Disintermediation

The value proposition of technology is often determined not by the capabilities it enables, but by the rate at which those new capabilities are accepted by society and can be incorporated into everyday life or, in the case of business, into the processes that add value to its production. The implications of technology are typically not reflected in its initial value proposition but realized after it has been adopted by society and put to good use, as discussed in section 1.4. The initial business/consumer value proposition of the Internet and eCommerce technologies was the ability to directly connect consumers to manufacturers, effectively bypassing several layers of seemingly non-value-added intermediaries resulting in purchase price savings for consumers and a reduction in distribution cost for the manufacturer. However, manufacturers, distributors and consumers are now realizing that this technological phenomenon brings both market compression and channel expansion whose effects on the marketplace are not completely understood.