UK: Techknow - Survival rules.

UK: Techknow - Survival rules. - RULE 4: LEVER THE NEW INTERMEDIARIES

by HUNTER MADSEN.
Last Updated: 31 Aug 2010

RULE 4: LEVER THE NEW INTERMEDIARIES

A couple of years ago, new economy marketers feared they would have to master a tongue-twisting neologism. Disintermediation - booting out the middleman - was supposed to occur wherever suppliers used the internet to sell their products directly to end-consumers without working through traditional intermediary channels. Thus e-trading services were stepping past stockbrokers, airlines were sidelining travel agents, and web-based hardware and software vendors were outpacing their store-based rivals (think Dell vs. Compaq).

The door's open, come on in. As disintermediation proceeds, some are missing another shift that is more fundamental and goes by a similarly awkward name: reintermediation. Reintermediation describes the process whereby suppliers and consumers, instead of transacting directly, invite a new, highly prolific class of intermediaries into the value-chain under new rules of engagement.

No market too narrow. Reintermediation starts with the realisation that no supplier who sells direct, and no handful of traditional distributors, can ever hope to anticipate, reach, deliver to and satisfy every one of the countless market segments and micro-niches that might need their products.

By using the internet's communication efficiencies, however, smaller resellers and value-added services can bridge this gap by presenting bundled offerings from diverse suppliers that have been customised, as total solutions or 'cut-and-paste' product catalogues, to the particular interests of the narrow segments they serve.

We are here, and here, and here. Reversing the restrictive control they would have exercised in the old-school distribution game, smart suppliers online want their goods to show up wherever a prospective customer might look for them. So they make it easy for as many of these intermediaries as possible to represent their wares and project their marketing presence in the cyber-marketplace. Distribution agreements - available in click-and-go format on suppliers' web sites - are increasingly constructed to make it simple for a broad and shifting array of third parties to bundle, augment and resell their products and services.

Virtual matchmaking. Students of reintermediation point to the affiliate programs of large online retailers, such as Amazon, as harbingers of the economy to come. But a more telling precursor is LinkShare, the largest purveyor of 'partnership-based marketing programs on the web'. The company provides software and services to online merchants who want to partner with small intermediaries but don't wish to manage the sign-up and tracking of all those partnerships by themselves. LinkShare clients include Dell, JC Penney, Office Max, the Disney Store, NextCard Visa, Avon, Borders bookstores and hundreds of others. Last May, the company announced that it had 'facilitated' one million e-commerce partnerships.

Listen, repeat, learn. Going forward, then, the major marketing question of the new economy will not be simply whether to 'sell direct', but when to handle a segment directly, leave it to traditional distributors, or entrust it to - repeat this five times, now - reintermediaries.

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