New channel structures

New channel structures enabled by the Internet have been described in detail in Chapters 2 and 4. The main types of phenomena that companies need to develop strategies for are:

(a) Distintermediation. Is there an option for selling direct? Selling direct can lead to the channel conflicts mentioned in the next section. When assessing this option there will be a number of barriers and facilitators to this change. Research by Mols (2001) in the banking sector in Denmark suggests that important factors are senior management support, a willingness to accept some cannibalisation of existing channels and perceived customer benefits.

(b) Reintermediation. The new intermediaries created through reintermediation described by Sarkar et al. (1996) should be evaluated for suitability for partnering with for affiliate arrangements. The intermediaries receive a commission on each sale resulting from a referral from their site.

(c) Countermediation. Should the organisation partner with another independent intermediary, or set up its own independent intermediary? For example, a group of European airlines have joined forces to form Opodo (www.opodo.com) which is intended to counter independent companies such as Lastminute.com (www.lastminute.com) or eBookers (www.ebookers.com) in offering discount fares.

The distribution channel will also be affected. For instance, grocery retailers have had to identify the best strategy for picking customers' goods prior to home delivery. Options include in-store picking (selection of items on customer orders) and regional picking centres. The former is proving more cost-effective.

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