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Problem

Evaluate this statement: The most important determinant of the profit potential of a digital marketplace is the power of buyers and sellers in the particular product arena. Agree or disagree? Explain.

Step-by-step solution

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Step 1/2

E-commerce is a broader term where business practice happens through electronic technology. It explains the digital marketplace where the seller and buyer interact and perform business transactions.

Step 2/2

The statement given in the question is agreeable under various grounds. The digital marketplace gives both the seller and buyer equal rights and power to conduct their operations. The seller provides the product catalog with a price and certain associated services. The customer selects their best fit product from the given catalog. Here, the bargaining power is exercised by both the seller and buyer indirectly. They do not interact with each other directly but through the catalog the seller bargain with the customer and stimulate the customer to select the product within the price range that the seller desires too. Here the seller exerts his power to gain benefits out of the transaction. At the same time, the customer bargain with the seller through careful evaluation of the catalog and select the product that meets his need at the lowest best price. Both of them also enjoy the power of making payment on duly time and with transparent logistics information. This does create trust and keep the business practice more flexible and easier. This is why the e-commerce marketplace’s most potential profitability tends to be the power that buyers and sellers enjoy in the particular product arena.