To cover these new costs, the manufacturer who chooses to deal direct must sell a large number of units. Thus, because he will be dealing with new clients (his traditional clients were the wholesalers : he had practically no contact with the final customer), there is a fairly high risk. But the risk will increase further, as customers must see a real advantage in buying by Internet rather than in a shop : not having to go shopping is only a small advantage, and can even be a disincentive to buy for many consumers (notably those of Latin temperament, who like to handle the goods before they buy). The price, on the other hand, as long as it is considerably lower than those of other distribution channels, represents a great advantage, though still insufficient for the majority of customers (price-sensitive customers are not necessarily in the majority among those buying high-quality T-shirts). Personalised T-shirts (motifs, size, colour, fabric) represent another great advantage, compatible with their position at the upper end of the market. But this option, which presents an important advantage over the competition for this T-shirt manufacturer, obliges him to reorganise his production line, and incorporate computer data systems linking the Web, which will be used to collect customers' personal data, and the company's internal network, in turn linked to the production workshops. This is how the well-known phenomenon of missing out the middle-man, which is often associated with Internet, comes into being.

But it's true that this type of strategy presents undeniable advantages : the manufacturer can reach markets that he previously found it difficult to break into. The entry fee for items of mass consumption for markets such as the United States or Japan (where distribution is fairly tightly controlled) is extremely high. On the other hand, with Internet, the barriers are partially lifted and potentially it is possible to short-circuit the traditional distribution networks.

But to get his Website known among the millions which exist (between 5 and 10 million at present), the investment needed by our manufacturer, especially for online advertising, turns out to be enormous, requiring an movement of capital which is not available to every company, and which increases the risk as well as the passivity of the business. To get his product known quickly on Internet, the manufacturer could decide to implement an affiliation strategy. This consists of contacting the Websites that his customers visit, and persuading them to advertising his T-shirts in exchange for a commission on all the sales that they generate for his online store.

Manufacturer --------------> Affiliated members ------------> Final customer
3.5 euros -------------------> 10% commission ----------------> 39 euros

Figure 5

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