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Unformatted text preview: riced as high as 135% of its original cost to manufacturer.
have KEY CONCEPTS IN E-COMMERCE; DIGITAL MARKETS AND DIGITAL GOODS
Figure below illustrates how much savings result from eliminating each of these layers
(intermediaries) in the Distribution process.
By selling directly to consumers, or reducing the number of intermediaries, companies
are able to raise profits while charging lower prices. The removal of organizations or
business process layers responsible for intermediately steps in a value chain is called
‘’Disintermediation’’. The typical distribution channel has several intermediary layers, each of which adds to
the final cost of a product, such as a sweater. Removing layers lowers the final cost to
the KEY CONCEPTS IN E-COMMERCE; DIGITAL MARKETS AND DIGITAL GOODS
Airlines and Hotels operating their own Reservation sites online, earn more revenue
from Ticket selling because they have eliminated Travel Agents as intermediaries.
Table below summaries th...
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- Spring '11