• Industry convergence:
Industry boundaries are blurring as companies recognize new
opportunities at the intersection of two or more industries. The computing and consumer
electronics industries are converging, for example, as Apple, Sony, and Samsung release a
stream of entertainment devices from MP3 players to plasma TVs and camcorders. Digital
technology fuels this massive convergence.
• Retail transformation:
Store-based retailers face competition from catalog houses; directmail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV;
and e-commerce. In response, entrepreneurial retailers are building entertainment into their stores with coffee bars, demonstrations, and performances, marketing an “experience”
rather than a product assortment. Dick’s Sporting Goods has grown from a single bait-andtackle store in Binghamton, New York, into a 300-store sporting goods retailer in 30 states.
Part of its success springs from the interactive features of its stores. Customers can test golf
clubs in indoor ranges, sample shoes on its footwear track, and shoot bows in its archery
range.
• Disintermediation:
The amazing success of early dot-coms such as AOL, Amazon.com,
Yahoo!, eBay, E*TRADE, and others created disintermediationin the delivery of products
and services by intervening in the traditional flow of goods through distribution channels.
These firms struck terror into the hearts of established manufacturers and retailers. In response, traditional companies engaged in reintermediationand became “brick-and-click”
retailers, adding on-line services to their offerings. Some became stronger contenders than
pure-click firms, because they had a larger pool of resources to work with and established
brand names.
• Consumer buying power:
In part, due to disintermediation via the Internet, consumers have
substantially increased their buying power. From the home, office, or mobile phone, they can
compare product prices and features and order goods online from anywhere in the world
24 hours a day, 7 days a week, bypassing limited local offerings and realizing significant price
savings. Even business buyers can run a reverse auctionin which sellers compete to capture
their business. They can readily join others to aggregate their purchases and achieve deeper
volume discounts.
Industry boundaries are blurring as companies recognize new
opportunities at the intersection of two or more industries. The computing and consumer
electronics industries are converging, for example, as Apple, Sony, and Samsung release a
stream of entertainment devices from MP3 players to plasma TVs and camcorders. Digital
technology fuels this massive convergence.
• Retail transformation:
Store-based retailers face competition from catalog houses; directmail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV;
and e-commerce. In response, entrepreneurial retailers are building entertainment into their stores with coffee bars, demonstrations, and performances, marketing an “experience”
rather than a product assortment. Dick’s Sporting Goods has grown from a single bait-andtackle store in Binghamton, New York, into a 300-store sporting goods retailer in 30 states.
Part of its success springs from the interactive features of its stores. Customers can test golf
clubs in indoor ranges, sample shoes on its footwear track, and shoot bows in its archery
range.
• Disintermediation:
The amazing success of early dot-coms such as AOL, Amazon.com,
Yahoo!, eBay, E*TRADE, and others created disintermediationin the delivery of products
and services by intervening in the traditional flow of goods through distribution channels.
These firms struck terror into the hearts of established manufacturers and retailers. In response, traditional companies engaged in reintermediationand became “brick-and-click”
retailers, adding on-line services to their offerings. Some became stronger contenders than
pure-click firms, because they had a larger pool of resources to work with and established
brand names.
• Consumer buying power:
In part, due to disintermediation via the Internet, consumers have
substantially increased their buying power. From the home, office, or mobile phone, they can
compare product prices and features and order goods online from anywhere in the world
24 hours a day, 7 days a week, bypassing limited local offerings and realizing significant price
savings. Even business buyers can run a reverse auctionin which sellers compete to capture
their business. They can readily join others to aggregate their purchases and achieve deeper
volume discounts.
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