Question

In recent years we have seen considerable change to traditional channels through the emergence of ‘disintermediation’, whereby firms are increasingly cutting out intermediaries and selling direct to buyers, often using online platforms. Using examples, identify and explain what you consider to be the key pros and cons of this phenomenon for consumers

Answer 1

One of the best direct selling company is Amway followed by Avon, Tupperware and Oriflame. These companies have been able to eliminate the middlemen and directly reach out to the customer. This strategy of directly targeting customer has various advantages such as -

• Low cost of setting up the business as no infrastructure is required bring economies of scale and thus lesser price for the consumer
• Less risk as compared to traditional business and thus consumer gets more variety of products online
• Personalisation and direct contact with the customer online and greviances are solved quickly
• More control over the marketing strategies and brand image and customer so can check the reviews before purchasing
• Lesser cost by cutting out the expense of middlemen and their profit margin consumers gets various offers and discounts by the company
• Flexibility in operations as it can be done anytime and from anywhere
• Increased market and customer base which can go global in seconds and thus providing cutomer foreign goods

Disadvantages-

• Not really successful where the products need to touched and physical existence is required
• Cyber threats and crimes make it difficult to operate and consumers face difficulty in payment mechanism like frauds and hacking
• A business can lack in any of the skills of either production or selling as managing everything would be difficult thus not providing the cusomter quality as required
• Personalised assistance is not available and it takes time while returning or replacing the good online
• Not suitable for the target consumer which doesn't have access to technology
• Sometimes what the customer orders is exactly different from what he recieves making customer dissatisfied with the service