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A major trend in industry is to seek expanded market share, acquire new markets, encroach on competitors, or lower costs through the use of e-commerce (EC), in which the Internet performs the vital function of providing the interface. EC will undoubtedly lead to changes in the role traditional distributors and retailers play in the supply chain. Their roles could be enhanced or threatened by the new channels arising under EC.
This article was developed as part of a research study with a large industrial manufacturer. The following five potential channels were developed and are discussed in detail: (1) direct sale to the end user, (2) supplier as information controller, (3) distributor-controlled channel, (4) mixed channel, and (5) independent infomediary (the cannibal).
The development of the five channels was based on the various possibilities of each channel member's changing roles in an e-commerce scenario. This article explains the way each channel model works. It discusses the changes in the roles of the channel members in each case, especially the manufacturers and distributors, and the benefits and disadvantages each of the models provides to the channel members, compared with existing conditions. The dynamics of the relationships between channel members in each scenario are also explored.
DIRECT SALE TO THE END USER
In the channel model direct sale to the end user, the supplier (manufacturer) connects directly to the end user/customer, completely disintermediating distributors and retailers (see fig. 1). The supplier's Internet Web site makes direct transactions with customers possible. Any end user can buy products from the company catalog through the Internet. This direct marketing technique has been successful in many high-profile cases such as Dell Computers and Amazon.com [3]. The success of this channel is well documented, but industrial applications have been less common.
The lack of industrial applications can be attributed to a variety of factors. One difficulty lies in the fact that information is not standardized into common fields and codes that can be read by multiple supply chain systems. Industry alliances such as the industry data warehouse (IDW), Rosetta.net, and other e-commerce initiatives, however, have focused a great deal of attention and resources on this problem. They have already reduced it and will provide a vehicle for making the seamless exchange of...