“Electronic commerce is an emerging concept that describes the process of buying and selling
or exchanging of products, services, and information via computer networks including
Internet.”(Turban, Lee, King and Chung, 2000). Electronic commerce, or short e-commerce,
promised many benefits and golden opportunities often described by terms like business-tobusiness
(B2B) or business-to-consumer (B2C). Those terms are now often used in
commercials and advertisements. After only a short while new terminology was invented to
describe the new opportunities of e-commerce. The old terms lost their impressiveness much
too fast. Venture capital was readily available to finance business models described by peer-to
peer (P2P) and consumer-to-business (C2B). The online world but also their financial partners
found themselves in the middle of hype.
One of the great effects predicted was an effect named disintermediation. This term
describes according to Chaffey, Mayer, Johnston and Ellis-Chadwick (2000) the removal of
intermediaries. The former linkages between customers and companies like brokers or
distributors are replaced by the electronic channel. The picture some dot.com entrepreneurs
painted was one of a world without travel agencies, toyshops, electronic retailers and other
intermediaries.
Disintermediation caused some mid-sized channe l relationship earthquakes after a
rebellion from the intermediaries. Resellers of the Apple's I-Mac gave Steve Jobs at a
presentation in Paris, Europe a hard stand. Mr. Case was there to inform retailers about
Appel's newest PC model. His announcement, that the I-Mac will be exclusively available via
the Internet for an introduction period of four weeks, created whistle blowing and tumults
among the resellers. The upset intermediaries feared that this four weeks were just a try out
for their uncertain future (Stein, 2000). It comes at no surprise that intermediaries rebelled as
companies tried to shortcut them with the help of electronic commerce. Another example of
disintermediation is Steven King, who tried to sell a new book via the Internet. He put the first
chapters online for free and would only write further chapters if most people would pay him.
The project called 'The Plant" ended not successfully. Stephen King discontinued his trial
because the percentage of paying customers dropped with every chapter (Der Spiegel, 2000). [...]
Table of Contents
1.Introduction
2.1. Disintermediation
2.2 Reintermediation
2.3. Integrating the Internet - towards multi-channel distribution
3. Implications and suggestions for further research
4. References
Objectives and Research Focus
The paper examines the transformative impact of electronic commerce on distribution channels, specifically investigating whether the emergence of the Internet leads to the removal of traditional intermediaries (disintermediation), the creation of new types of intermediaries (reintermediation), or a combination of both.
- Analysis of disintermediation through cost efficiency and direct producer-to-consumer sales.
- Evaluation of reintermediation and the rise of cybermediaries in the digital marketplace.
- Integration of the Internet as a multi-channel distribution strategy.
- Management of channel conflicts and the strategic role of intermediaries in e-commerce.
Excerpt from the Book
2.1. Disintermediation
Brick-and-mortar retailers fear that some output utilities that were more insignificant for intermediaries as manufacturers can offer extensive customer service via their Internet sites (Gilbert & Bacheldor, 2000). Good examples for self-service are Siemens AG and other electronic manufacturers, which offer FAQ, Forums and online problem solving on their websites. The traditional intermediaries could provide such services, but the efficiency of the electronic communication channel via Internet makes their service redundant as they are better performed by the manufacturers themselves. This holds especially for complex, high tech products, which provide multi-functionality like consumer electronics or PC-software. The next section will discuss the above-described disintermediation of suppliers caused by higher efficiencies of the Internet as a distribution channel. The focus will in particular be on cost efficiencies caused by lower distribution costs and possibilities for better service.
A distribution channel exists only if a certain utility is attached to the role of the intermediaries. Pelton, Strutton & Lumpkin (1997) distinguish four channel output utilities: convenience, lot size, selection and service utility. A distributor always adds costs the customer has to bear. The intermediaries can only enter the distribution channel if they provide some value in the form of utilities customers are willing to pay for. The convenience utility is divided into temporal and spatial. Intermediaries offer lower waiting time (temporal) or ease the process of the acquisition (spatial). Lot size utility refers to intermediaries adding value by resizing quantities to customer needs. Retailers usually distribute smaller quantities. Because of time constraints or mobility constraints customers cannot search for the best product themselves. They are most of the time locally bounded and have a lack of time, which makes extensive search too expensive. Therefore, an important utility that intermediaries provide is that of selection. The intermediaries pre-select products and give advice to their customers. The services utility are value-added services like free delivery, installation or repairs the intermediaries add to the supply chain.
Summary of Chapters
1.Introduction: This chapter introduces the core concepts of e-commerce and defines the phenomena of disintermediation and reintermediation within the context of changing supply chains.
2.1. Disintermediation: This section explores how manufacturers use the Internet to lower costs and bypass traditional retailers, effectively removing intermediaries from the distribution process.
2.2 Reintermediation: This section discusses the emergence of new, Internet-based intermediaries or cybermediaries that provide specialized value-added services to consumers.
2.3. Integrating the Internet - towards multi-channel distribution: This chapter analyzes how companies can balance traditional and electronic channels while mitigating potential channel conflicts.
3. Implications and suggestions for further research: This section synthesizes the findings, concluding that both disintermediation and reintermediation coexist and suggests future research directions.
4. References: This section lists the academic and industry sources cited throughout the paper.
Keywords
Electronic Commerce, E-commerce, Disintermediation, Reintermediation, Distribution Channels, Cybermediaries, B2B-hubs, Multi-channel distribution, Transaction costs, Supply chain, Channel conflict, Internet marketing, Digital transformation, Business models, Consumer behavior.
Frequently Asked Questions
What is the core focus of this research paper?
The paper fundamentally investigates the impact of electronic commerce on the traditional distribution landscape, specifically focusing on the shift in power between producers, consumers, and intermediaries.
What are the primary themes discussed in the study?
The central themes are disintermediation, which involves removing middlemen, and reintermediation, which involves the creation of new, tech-driven intermediaries, alongside the complexities of multi-channel distribution.
What is the main research question?
The study seeks to answer whether the emerging concept of e-commerce will cause the total disappearance of intermediaries (disintermediation) or whether it will lead to the rise of new forms of intermediation (reintermediation).
Which research methodology was utilized?
The author employs a comprehensive literature review, drawing on existing academic research, industry studies, and various business model examples from the late 1990s and early 2000s to evaluate market trends.
What is covered in the main body of the text?
The main body examines the economic theories behind channel utility, explores B2B-hubs and new cyber business models, and discusses the challenges of integrating online channels without damaging brand image or causing channel cannibalization.
Which keywords define this work?
The work is defined by terms such as disintermediation, reintermediation, cybermediaries, electronic commerce, distribution channel strategy, and multi-channel integration.
How does the author define reintermediation in the context of Amazon?
The author uses Amazon as a prime example of reintermediation, noting how it adds value through superior search capabilities, convenient product reviews, and customer lock-in techniques without owning physical bookstores.
What conclusion does the paper draw regarding the future of intermediaries?
The paper concludes that total disintermediation is unlikely; instead, the future will likely see a diverse landscape where established channels and new, digitally-enabled intermediaries coexist and complement each other.
- Quote paper
- Tomislaw Dalic (Author), 2001, Does electronic commerce as a new distribution channel cause disintermediation or reintermediation or both?, Munich, GRIN Verlag, https://www.grin.com/document/20728
