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The Role of E Commerce

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The Role of Intermediaries in Electronic Marketplaces: Assessing Alternative Hypotheses for the Future
George M. Giaglis1 , Stefan Klein2 and Robert M. O’Keefe 1
1

Department of Information Systems and Computing, Brunel University, Uxbridge, UK
2

Institute for Information Systems, University of Munster, Germany

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 ‘internalised’ through direct supplier-buyer dealings, and hence mediating parties may continue to play a significant role even 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 where market dynamics will favour direct buyer-seller transactions, the reintermediation scenario where traditional intermediaries will be forced to differentiate themselves and re emerge in the electronic marketplace, and the cybermediation scenario where 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 each case.

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1. Disintermediation in Electronic Markets: A Historical Perspective

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