The Internet Has Become a Great Opportunity for Buyers - Essay Example

Under which circumstances do intermediaries have important roles to play in e-markets? And under which circumstances do they not? Introduction Internet has become a great opportunity for buyers, producers and sellers. Buyers for instance have more opportunities to choose variety of needs, products and services through online yet with little consideration in their search duration (Zumpano et al., 2003). Electronic markets are existing trends in today’s latest breakthrough of advanced information technology. Within this type of market system are incorporated fundamental roles of different players in the value chain. The major players in the value chain that are always taken into consideration are producers and consumers. However, in the actual scenario, before the products or services could reach to their final destination intermediaries play significant function in the value chain for the offering and delivering process. There are many important activities that need to be understood in the presence of intermediaries. This article provides insights on circumstances in which intermediaries have important roles to play in e-markets and at the same time circumstances in which they do not have important roles to play. There are great impacts of emerging electronic markets. One of these impacts is evident in the decision support systems. Lang and Whinston (1999) concluded that the emergence of electronic markets and other advancements in information and software technology have strong impact on the decision support systems. In today’s wide coverage of internet in the world, there are already existing organizations that are Internet-based known as electronic intermediaries allowing other organizations to create interaction in the business process (Muylle and Basu, 2008). Muylle and Basu found out that the business performance of electronic intermediaries can be enhanced through the consideration of its resource base and evolutionary context. E-commerce and market structure According to Malone et al. (1987) the improvement in Information Technology has strongly long been acknowledged to create fundamental changes in an organization and market structures. It cannot be denied that the internet can create impacts on how business is thought today that was unthinkable before. For instance, with internet, electronic commerce and formulation of electronic marketplaces are becoming fundamental ways to conduct business (Rockart and Scott-Morton, 1991). There was significant consideration in this since there are various ideas claiming that the move to conduct business on electronic commerce and electronic marketplaces will lead to direct interaction between producers and consumers (Malone et al., 1987). This only suggests that intermediaries will be eliminated from the value chain. There is known evidence to suggest that intermediaries only add cost to the value chain (Benjamin and Wigard, 1995). As a result, producers’ profit margin is suppressed while the final price for consumers is significantly increased. Thus, the best way to ensure good profit margin is to go for direct selling. This means that the products or services can directly reach to consumers or customers without passing through other distribution channel such as intermediaries. There are three most obvious markets when it comes to e-commerce and these are publishing market, music market and flight market. These are the three common markets that are cited most of the time in this paper. In the case of publishing market, all books before reached to customers through the process called physical retail operations. There is much of human contact and personal relation selling in the process. The emergence of internet in the scenario ca be an opportunity for wholesalers, publishers and authors to create direct access to customers. This in return can change the whole structure of tradition retailing system in the publishing market. In the case of music market, the traditional distribution of products can be implemented through retail outlets. The business here should work in a way preferences of consumers have significant match with the final products produced by recording companies. There is a positive outlook on the cost of distributing products by electronic distribution since it can be of a little amount that almost becomes negligible. Thus, there is a great chance for those authors, writers or publishers to go direct selling considering the cost they would earn compared to relying on traditional distribution system. In the flight-ticket market, there is a great opportunity for travel agents since around 80-90% of flight-scheduled tickets were sold via through them. With the emergence of probable direct selling from airline industry, customers can directly placed orders online direct to the airline company. This minimizes cost of the airline company while increasing its revenue and profit margin in the long run. These understandings however only focused on cost of intermediation. According to Heijden (1996), there can be values added by intermediaries and the economics of intermediation in the value chain. Burton and Mooney also agreed that there can be significant information to back up the fact that intermediaries are not disappearing but re-emerging in order to successfully play in the electronic markets. In fact, a new market for electronic intermediaries has emerged and known as cybermediaries (Sarkar et al., 1995). In the case of publishing market, traditional retailers nowadays are pressured by the emerging online retailers such as e-Bay, Amazon.com and many more. These online retailers are continuously creating effort in order to survive and continue their business in electronic-driven market system. The advent of MP3 and other related standard devices in the music industry allow fast and easy transfer of information. Even though companies have no intention on direct selling strategy in the electronic market, intermediaries are continuously creating demand just to create their market segments in the long run with the help of their electronic market system. Traditional retailers in flight-ticket market are no longer confined with their old system of distribution. They are now online and customers have enough convenience in placing their schedules with them through online process. As noticed, there are three most important points that need to be understood. Circumstances under cost, economy and technology are three most important points that this paper tries to expound in order to understand the definite roles of intermediaries in the electronic market. Cost It is very important for Porter (1980) to consider cost because out of it comes an organization’s competitive advantage in the market. Looking at this perspective, intermediaries can be viewed as significant obstruction for the producers in generating more profitable and competitive business venture. If the main concern of producers lies on their profit optimization, customers on the other hand are after of their savings and after of having more than enough if it will be possible. Customers are becoming sophisticated nowadays and they know for sure that the final price they are paying for the product is an accumulated amount as the product passes through the value chain. Thus, elimination of intermediaries in this case may prove a significant deduction to the final price of the product. On the other hand, in highly electronic-driven country, there can be no assurance that corruption will be totally eliminated or at least alleviated. Businessmen and anecdotal conducted surveys and found out that intermediaries especially those agents hired by corporation and individuals contributed to the increasing corruption especially in developing world (Hasker and Okten, 2008). This was found out in the analysis of interaction between clients, public official and intermediary agents. Intermediary agents only worsen the impact of corruption. Thus, with traditional way of fighting corruption, there is no assurance to alleviate corruption, but in fact, there is a great chance to worsen it in the presence of intermediary agents. However, since producers are after of maximizing their profits, the unreasonable cost may be given directly to the customers since there is no more intermediation that can take place. Intermediaries are known to maximize their profit potential and part of it is to generate products that as much as possible cheap and affordable at the end of the value chain. There can be a significant reduction of cost in the long run for the final price of product in the value chain but still there is no assurance that the entire goal for maximizing outcome can be addressed. Intermediaries are always in the go to survive. Suppressing them at some point may prove to be significant but in the long run, they try to re-emerge and align themselves with the current business trend. It is therefore good to suppress them especially on cost reduction. However, the real circumstance would suggest they are always on the go to resurface, create a structure and maximize their potential. This is a specific circumstance suggesting there is no way to eliminate them especially now in the age of information technology. Today, everyone can create his or her own business with the internet. Thus, allowing more intermediaries in the days to come. Economy Competition is healthy and this principle is very important to consider for out of it comes the appreciation for the need to have more competitors especially on meeting the needs of consumers. It cannot be denied that traditional retailers are confined to existing trend where intermediaries have played significant intermediation in the electronic markets especially on major retailing websites in the world such as Amazon.com and e-Bay. Even on Facebook, Friendster and other social networking sites, intermediaries found themselves creating business and certain demand on products and services they are offering. The electronic world has become digital market system and where the physical goods need not be seen on actual display. People are looking forward to convenience in life and not only that; additional financial savings are other most important consideration. Compared to what can be found in traditional where market goods and services may be limited, in the internet and electronic marketing system, consumers have variety of options to choose from. If there are more options to choose from, there must be considerable amount of supply leading consumer to have significant buying power. Such power leads to getting products at a remarkable lower price. This can be different however in e-Bay where retailers let consumers decide the price of the products and services. In the end, it is always the intermediary or e-Bay that has remarkable advantage in the whole working electronic marketing system. The above scenario is only possible if more players are present especially intermediaries. Intermediaries provide different products and services allowing consumers to choose with variety of options. Intermediaries are integral parts of the growing economy. The good thing about intermediaries in this era of electronic marketing system is that they learn to survive on their own by being so innovative. They try to create demand with the aid of internet that can possibly connect almost everyone in the world today. Intermediaries are important economic assets. They create among themselves competition. The case of online retailers is a good example. As noticed, there are different retailing websites trying to compete among themselves. In fact, there are different modern innovative approaches used just to gain competitive advantage in the competition. Whatever activities these may be, it is healthy to have competition in the economy. The bottom line will always point to consumers to benefit in the process. This alone is a healthy contribution to the economy having consumers with absolution marketing buying power. Technology In the case of publishing market, it is a fact that publishers or even writers are exited to go on with electronic distribution. In fact, there are many circumstances when eBooks can be a cut above printed books. The following reasons are important information on the nature of publishing on traditional publishing market. There is a high rate of rejection of publishing among printed books because publishers are too picky. There is enough time to wait for publishers in order that their printed books can finally arrive in the market. There is only a little amount of money for publishers to generate in publishing printed books because others such as distributor and publisher are to share with the revenue. These are important reasons why publishers are apt to go for online publishing. In this case, book reading software companies or intermediaries are trying to reach publishers. The point is to package their eBooks on electronic reading gadgets for high feel of technological advancement. This is another form of latest technological involvement of intermediaries within electronic marketing system. The point here is that they can contribute in the fast distribution of products to consumers using the latest trend in technological innovation. Traditional retailers do not have much information on the advancement of information system. Thus, new level of retailing system has surfaced allowing new entrants as modern intermediaries in the electronic marketing system to run the economy in a competitive way. The need for intermediaries Intermediaries are very important. In transitional economies, financial intermediaries play significant roles. They are asked to actually perform different tasks (Caprio, 1995). In today’s advanced technological information there is a need to create more intermediaries. In fact, Fletcher (2001) discussed the need for the role of intermediaries in the world of patent information retrieval for instance. Considering that the information available in the internet is increasing day by day, there is a need to consider the low cost associated in obtaining them. Thus, there is a great consideration of understanding the role of intermediaries in order to consider related benefits in the long run. In the advent of internet-based information communication technologies, there is a substantial evidence to suggest the reconfiguration of supply chains (Barnes and Hinton, 2007). There is an existing cybermediary known as online intermediary that the main function is to operate in the virtual environment. The main point is that each intermediary has specific roles they need to play within their supply chain. The intermediary in library for both electronic and print subscription gives significant benefits. A library can use subscription agent on the purpose of consolidating its orders, voices and payments. The next step in the process is that the intermediary directly pays publishers on behalf of libraries. This only suggests that even on electronic books, prints or journals, intermediaries still find their ways on the business (Wang and Schroeder, 2005). The global distribution systems (GDSs) or tour operators’ videotext systems have important function in the distribution role in the travel industry. The GDSs are traditional electronic tourism intermediaries that find the best opportunity in the internet. With emergence of the internet, the business can be created in three major platforms namely the Internet, interactive digital television and mobile devices. These in return bring so many challenges to any traditional electronic tourism intermediary. The reason can be clear enough. With the new and advanced electronic system for electronic tourism system, organizations and suppliers sell direct on the internet through easy access on reservation system, web-based travel agents, internet portals and vortals and auction sites. This in return would require traditional eMediaries to recreate them through effective reengineering of their business process (Buhalis and Licata, 2002). The above examples are further justifications why there is a significant need for intermediaries in today’s latest advancement of technology and momentary integration of global economies. ‘ Conclusion There are many circumstances that can tell intermediaries have important roles to play in the electronic market. At some point, there are also circumstances pointing out their destructive capacity. However, most of those pointed out desirable circumstances are tied to the cost consideration of the final products and services. There are other most important points to consider and these include the latest trend of technology and slowly integrating world economy. These major points can actually tell different level of circumstances allowing more meaningful understanding on the advantages and disadvantages of intermediaries in the value chain of electronic marketing system. References Barnes, D. and Hinton, M. (2007) “Developing a framework to analyse the roles and relationships of online intermediaries.” International Journal of Information Management, Vol. 27 (2): 63 – 74. Benjamin, R. and Wigand, R. (1995) “Electronic Markets and Virtual Value Chains on the Information Superhighway.” Sloan Management Review,Vol. 36(2): 62-72. Buhalis, D. and Licata, M. C. (2002) “The future eTourism intermediaries.” Tourism Management, Vol. 23(3): 207 – 220. Burton, A.F. and Mooney, J.G. 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