfere with offline price promotion programs?
Online category & shelf management
▪ Online visibility.
- Where to feature on a webpage and how can it jockey for that position.
- What brands gain most from preferential page locations, leading brands or smaller?
- Are online subscription models beneficial for brands, especially innovative brands?
- What is the impact of voice-supported technology on brand value?
▪ Online Presentation
- What is the impact on brand success of surrounding brands and items on web pages?
- What is the impact on brand success of brand presentation customization on webpages?
- What is the impact on brand success of online store-in-store concepts?
Online relationship management
- What are the right metrics to evaluate online retailer-brand manufacturer relationships?
- Does online retail presence impact offline retailer-brand manufacturer relationships?
- What are the best strategies to build long-term relationships with online retailers?
- What is the role of online exclusives in long-term relationships with online retailers?
Online store brand competition
- How do online store brand introductions impact performance, online and offline?
- Can online store brand introductions reduce national brand price erosion?
- Can online store brands become brands in their own right? Can they go premium?
- How does voice-supported technology impact online store brand performance?
Digital transaction disintermediation: Ecommerce D2C models
D2C brand website management
▪ Dedicate websites for established brands
- What is the (long-term) impact of D2C channels on brand equity?
- What type of brand stands to gain more or less?
- What is the impact of D2C channels on new product success, online and offline?
- What is the impact of website outsourcing on brand success?
▪ De Novo brand websites
- When can de novo brands benefit from B&M operations?
- How does the price of de novo brands evolve, as brands mature?
D2C marketplaces
- Does online marketplace presence outperform online retail presence?
- Does online marketplace presence reduce online and offline price erosion?
- Does online marketplace presence impact offline retail presence and visibility?
- Do gray channels hamper marketplace success?
Digital marketing intermediation: D2C marketing models
Crowdsourcing of new product ideas
- How to market new products based on crowdsourced ideas?
- What are the key organizational factors (structure, processes, culture) to make crowdsourcing of new products a success?
- How to protect confidentiality in strategic direction a firms wants to go (new products, markets) in a crowdsourcing environment?
Crowdsourcing of other elements of the marketing mix
- What is the success rate of crowdsourcing of marketing mix strategies?
- For which marketing mix elements is crowdsourcing most useful?
- Is the effectiveness of crowdsourcing contingent on brand, company, and industry factors?
- Is crowdsourcing of the marketing mix worth the effort?
Global crowdsourcing
- Does global crowdsourcing lead to better, geocentric brand strategies?
- How to deal with sample selection bias?
- How to leverage insights from tight cultures?
Digital marketing disintermediation: C2C marketing models
Consumer motivations to use C2C platforms
- What is the relative importance of the three core motivations to participate in C2C platforms?
- What is the long-term viability of C2C platforms whose primary appeal is rooted in non-economic motivations?
- What are the comprehensive (total) welfare implications of C2C platforms?
- What are sustainability benefits of C2C platforms?
C2C platforms as brands
- How valid are market and brand valuations of C2C brands?
- How important is the first-mover advantage (network externalities) for C2C brands?
- Which industries offer the best, long-term prospects for C2C brands?
- Do C2C brand extensions dilute or strengthen brand equity? What are contingent factors?
Competing with C2C brands
- What is the cross-elasticity of C2C expansion on revenues of traditional firms?
- Do C2C brands primarily expand the pie or steal sales from incumbents?
- Which incumbent firms get hurt the most? Does this depend on industry, service quality, and other factors?
- How do (should) incumbent firms respond to C2C entrants? Under which conditions is a particular response strategy more effective?
managers to tap into the creativity of the crowds. The idea is to outsource brand-building activities, from new product ideas to
advertising and positioning, to consumers. With global digital reach, truly geocentric brand building strategies become a distinct
possibility. While this can benefit any brand, it may be especially attractive for smaller and new brands, which lack the financial
resources to compete with established brands in R&D and advertising.
A final development is digital marketing disintermediation, which is closely tied to the rise of C2C models. In their extreme
form, C2C models do not involve companies at all – all transactions take place between consumers. Yet, paradoxically, that can
only happen if the platform where supply and demand are matched is trusted by all parties. As a consequence, some of the hottest
new brands are C2C brands. To wit, a transportation disruptor brand like Uber is worth more than almost all car brands. Airbnb's
brand value exceeds that of most hotel chains.
The implications of the emergence of digital (dis)intermediation for branding are so variegated, aptly reflecting the multicol-
ored phenomenon of digital (dis)intermediation itself, that we have only started to scratch the surface. On the positive side,
that means that there are countless opportunities for future research. We introduced issues for future research in each (sub)sec-
tion. We summarize the most pertinent research questions in Table 3. Addressing these, and other, research questions ensures that
the domain of digital (dis)intermediation will remain a vibrant area of research for many years to come.
We conclude our article with several broader observations. While studying this phenomenon, we were struck by the dynamics
in the marketplace, which in some respects is ahead of academia. C2C business models are broadening the scope by incorporating
D2C (e.g., Etsy, eBay). Original pure D2C brands like Warby Parker (eyewear), Harry's (shaving gear), and Untuckit (apparel) are
opening B&M a move dubbed “online moving offline.” Often, this is in response to customers' requests to see, touch, and try the
product before buying. Moreover, pure e-commerce plays like Amazon and Alibaba are opening B&M stores, either as greenfield
operation or via the acquisition of an existing chain — as Amazon did in case of Whole Foods. Are the moves from pure
ecommerce and D2C to online plus offline the latest instance of the Wheel of Retailing? A linchpin of ecommerce retailers' busi-
ness model is their lower cost structure (Fig. 2). As players like Amazon or Warby Parker move into the expensive and inflexible
offline channel to reach new customers, their costs will increase. Will that not open the door for new, lower-costs pure online
players?
The ramifications of these moves by online and offline retailers and brand manufacturers are unclear. Might it be that in a few
years, everybody engages in intermediation and disintermediation? Is that a wise strategy? Take Amazon — in early 2019, it had a
price/earnings ratio of around 90, about five times higher than Walmart's. Much of this higher P/E ratio is motivated by the ex-
pectation that Amazon's revenues will grow 20–30% per year, if not more. While such growth in revenues is in principle feasible
(up to a certain point) for e-commerce, for B&M retailing it is not. So, as Amazon moves more into offline, what will that do for
firm value? One harbinger of the dangers ahead is that on October 26, 2018, Amazon lost 8% of its market value because its fore-
casted year-on-year growth figure of 15% disappointed. One reason for the lower growth was that now for the first time, Whole
Foods figures were included, and B&M grocery retailing revenue growth is in the low single digits. As a consequence, the cost of
acquiring Whole Foods might be higher than the acquisition price of $13.7 billion. This is just one example. We need to better un-
derstand how these moves – online to offline, offline to online, C2C to D2C, D2C to offline – affect competitive dynamics, brand
equity, and firm value.
The boundaries between brand manufacturers and retailers, between offline and online retailers, and between suppliers and
consumers are increasingly blurred. In many respects, practitioners are ahead of academic in developing new business concepts,
but academics are in a better position to systematize these new developments. Let us use this opportunity to develop new theories
to make sense of this rapidly changing marketplace. We conclude with a call that marketing takes the lead in developing overarch-
ing, indigenous theories of digital (dis)intermediation of the kind championed by Ajay Kohli (2009, 2017), rather than look to
other disciplines for direction.
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International Journal of Research in Marketing 36 (2019) 367–384

Contents lists available at ScienceDirect

Full Length Article

Branding in the era of digital (dis)intermediation

1. Digital transaction intermediation: the rise of ecommerce retailers

Online price management Crowdsourcing of new product ideas

Rise of ecommerce D2C models The rise of C2C matching models

D2C brand website management Leveraging consumer motivations

D2C marketplaces Competing with C2C brands

Fig. 1. Branding issues in the era of disintermediation.

2. Digital transaction intermediation: The rise of ecommerce retailers

Lower Cost Lower

Customer Free Fast Fulfilment

Sellers Experience Video/Music

Fig. 2. The Amazon ﬂywheel.

2.1. Online pricing management

2.2. Online category and shelf management

2.2.1. Online visibility

Strategy of offering Dynamic pricing

Fig. 3. Vicious price circle.

2.2.2. Online presentation

2.3. Online relationship management

General merchandise, grocery 382,601 34.4

2.4. Online store brand competition

3. Digital transaction disintermediation: The rise of ecommerce D2C models

3.1. D2C brand websites

3.1.1. Dedicated websites for established brands

3.1.2. De novo brand websites

3.2. D2C marketplaces

4. Digital marketing intermediation: The rise of D2C brand-building models

4.1. Crowdsourcing of new product ideas

4.2. Crowdsourcing of other elements of the marketing mix

4.3. Global crowdsourcing

5. Digital marketing disintermediation: The rise of C2C matching models

5.1. Consumer motivations to use C2C platforms

5.2. C2C platforms as brands

Uber 2009 Transportation U.S. 84 68 16.0

n.a. = not available.

5.3. Competing with C2C brands

Digital transaction intermediation: Ecommerce retailers

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