As the large-scale commercial viability of Internet-enabled retailing became increasingly viewed as a distinct possibility, many commentators initially focused their attention on the widespread disruptive effects that would ensue. However, it soon become apparent that the retailing changes were likely to occur at a pace that was much slower than what many observers were forecasting and that these changes would not occur uniformly across all product categories. To address the inadequacies in our understanding of this phenomenon, researchers' attention has now shifted to a deeper analysis of the factors that may facilitate or impede the emergence of the electronic marketplace.

This paper seeks to understand more fully how the networked environment facilitated by the Internet impacts on product migration to the electronic marketplace (i.e., the extent of reliance by buyers and sellers on the electronic marketplace for activities pertaining to information search, purchase, acquisition, use, and disposal of a product). While the notion of varying rates of product migration is implicit in extant work (i.e., all products will not be impacted equally by the evolving electronic marketplace), there is a dearth of research on how product-related contingencies impact on product migration to the electronic marketplace. We explore this issue by developing a conceptual framework that, in addition to facilitating research in this emerging area, can also be employed by managers to structure strategic discussions related to the electronic marketplace. The framework has three main building blocks: interactivity, value outcomes for buyers and sellers, and product migration.

The concept of interactivity refers to a characteristic of communication. Focusing on consumers and firms as the primary entities of interest, there are three specific communication linkages that must be recognized: between consumers, between firms, and between consumers and firms. This many-to-many approach is useful for conceptualizing interactivity in the electronic marketplace and is adopted for the purposes of this paper. Recent developments in the context of business-to-consumer (B2C) and business-to-business (B2B) e-commerce indicate that interactivity of all three types of communication linkages is likely to keep increasing.

Value outcomes refers to the benefits that buyers and sellers derive in exchange for the effort expended in purchase- and marketing-related activities performed in the electronic marketplace. Following extant work on buyers' perceptions of value, these value outcomes stemming from the electronic marketplace can be categorized as follows: acquisition value (net utility obtained from acquiring a product), transaction value (perceived savings), in-use value (utility derived from product consumption), and redemption value (utility derived at the point of product disposal). Firms also benefit from increased interactivity in a number of different ways. A careful consideration of such value outcomes for sellers indicates that they can be categorized as follows: increased customer reach (number of existing and prospective customers that can be served), increased information richness (ability to describe products in greater detail and collect more detailed information about customers), increased marketing effectiveness (ability to deploy superior marketing strategies), and increased value chain coordination (improved linkages with upstream and downstream firms).

We conceptualize product migration to the electronic marketplace as the extent to which (a) buyers rely on the electronic marketplace to search for, purchase, acquire, use, and dispose a product and (b) sellers rely on the electronic marketplace to provide information, sell, distribute, and service a product. Specifically, we discuss product migration as being comprised of four components: information, transaction, fulfillment, and post-purchase support activities migration. A growing body of literature lends support to the above conceptualization of product migration, suggesting that buyers’ and sellers’ reliance on the electronic marketplace can take a variety of forms depending on the specific purchase-related task they are seeking to accomplish (e.g., information search, pre-purchase inquiries, transaction facilitation, post-purchase inquiries).

Value outcomes for buyers and sellers that ensue as a consequence of increasing interactivity positively impact on product migration to the electronic marketplace. In essence, interactivity presents incentives to buyers and sellers to consider the electronic marketplace for facilitating exchange. As interactivity increases, incentives increase, and so does product migration to the electronic marketplace. These incentives for buyers and sellers work synergistically to facilitate product migration. Buyers can rely on the electronic marketplace to search for, purchase, acquire, use, and dispose a product only to the extent that sellers have incentives to support such activities. Sellers, on the other hand, need buyers who perceive benefits from participating in the electronic marketplace. The greater the incentives for both buyers and sellers, the greater the product migration to the electronic marketplace.

While increased interactivity has the potential for creating value outcomes for both buyers and sellers, the extent of value outcomes is likely to vary across products. Products that are associated with greater value outcomes for buyers and sellers as a result of increased interactivity will subsequently experience a greater degree of product migration to the electronic marketplace. In an effort to provide insights into such differences across products, researchers have focused on a number of underlying product-related characteristics that may moderate the effects of increased interactivity. In the proposed framework we organize these characteristics into three broad categories: (1) product’s core characteristics (digitizability, tangibility, perishability, and fulfillment ease), (2) product’s purchase and use characteristics (purchase frequency, buyers' information needs, and need for physical interactions), and (3) product’s market characteristics (channel efficiency, market thinness, and consumer dispersion).

Finally, it is important to recognize the reasons that may prompt consumers and firms to exhibit inertia (i.e., inability to change an established pattern of buying or selling activities) and resistance (i.e., unwillingness to change an established pattern of buying or selling activities) to product migration—despite the potential benefits. Initial projections of product migration were overly optimistic largely because they did not take into account the potentially significant impact of such impediments. Understanding consumers’ and incumbent firms’ inertia and resistance to product migration is thus crucial to advancing our understanding of product migration and the long-term evolution of the electronic marketplace.