Marketing expert develops framework providing retailers strategies for organizing around ecosystems

LAWRENCE — Many things are often compared to an environmental ecosystem: a body, a sports franchise, an economy.

“Any time more than one person is involved, people say, ‘We are part of this ecosystem.’ Everybody uses it to describe anything these days,” said Murali Mantrala, the Ned Fleming Professor of Marketing at the University of Kansas.

Although the term is widely used across industries, retailers still lack a clear strategic framework for deciding when and how to organize around ecosystems. Mantrala’s latest article, “Retailer ecosystem-centric strategy: A framework for orchestrating value in platform and non-platform configurations,” provides a practical roadmap for how retailers can deploy an ecosystem-centric strategy. The article appears in the Marketing Strategy Journal published by Elsevier.

“An ecosystem is defined formally by having multiple actors who are independent but interdependent. And the connection between these actors is not necessarily imposed or contractual. It is something where people voluntarily come together in their common interest,” said Mantrala, who co-wrote the article with Shankar Ganesan of the University of Notre Dame.

“Of course, the term was borrowed from ecology, where you could imagine animal ecosystems like in the Everglades. Everything — the vegetation, the fauna, the flora — is all in balance. But who organized it? They’re not partners. In fact, many of them eat each other.”

By comparison, he said that retailers increasingly compete not only through traditional merchandising, pricing and operations, but also through their ability to design and govern ecosystems. These interdependent sets jointly create and capture customer value. Leading retailers, from Amazon’s Marketplace to Kroger’s 84.51◦ data ecosystem, capture value by coordinating external partners.

Mantrala separates these approaches into platform and nonplatform.

Amazon’s Marketplace exemplifies platform-based ecosystem orchestration. Through Marketplace, third-party sellers transact directly with customers on Amazon’s infrastructure. 

In contrast, Kroger’s data analytics subsidiary 84.51◦ (named for the longitude line that runs through the company’s headquarters in Cincinnati) serves as a nonplatform ecosystem orchestrator, connecting consumer packaged goods manufacturers, measurement partners, tech providers and Kroger’s retail operations to deliver multiple complementary services.

“Amazon’s profitability increasingly depends on ecosystem businesses, such as marketplace services, advertising, subscriptions and cloud computing, rather than traditional merchandise sales,” Mantrala said. 

Retail media networks are one visible example of this broader shift: Retailers increasingly monetize their first-party shopper data and owned media inventory to enable third-party brands to advertise directly to the retailer’s customers.

In order for retailers to best align to this ecosystem-centric strategy, the professors developed an integrated framework linking (a) value proposition architecture, (b) ecosystem configuration and (c) governance mechanisms.

“Let’s say a medium-sized retailer wants to expand into an ecosystem, they first must come up with what we call the value proposition, which is, what is the range of customers it’s targeting and what particular customer need is the ecosystem supposed to satisfy?” he said. 

They must then match that value proposition to the appropriate ecosystem configuration — platform-based, such as Amazon’s Marketplace, or nonplatform, such as Kroger’s 84.51°. And, finally, if they are the orchestrator, how should they govern? What rules determine who can participate, how data is shared and how revenue is divided among partners?

“Any traditional retailer who is contemplating this strategy will find it quite hard to make it happen. They have to decide whether they want to be a Marketplace-type or a Kroger-type ecosystem. These both represent very different configurations and challenges in setting up connections and networks,” Mantrala said.

“If you’re the orchestrator, you still want to make sure all your partners in this ecosystem are singing the same song. Because it’s a problem if each one is going off in an independent direction.”

For example, he points to Target’s previous partnership with Ulta Beauty.

“Target hosted Ulta Beauty shops within its stores, but the Ulta brand and expertise enhanced the shopping experience in ways Target couldn’t easily replicate on its own,” he said. 

The impetus for this research came when Mantrala and Ganesan were discussing how technology continues to push retail forward.

“I was just amazed at how much volume of business is not due to traditional merchandising but due to ecosystems, whether it’s Kohl’s or Kroger or Walmart or Amazon,” Mantrala said. “A growing and in some cases dominant share of their revenue now comes from ecosystem-enabled streams rather than traditional merchandise margins.”

A KU faculty member since 2020, Mantrala specializes in quantitative marketing strategy (specifically retailing channels, marketing resource allocation and sales force management). He has also been doing research in retail spaces for more than 30 years.

“If you look at business textbooks, nobody is discussing ecosystems. But I doubt that standalone retailing will be the dominant form in another 10 years, especially with the prevalence of AI,” Mantrala said.

As AI accelerates the ability to match partners, personalize at scale and automate governance, retailers who have not built ecosystem orchestration capabilities risk being outpaced by those who have.

He said, “It’s obvious businesses need to start talking about this.”