Disintermediation .

• Disintermediation

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Distribution (business) - Channel mix

1 In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales-

force, calling on the larger accounts, with agents, covering the smaller customers

and prospects. In addition, online retailing or e-commerce is leading to

disintermediation. Retailing via smartphone or m-commerce is also a

growing area.


Bricks and clicks

1 The success of the model in many sectors has lessened the credibility of some analysts who argued that the

Internet would render traditional retailers obsolete through

disintermediation.


Disintermediation

1 In economics, disintermediation is the removal of intermediaries in a supply chain, or "cutting out the middleman". Instead of

going through traditional distribution channels, which had some type of intermediate (such as a distributor,

wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. One important

factor is a drop in the cost of servicing customers directly.


Disintermediation

1 Disintermediation initiated by consumers is often the result of high market transparency,

in that buyers are aware of supply prices direct from the manufacturer. Buyers bypass the middlemen (wholesalers and retailers) to buy directly from the manufacturer, and pay

less. Buyers can alternatively elect to purchase from wholesalers. Often, a

business-to-consumer electronic commerce (B2C) company functions as the bridge

between buyer and manufacturer.


Disintermediation - History

1 The term was originally applied to the banking industry in 1967; disintermediation referred to

consumers investing directly in securities (government and private

bonds, and stocks) rather than leaving their money in savings

accounts, then later to borrowers going to the capital markets rather

than to bankshttps://store.theartofservice.com/the-disintermediation-toolkit.html

Disintermediation - Discussion

1 In the non-Internet world, disintermediation has been an important strategy for many

big box retailers like Walmart, which attempt to reduce prices by reducing the number of intermediaries between the

supplier and the buyer. Disintermediation is also closely associated with the idea of

just in time manufacturing, as the removal of the need for inventory removes one

function of an intermediary.



1 The existence of laws which discourage disintermediation has

been cited as a reason for the poor economic performance of Japan and

Germany in the 1990s.



1 In response to the threat of disintermediation, some retailers

have attempted to integrate a virtual presence and a physical presence in

a strategy known as bricks and clicks.


Disintermediation - Reintermediation

1 Reintermediation can be defined as the reintroduction of an intermediary between end users (consumers) and

a producer. This term applies especially to instances in which

disintermediation has occurred first.



1 At the start of the Internet revolution, electronic commerce was seen as a tool of

disintermediation for cutting operating costs. The concept was that by allowing consumers to purchase products directly from producers via the Internet, the product delivery chain would

be drastically shortened, thereby "disintermediating" the standard supply model middlemen. However, what largely happened was that new intermediaries appeared in the

digital landscape (e.g., Amazon.com and eBay).



1 Before disintermediation, supply chain middlemen acted as salespeople for the

producers


Disintermediation - Examples of companies

1 Notable examples of disintermediation include Dell and

Apple, which sell many of their systems direct to the consumer—thus bypassing traditional retail

chains, having succeeded in creating brands well recognized by

customers, profitable and with continuous growth.


Technological evolution - Theoretical implications

1 With growing disintermediation in said markets and growing concerns over the protection of intellectual property rights it is not clear what form markets for information will

take with the evolution of the information age.


Peer-to-peer lending - Characteristics

1 Early peer-to-peer lending was also characterized by disintermediation and reliance on social networks but

these features have started to disappear


American English - 19th century onwards

1 From the world of business and finance came breakeven, merger, Wikt:delisting|delisting, downsize, disintermediation,

Net income|bottom line; from sports terminology came, jargon aside, Monday-morning quarterback, cheap shot,

game plan (American football|football); in the ballpark, out of left field, off base, hit and run, and English language idioms derived from baseball|many other idioms from

baseball; gamblers coined bluff (poker)|bluff, Wikt:blue chip|blue chip, Betting (poker)#Ante|ante, bottom dollar, raw

deal, pass the buck, ace in the hole, freeze-out, showdown; miners coined bedrock, bonanza, peter out, pan out and the

verb prospect from the noun; and railroadmen are to be credited with make the grade (slope)|grade, sidetrack, head-

on, and the verb railroad


Ecommerce in India - Market size and growth

1 * Lower prices compared to Brick and Mortar retail driven by

disintermediation and reduced inventory and real estate costs


Virtual community - Advantages of Internet communities

1 Disintermediation eliminates pricey mark-ups and allows for a more

direct line of contact between the consumer and the manufacturer.


Travel agencies - Travel agencies in the 21st century

1 Since 1997, travel agencies have gradually been disintermediation|

disintermediated, by the reduction in costs caused by removing layers

from the package holiday distribution network


Blog - Consumer-generated advertising in blogs

1 Blogs have led to some disintermediation and a breakdown of the traditional advertising model where companies can skip over the advertising agencies (previously the

only interface with the customer) and contact the customers directly

themselves. On the other hand, new companies specialised in blog

advertising have been established, to take advantage of this new

development as well.


Procuring (prostitution) - Internet effect

1 The use of the Internet for prostitution as well as other changes in the sex industry have resulted in

the disintermediation of prostitution, allowing prostitutes to deal with

clients directly. This has rendered pimps largely superfluous, at least in

the United States. In 2011, Wired (magazine)|Wired reported that of 11

pimps working out of New York's midtown Manhattan in 1999, all were

out of work within four years.


Government 2.0 - Disadvantages

1 There are many considerations and potential implications of

implementing and designing e-government, including

disintermediation of the government and its citizens, impacts on

economic, social, and political factors, vulnerability to cyber

attacks, and disturbances to the status quo in these areas. See also

Electronic leviathan.https://store.theartofservice.com/the-disintermediation-toolkit.html

Stock market - Relation of the stock market to the modern financial system

1 The financial system in most western countries has undergone a

remarkable transformation. One feature of this development is

disintermediation. A portion of the funds involved in saving and

financing, flows directly to the financial markets instead of being

routed via the traditional bank lending and deposit operations. The general public interest in investing in the stock market, either directly or through mutual funds, has been an

important component of this process.


Bank - Competition for loanable funds

1 The phenomenon of disintermediation had to dollars

moving from savings accounts and into direct market instruments such as United States Department of the

Treasury|U.S


Distributor (business) - Channel mix

1 In practice, many organizations use a mix of different channels; in

particular, they may complement a direct sales-force who typically call

on larger customers with agents who cover the smaller customers and

prospects. In addition, online retailing or electronic commerce|e-

commerce is leading to disintermediation. Retailing via

smartphone or m-commerce is also a growing area.


Savings and loan association - Further advantages

1 The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 was designed

to help the banking industry to combat disintermediation of funds to higher-yielding non-deposit products such as money market mutual funds


Agency Theory - Contract design

1 This can be thought of as a kind of disintermediation—targeting certain

measurable variables may cause others to suffer


Savings and loan crisis - Background

1 Because regulators controlled the rates thrifts could pay on savings,

when interest rates rose depositors often withdrew their funds and

placed them in accounts that earned market rates, a process known as

disintermediation


Capital market - Difference between regular bank lending and capital markets

1 But since about 1980 there has been an ongoing trend for

disintermediation, where large and credit worthy companies have found they effectively have to pay out less in interest if they borrow direct from capital markets rather than banks


Financial intermediary

1 Money and Banking: Chapter 2 Section 5: Financial Intermediaries.

[http://www.saylor.org/site/wp-content/uploads/2012/06/ECON302-1.2-1st.pdf] Accessed June 28, 2012

Alternatively, they may lend the money directly via the financial

markets, which is known as financial disintermediation.


Classless society - Marxist definition

1 with disintermediation|no intermediary between themselves and the society that

consumes their labor


Business models - Examples of business models

1 * Disintermediation|Cutting out the

middleman model


Unlimited company

1 * developing more advantageous company and business capital

strategies in an ever increasing irreversible trend of bank

disintermediation by companies and their management.


Grey literature - Towards a new definition

1 *The tendency of disintermediation in the traditional value chain of Scientific information|scientific and technical

information. The “risk” of grey literature is not web-based technology but the

somehow fading role of libraries and information professionals as intermediaries

between authors, publishing bodies, and the end user. And tell the reader why this is

important other than job preservation.


Print on demand - Self-publishing authors

1 Other services may also be available, including formatting, proofreading, and editing, but such companies typically do not spend money on

marketing, unlike the conventional publishers they Disintermediation|

disintermediate


Search cost

1 The Internet was expected to eliminate search costs . For example, electronic commerce was predicted to cause disintermediation as search costs become low enough for end-consumers to incur them directly instead of employing Retailing|

retailers to do this for them. This would in turn lead to lower prices and less variation between prices quoted

by different sellers.https://store.theartofservice.com/the-disintermediation-toolkit.html

Trader Joe's - Products

1 By selling almost all of its products under its own label, Trader Joe's

disintermediation|skips the middle man and buys directly from both local and international small-time

vendors.


Direct imports - Disintermediation by Technology

1 This is a significant example of how Internet technology is a powerful

force for disintermediation in commerce. To illustrate, a typical

B2C supply chain involving imports is composed of five entities (in order):


James Cash, Jr.

1 At the interorganizational and industry levels, perhaps the most prominent effect of

information technology is the blurring of traditional company and industry boundaries, which is facilitating disintermediation and new forms of market access, as illustrated by the growing use of the Internet for business-to-

consumer, business-to-business, and intrabusiness communication. What does the

shift from face-to-face to screen-to-face delivery of information-based services mean for the

average person?


Transparency (market)

1 A high degree of 'market transparency' can result in

disintermediation due to the buyer's increased knowledge of supply

pricing.


Online media cooperative

1 The disintermediation that the Internet brought about has benefitted consumers and

businesses typically at the expense of small local businesses


Laiki agora - History

1 People's markets were founded by Greek political leader Eleutherios Venizelos. Part of the motivation was to help local agricultural

producers sell their fresh produce to the local population in nearby towns without the need

of Wholesaler|middlepersons, thus cutting down prices, and from this perspective the introduction of people's markets in Greece can be considered as an application of the

commercial practice of disintermediation (or cutting out the middleperson).


1933 Banking Act - Fate of 1933 Banking Act as “traditional bank regulation”

1 Instead of financial stability inducing deregulation and financial instability after 1980, as later suggested by David Moss and Elizabeth

Warren, Thomas Huertas and other critics of traditional bank regulation argued Regulation Q limits on interest rates (mandated by the 1933 Banking Act) created the “disintermediation”

that began in the 1960s, led to the phase-out of Regulation Q through the Depository Institutions Deregulation and Monetary Control Act of 1980,

and opened banking to greater competition.Huertas 1983, pp


Frank Lucas (drug dealer)

1 He was particularly known for disintermediation|cutting out

middlemen in the drug trade and buying heroin directly from his

source in Golden Triangle (Southeast Asia)|the Golden Triangle


3D printer - Social change

1 This process of labor substitution and disintermediation has been

underway for some time in service sectors – think of ATMs, online banking, enterprise resource

planning, customer relationship management, mobile payment

systems, and much more


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Disintermediation .

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