Summary of Key Points
This article illustrates that the essence of a “platform” is an organization that holds control over traffic and, thereby, has significant influence. It discusses various cases, such as the rivalry between Gome and Gree, as well as Walmart and Carrefour, to demonstrate this point. From traditional appliance stores, supermarkets, and shopping centers to today’s e-commerce platforms, any entity that can determine whether merchants can reach consumers possesses the power to dictate terms to them. The struggle between platforms and merchants has never ceased: strong brands can negotiate with platforms, but smaller businesses are often exploited. The result of free competition is often the emergence of monopolistic “giants,” which necessitates policy intervention to protect smaller retailers.
Detailed Analysis
1. What is a “platform”? – Traffic is the key to platform power
Many people think of platforms as only companies like Taobao or JD.com, but the article argues that any entity that can control consumer traffic qualifies as a platform. For example, in the past, appliance retailers like Gome and Suning relied on their customer flow; thus, they could make demands on manufacturers. Walmart and Carrefour were also platforms, as products in their supermarkets had to be displayed for consumers to see. Today’s shopping centers are no different—merchants need to rent space there because of the high foot traffic. In simple terms, a platform acts like a “traffic checkpoint”; if you want to reach customers, you must go through it, which gives the platform control over you.
2. The battle between platforms and merchants: The Gome-Gree conflict is a typical example
The conflict between Gree and Gome in 2004 brought this dynamic to the fore:
- Gome arbitrarily reduced the price of Gree air conditioners, prompting Gree to demand that it stop and apologize, but Gome ignored the request.
- Gree then cut off supply, leading Gome to ban all Gree products nationwide.
- In response, Dong Mingzhu stood firm, withdrew from Gome, and established its own distribution network and retail stores. Since Gree had a strong brand and was recognized by consumers, it wasn’t afraid of the platform’s actions. This shows that merchants with their own brands and customer bases can challenge platforms; however, smaller, brand-less businesses are at the mercy of the platforms. For instance, many small restaurants today不敢 leave food delivery platforms because they lack customers, while Wei Jia Liangpi was able to exit such platforms due to its high local foot traffic.
3. Today’s platforms are even more powerful
The article states that the five major e-commerce platforms currently have much more power than Gome and Suning did in the past:
- They control dozens of times the amount of traffic that those platforms did, which allows them to squeeze merchants’ profits to a minimum (e.g., food delivery platforms taking over 20% of transactions).
- Some shopping centers require merchants to renew their contracts every six months instead of the usual three years, preventing them from making investments or renovations for fear of being expelled.
- Platforms also use strategies like selling luxury goods at their own prices to attract more customers and strengthen their influence.
4. The trap of free competition
The author once believed in the benefits of free competition, but now believes that it often leads to monopolies:
- In a market economy, the strong become even stronger, eventually dominating all traffic and profits.
- E-commerce platforms initially competed with each other, but gradually only a few large ones remain, controlling almost all online traffic. These platforms act like “giants,” taking merchants’ profits as a given.
- Smaller businesses either have to tolerate exploitation or go out of business.
5. Policy regulation is the key to breaking this cycle
The article concludes that market forces alone are insufficient to address this issue; policy intervention is necessary. Without regulation, smaller businesses will be at the mercy of the platforms. Policies can limit platform fees, prohibit monopolistic practices, and protect the rights of smaller merchants, preventing platforms from becoming tyrannical.
In summary
This article emphasizes that the relationship between platforms and merchants revolves around the control of traffic and influence. Platforms have always been dominant, and this trend has intensified with the rise of e-commerce. Free competition does not prevent monopolies; therefore, policy regulation is essential to ensure a fair market environment where smaller businesses can survive. By understanding this, ordinary people can grasp why businesses sometimes complain about platforms—it’s not that they are being overly sensitive, but rather that the platforms have too much power.