Why Web won't kill middlemen

Why Web won't kill middlemen

Several years ago, strategists and futurists began predicting that companies would increasingly sell directly to consumers, cutting out distributors and any other distribution intermediaries, including some retailers. The change was given a fancy term: disintermediation.

There are certainly some great examples of disintermediation at work, such as Dell Computer's direct-to-the-customer strategy. But I don't assume that most manufacturers will be selling consumer-direct very soon.

Why? Because most manufacturers don't understand consumers well enough to deal with them directly. When they think of consumers, they think of marketing-pushing their products instead of trying to understand real consumer needs. It's a natural phenomenon. Most manufacturers, especially those dealing in technology, are product-driven. They focus their energies on making stuff, while someone else worries about getting the stuff to the customer.

But there's also another phenomenon that's supporting the rise of a new class of middlemen. It's that consumers today often want products and services packaged in different ways to meet their specific needs. I call the middlemen who do this work consolidators. They stand in the middle of a distribution channel, somewhere between manufacturers and consumers. And they come in various forms-some old, some new.

In one sense, the famed isn't just a retailer. Rather it, too, is a consolidator. It assembles products and search and delivery services in a manner that responds to a specific consumer need.

And consolidators aren't limited to companies that deal only in the combination of products and services. There are consolidators that just put services together.

And then there are all the telecommunications companies and utilities that aspire to sit between you and your bank, health care provider and airline. They want to package and sell you as many products and services as you will buy.

No one has done it at scale yet, though IBM's Integrion banking consortium and the Microsoft-First Data TransPoint partnership aimed at allowing customers to pay all their consolidated bills over the Internet come closest. That means wide opportunity.

Get excited, because IT is the real enabler of these kinds of consolidator businesses. There's much more ahead in 1999 than the boring work of Y2K. There's the need to figure out how to put together the systems that will assure a food delivery within two hours, that will let consumers shop online as they wish and that will manage, track and spend money in new ways.

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