The role of intermediaries in electronic marketplaces: developing a contingency model

Abstract. Early research in electronic markets seemed to suggest that e- commerce transactions would result in decreased costs for buyers and sellers alike, and would therefore ultimately lead to the elimination of intermediaries from electronic value chains. However, a careful analysis of the structure and functions of electronic marketplaces reveals a different picture. Intermediaries provide many value-adding functions that cannot be easily substituted or ‘internalized’ through direct supplier–buyer dealings, and hence mediating parties may continue to play a significant role in the e-commerce world. In this paper we provide an analysis of the potential roles of intermediaries in electronic markets and we articulate a number of hypotheses for the future of intermediation in such markets. Three main scenarios are discussed: the disintermediation scenario, in which market dynamics will favour direct buyer–seller transactions; the reintermediation scenario, in which traditional intermediaries will be forced to differentiate themselves and re-emerge in the electronic marketplace; and the cybermediation scenario, in which wholly new markets for intermediaries will be created. The analysis suggests that the likelihood of each scenario dominating a given market is primarily dependent on the exact functions that intermediaries play in each case. A detailed discussion of such functions is presented in the paper, together with an analysis of likely outcomes in the form of a contingency model for intermediation in electronic markets.

[1]  Brian S. Butler,et al.  Intermediaries and Cybermediaries: A Continuing Role for Mediating Players in the Electronic Marketplace , 1995, J. Comput. Mediat. Commun..

[2]  R. Wigand,et al.  Electronic Markets and Virtual Value Chains on the Information Superhighway , 1995 .

[3]  C. F. Phillips Industrial Market Structure and Economic Performance , 1971 .

[4]  Shailendra C. Palvia,et al.  Distribution Channels in Electronic Markets: A Functional Analysis of the 'Disintermediation' Hypothesis , 1999, Electron. Mark..

[5]  R. Gulati,et al.  Get the right mix of bricks & clicks. , 2000, Harvard business review.

[6]  Paola Benassi,et al.  TRUSTe: an online privacy seal program , 1999, CACM.

[7]  J. G. M. van der Heijden,et al.  The changing value of travel agents in tourism networks: towards a network design perspective , 1996, ENTER.

[8]  Eric K. Clemons,et al.  Reengineering Money: The Mondex Stored Value Card and Beyond , 1996, Int. J. Electron. Commer..

[9]  Yannis Bakos,et al.  The emerging role of electronic marketplaces on the Internet , 1998, CACM.

[10]  Bob O'Keefe,et al.  Re-Wiring Business: Uniting Management and the Web , 1997 .

[11]  Thomas Adelaar,et al.  Electronic Commerce and the Implications for Market Structure: The Example of the Art and Antiques Trade , 2006, J. Comput. Mediat. Commun..

[12]  Rajiv M. Dewan,et al.  Portal Kombat: the battle between Web pages to become the point at entry to the World Wide Web , 1999, Proceedings of the 32nd Annual Hawaii International Conference on Systems Sciences. 1999. HICSS-32. Abstracts and CD-ROM of Full Papers.

[13]  J. Hagel,et al.  Net Worth: Shaping Markets When Customers Make the Rules , 1999 .

[14]  Eric K. Clemons,et al.  Electronic consumer interaction, technology-enabled encroachment, and channel power: the changing balance between manufacturers electronic distribution and established retailers , 1998, Proceedings of the Thirty-First Hawaii International Conference on System Sciences.

[15]  Eric van Heck,et al.  Experiences with Electronic Auctions in the Dutch Flower Industry , 1997, Electron. Mark..

[16]  Yannis Bakos,et al.  An Exploratory Study of the Emerging Role of Electronic Intermediaries , 1997, Int. J. Electron. Commer..

[17]  Robert J. Kauffman,et al.  Strategies for Internet Middlemen in the Intermediation/Disintermediation/Reintermediation Cycle , 1999, Electron. Mark..

[18]  E. P. Michael Strategy and the Internet. , 2001 .

[19]  Jens Hanker Strategische Bedeutung der Informatik für Organisationen - industrieökonomische Grundlagen des strategischen Informatikmanagements , 1990, Informatik und Unternehmensführung.

[20]  John Mooney,et al.  The Evolution of Electronic Marketplaces: an exploratory study of internet-based electronic within the American Independent Insurance Agency system , 1998, Australas. J. Inf. Syst..

[21]  JoAnne Yates,et al.  Electronic markets and electronic hierarchies , 1987, CACM.