Mumbai University > Information Technology > Sem 7 > E–Commerce & E-Business

Marks: 10 M

Year: Dec 2013

i) Disintermediation:

1. The relationship between a company and its channel partners is shown in the above figure. This relationship can be dramatically altered by the opportunities afforded by the internet. This occurs because the Internet offers a means of bypassing some of the channel partners. This process is known as “disintermediation” or “cutting of the middleman”.

2. The above diagram is a graphical form for a simplified retail channel.

3. Fig a shows the former position where a company marketed and sold its products by pushing them through sales channel.

4. Fig b and c shows two different types of disintermediation in which the wholesaler (b) or the wholesaler and retailer (c) are bypassed, allowing the producer to sell and promote direct to the consumer.

5. The benefits of disintermediation to the producer are clear-it is able to remove the sales and infrastructure cost of selling through the channel.

6. Example: 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.

ii) Counter-mediation:

1. Counter-mediation can be defined as “creation of a new intermediary by an established company.”
2. In short a company is not just reintermediating, but is also actively investing in the creation of a new intermediary that it own which is positioned separately from its owners.
3. The whole idea about counter-mediation is about controlling key elements of a supply chain (and gain monopolistic power yourself), or to prevent a competitor from gaining monopolistic positioning.
4. An example of counter-mediation is Opodo.com, set up by a collaboration of European airlines to encourage customers to book flights directly with them rather than using cost-comparison intermediaries.

iii) Vertical Portal:

These are web portals which focus only on one specific industry, domain or vertical. Vertical portals provide tools, information, articles, research and statistics on the specific industry or vertical. As the web has become a standard tool for business. There are innumerable possibilities for establishing special vertical portals on the market. A vertical portal covers a particular market such as construction with news and other services.

Examples:

Construction Plus (www.constructionplus.com)

Chem Industry (www.chemindustry.com)

iv) Right Channelling:

1. Prioritization of different communications channels to achieve different e-Business objectives is an important aspect of e-Business strategy.
2. It is necessary to identify which strategies will be pursued, set objectives for them and then define approaches to encourage customers to adopt the appropriate channel.
3. This approach is referred to as “Right Channelling”.
4. Thus, Right Channelling involves devising a contract strategy and tactics, support by technology to reach:
5. The Right Person
6. At the Right Time
7. Using the Right Communications Channel
8. With a relevant offer, Product or Message
9. True right-channelling is only possible with a marketing platform with the following four attributes: a real-time, 360-degree customer view encompassing all known and inferred information; seamless channel integration, which allows a single campaign or message to be rendered and delivered across channels; a central offer engine containing the business rules that drive message or offer selection across channels; and high-volume automation for effectively scaling right-channelling, no matter how large the customer base.
10. One example of successful right-channelling comes from Debenhams, the second largest retail department store chain in the UK. Debenhams sends its customers personalised marketing communications via email and mobile. Because both channels are managed from a single marketing platform, the retailer is able to channel select according to customer opt-ins and preferences, as well as execute cross-channel campaigns driven by a centralised marketing database.

iv) Reverse Auctions:

1. These auctions are more common on business-to-business marketplaces. For these auctions, the buyer sets the rules and timing.
2. Here the buyer places the request for tender or quotation (RFQ) and many suppliers compete, decreasing the price, with the supplier whom the buyer selects getting the contract.
3. Because the price drops until bidder claims the item, they are also called as descending price auctions.
4. Companies may use the reverse auctions to:
5. Rationalize suppliers in a particular spending category.
6. Source new components in an area they are unfamiliar with.
7. The most common application of reverse auctions is for E-procurement, a strategy used by purchasing as part of strategic sourcing and other supply management activities.
8. It enables suppliers to compete on-line in real time and are changing the way firms and their consortia select and behave with their suppliers worldwide.
9. It improves effectiveness of the sourcing process and facilitate access to new suppliers. It also leads to standardization of sourcing procedures, reduced order cycle, reduced prices and generally higher service levels
10. Reverse auctions are used to fill both large and small value contracts for both public sector and private commercial organizations.
11. In addition to items traditionally thought of as commodities, reverse auctions are also used to source buyer-designed goods and services; and they have even been used to source reverse auction providers.
12. Most online retailers who have tried Dutch auctions have found that they do not increase sales or generate interest in the products well enough to justify the costs of operating the auction