Figure 2.9 shows the operation of reintermediation in a graphical form. Following dis-
intermediation, where the customer goes direct to different suppliers to select a product,
this becomes inefficient for the consumer. Take, again, the example of someone buying
insurance, to decide on the best price and offer, they would have to visit say five differ-
ent insurers and then return to the one they decide to purchase from. Reintermediation
removes this inefficiency by placing an intermediary between the purchaser and seller.
This intermediary performs the price evaluation stage of fulfilment since its database has
links updated from prices contained within the databases of different suppliers.
What are the implications of reintermediation for the Internet marketer? First, it is
necessary to make sure that a company, as a supplier, is represented with the new inter-
mediaries operating within your chosen market sector. This implies the need to integrate,
using the Internet, databases containing price information with that of different interme-
diaries. Secondly, it is important to monitor the prices of other suppliers within this
sector (possibly by using the intermediary web site for this purpose). Thirdly, long-term
partnering arrangements such as sponsorships need to be considered. Finally, it may be
appropriate to create your own intermediary to compete with existing intermediaries
or to pre-empt similar intermediaries. For example, the Thomson Travel Group set
up Latedeals.com (www.latedeals.com) in direct competition with Lastminute.com
(www.lastminute.com). A further example is that, in the UK, Boots the Chemist set up its
own intermediaries Handbag (www.handbag.com) and Wellbeing (www.wellbeing.com).
This effectively created barriers to entry for other new intermediaries wishing to operate
in this space. Such tactics to counter or take advantage of reintermediation are sometimes
known as countermediation.MARKETPLACEFigure 2.8 Screentrade insurance intermediary (www.screentrade.com)Countermediation
Creation of a new
intermediary by an
established company.