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DEFINITIONS
Disintermediation refers to cutting out the middlemen in e-commerce transactions. Examples include General Motors Corp. bypassing dealerships to sell cars directly to consumers, and insurance companies skirting their own agents to sell products and services.
Reintermediation refers to using the Internet to reassemble buyers, sellers and other partners in a traditional supply chain in new ways. Examples include New York-based e-Steel Corp. and Philadelphia-based PetroChemNet Inc. bringing together producers, traders, distributors and buyers of steel and chemicals, respectively, in Web-based marketplaces.
HANKS TO THE near-ubiquity of the Internet, just about any company that wants to can sell its products and services directly to consumers and businesses online. And many do, because cutting out intermediaries - otherwise known as disintermediation can mean bigger profits and greater access to valuable customer information.
At least theoretically.
But cutting out the middleman also can mean new kinds of problems, such as figuring out how to fulfill onesie and twosie orders from consumers, setting up new customer-service centers and dealing with backlash from retailers and other spurned channel partners.
Levi Strauss & Co. didn't score any points with its original e-commerce strategy, which shut out retailers from selling its blue jeans and other clothing online. Initially, Levi Strauss thought it wanted to keep the cybermarket to itself But less than a year later, the $6 billion manufacturer, which had invested several million dollars...