Chicken Little and the Disintermediation Myth

by : Paul Shearstone

If Chicken Little were alive today he wouldn’t be running around forewarning us of the sky that was about to fall. He’d be too preoccupied alerting everyone about another potential disaster - which may in the end prove to be just as erroneous as his first prediction. Nevertheless, if the conversations around the office water coolers are any indication, he’d still get the attention of many nervous corporate omni-smarts. So what’s the new buzz? Disintermediation!

If you haven’t heard the word already, you’re going to hear it ad nauseum.

For those unfamiliar with the term; Disintermediation is a groovy way of saying; “Soon there won’t be a need for a Middleman." That is to say, thanks to things like the Internet, e-commerce, global attraction and fulfillment, manufacturers will no longer require the services of the “Middleman in the Channels" [resellers] to reach end users or customers.

It would seem today’s prognosticating Chicken Littles are quite convinced the death of the middleman is in fact, imminent. But like the chicken that went before them, that doesn’t mean they’re right!

The incredible rise and untimely fall of many of the mighty dot-com’s should serve in no small way to highlight much of what we thought the internet was going to do, it didn’t and probably won’t. And you don’t have to bring up the name, Peter de Jager, to know there is no shortage of red-faced futurists still hiding under rocks looking for ways to get out of town. Fortunes were made and lost especially in high-tech resulting from, let’s call it; bad information concerning things like Y2K and the forecasted unavoidable changes to the traditional business landscape, thanks to the Internet.

But to be fair, de Jager wasn’t in a bomb shelter when the clock struck twelve, he was in a plane and as far as I know, he never told anyone to stock up on Tang! We can save that discussion for another time as it is – at the risk of sounding a little ironic – history.

Nevertheless, the argument regarding whether e-commerce will entrench itself as the 'preferred' way of doing business continues. From my perch, I’ll go out on a limb and say, “It won’t! At least not totally."

Simply put, there are two fundamental transaction-types that culminate in a sale. One is Tactical and the other is Strategic. Few would argue the implementation of a new IT-network or specialized software requires a strategic approach that can only be satisfied in person employing a B2B strategy. Most sales requiring specializations all but eliminate – at least for now – an e-commerce solution.

Tactical sales, however, are entirely different and is a perfect example. For products like books,a bar of soap or an airline ticket, e-commerce has a far better chance of becoming the time and money-saving fulfillment process of choice – but even that, as we have seen, has no guarantees!

A toy is a toy is a toy. Right? So why did go under? Surely their business model personified the quintessential Tactical sale for which e-commerce was designed. It did! Yet it still failed. Why?

Why also do studies conducted by US-based firms like Pittiglio Rabin Todd & McGrath report e-commerce has not – as of yet - replaced or significantly reduced traditional channel operations to any significant extent?

I personally am reasonably e-savvy but, to date, I have only bought a couple of small items over the net. Not because I haven’t tried to buy more.

Giving out my credit card information has never frightened me. My bank assumes all responsibility for purchases by my card should it fall into the wrong hands. [Note: I, like you, pay handsomely for this privilege].

On several occasions I did try to make a small e-purchase. Each went something like this. Step 1: Name / Address / Phone Number / [No problem with that].

Step 2: Date of Birth / [SAY WHAT?] SIN Number / [NOT A CHANCE!]

The fact is; I, like most people, will, not - under any circumstances - give out sensitive, personal information over a faceless Internet regardless of how secure the connection is. And therein lies one of the major stumbling blocks for even the simplest e-purchase. Misuse my credit card; I am inconvenienced. Misuse my personal information; I am potentially devastated for life. A few bars of soap or a new toner cartridge for my printer are in the end, not worth the risk.

What about larger purchases? Not too long ago, the Auto Industry was bracing for what it thought would be a groundbreaking way to sell cars – over the Net. After all, it did meet the Tactical Sale Model e-commerce was designed to satisfy. And when that didn’t happen, they were quick to ameliorate their expectations by saying; customers will purchase cars in three steps. First: They will shop the net for exactly the car they want. Second: They will physically test drive one. Finally: They will again shop the net for the very best price and purchase. … So how come so few buyers have done this?

There is an obvious [predictable] answer and it isn’t so difficult to understand.

Educated sales-specialists know there is an Art and a Science to selling. Both the Art and the Science are time-tested and proven and are well rooted in things like Psychology, Human Behavior and Motivation. E-commerce, although quick to offer a potentially new and better way to buy, has fallen miserably short in its ability to offer the human factor still expressly integral in allowing traditionalists to make the leap of faith from the real world to the e-world. In the end, it doesn’t matter whether it’s a computer part, a bar of soap or a new car. A better strategy is still needed to achieve synchronicity between the two buying-models thereby bringing credibility or a speedy end to the argument about Disintermediation.

“Is Disintermediation real? Or is it a Myth?

For the answers to this and strategies you can use [already embraced by successful e-managed companies], go to >< home of the ‘Pragmatic Persuasionist’ Paul Shearstone.