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Evidences and Departure to a New TheoryFiled Under: General

Evidences of re-intermediation are in plenty. There are, however, other related changes in the market, such as in the emergence of a novel framework of liability (Valimaki & Martikainen, 2001), or the emergence of new relationships between the wholesaler and the retailer (Nettesine & Rudi, 2000), or in offerings of greatly dispersed prices (Pan, Ratchford & Shankar, 2001). Several databased searches and research on price offerings on the electronic commerce have shown that prices offered on Internet are often not lower
than other modes of retail sales. Internet pricing has shown personalized effects based on quality differentiation and on personalized offerings. Ecom offerings have been compared to mass customization (Wind & Rangaswamy, 2000), necessitating the spawning of very large number of novel intermediaries. Technology has allowed firms to identify and track customers, on the online stores as also on Web sites. Firms now can create individual consumer profiles matched by all other relevant information on choices,
demographics, cultures, and preferences. Internet retailers can deploy complex pricebots and can effectively discriminate price offers based on such profiles of preferences, etc. Ecom has thus opened up the possibility of offering extremely variegated personalized pricing. This forum can also offer equivalents of typical marketplace bargains. It follows logically that retail offers on Ecom cannot disintermediate and eliminate stages of intermediation necessary to gather market and competitive intelligence. Market clearing
in Ecom therefore necessarily requires a very large increase in information transacted and processed (Aoki, 1990). These in turn demand services from new entrepreneurs offering specialized facilities for search and offer. Ecom market thus increases the market along the dimension of scope.

Along with personalization of pricing, the electronic retailer can now design its product offers on personalization of the qualities of the products. This results in offers of extremely variegated products, which in turn calls for revolutionary changes in the entire system of production that once through Tayloristic mode had developed along the line of corporatization and mass production of mass-standard goods. Mass customization and co-production of a new product offered especially through cooperation along the direction of scope have increased enormously the number of products on offer. Codevelopment
of products by a group of competitors’ complementors or collaborators in association with current or potential customers and the strategy of producing products’ versions have catapulted previous industrial vertical segments into a jumbled up flux of cross-connected firms. Expansion along scope direction has deferred consumption of a good. Consequently the period of production has increased. This expansion has created numerous linkages or mediations along the scope axis before a product can be consumed. Expansion along vertical organization consumes a product necessarily earlier than through expansion along scope-axis.

Taken From : Digital Economy – Impacts, Influences and Challenges