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Disintermediation: Elimination of intermediaries in the supply chain

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  1. Introduction
  2. The study of disintermediation
    1. The fundamental issues of disintermediation
    2. The pros and cons of disintermediation
  3. The transition from traditional to disintermediated markets
  4. Disintermediation at work
  5. Definitions of hypermediation, cybermediaries and re-intermediation
  6. References
  7. Conclusion

The world today is witness to intelligent customers and consumers. People who no longer take the marketer's claim as sacrosanct and are thinking people. These are the new takers of products and services that today's business folk have to offer. For the action of consumption to be effective and repeatable, direct channels need to be established. A direct reach ensures faster and efficient contact with this thinking customer/consumer. This trend is being met by the ?disintermediation? concept, which is the elimination of intermediaries in a business value chain. During the course of this paper, we talk about the emergence of this concept, its advantages like streamlining, lowered costs and increased speed. These advantages go on to make better business sense which will be illustrated through examples from the industries that are affected by it today namely, real estate, travel agencies, publishing and entertainment, health care, brokerage firms and many more.

[...] Impacted Sectors: This "disintermediation" is occurring in a broad range of industry sectors because the more direct access between a provider and consumer of goods and services, facilitated by the Internet, results in greater economic efficiency and customer convenience. COMPANY PROFILE 49 million customers 31 product categories Presence in 7 countries Known as ?Earth's Biggest Selection' Books: Amazon is a classic example that has made this concept work for itself. An online portal that lists millions of unique new and used items in categories such as electronics, computers, kitchen and housewares, books, music, DVDs, videos, camera and photo items, toys, baby and baby registry, software, computer and video games, cell phones and service, tools and hardware, travel services, and outdoor living products. [...]


[...] (And that doesn't even include the people who posted reviews on Nancy's site - they just haven't realized that they could be charging for their words.) In fact, every single time Bob clicked his mouse, a transaction took place: a little bit of value was created, and a little bit of money changed hands. Yes, the money usually amounted to only a penny or two, but it seems a safe bet that far more profit was made by the intermediaries that took those pennies than by eToys when it sold the book for half-price and through in free shipping. [...]


[...] Bob clicks on the link, and he finds that eToys is selling the first book in the series for 50% off its list price - just $ He can't resist that kind of a bargain, so he takes out his Visa card and places an order. Three days later, the book is in his mailbox. A fairly routine buying expedition on the Web, right? But consider the complex array of intermediaries that made money off Bob's modest purchase. There are the usual suspects, of course - the retailer eToys, the book distributor that eToys buys from, the bank that issued Bob's Visa card, the U.S. [...]

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