1. MD253/MK252 Electronic Commerce Jan. 25, 2006 Distribution Channels: Disintermediation

2. Topics Covered Collapsing Channels –Failures & successes –the role of value gaps Firms ‘changing the channel’ –Expedia & the travel industry –BlueNile & the jewelry industry –NetFlix & the movie industry

3. Source: Benjamin & Wigand (SMR) Disintermediation

4. Value Gaps customersretailerdistributorsource firm Value Added = A, Expense = X Value Added = B, Expense = Y Expense Savings = (X+Y) - Cost of New Effort Value Gap = (A+B) - Value Added by New Effort

14. The Long Tail Source: Wired

15. Revenue sharing for DVDs Source: Video Rental Developments & the Supply Chain: Netflix Inc., WUSTL.EDU case http://www.olin.wustl.edu/workingpapers/pdf/2004-03-225.pdf