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In other words, 'Internet doesn't itself create success, but it allows steps to be taken towards success' (Michael Dell, managing director of Dell Computer Corp.).


Medium chains

If you're not as famous as Dell and you're dealing with a rather less concentrated market, the value chain gets a bit longer. Suppose you're a book publisher, for example Eyrolles-http://www.eyrolles.com and you sell the titles your publish through your website. This method allows you to sell to customers who know your name, or who have seen an advertisement in the press for a book sold on your website. But your sales are fairly limited, as the competition is fierce : the fifteen or so online bookshops (aggregators such as alapage.com, alibabook.fr or bol.fr) have captured a large part of the market and are responsible for part of the sales of your titles on the Web through their system of electronic commerce. But they themselves have signed agreements with access providers (portals, communities or agents) in order to increase their visibility. They have also set up affiliation programmes destined for small sites, such as those which list book references by theme. Soon books like fr.agiligence.fr will also be available online, on sites such as 00H00.com

We notice that as the value chain gets longer, the chains also multiply. Eyrolles' books are sold direct on its own site, but also on a parallel distribution circuit on the aggregators' sites and sites specialising in online publishing. Eyrolles obviously also continues to sell in 'bricks and mortar' bookshops. In this way, the distribution circuits are superimposed on each other.

Long chains

The further a supplier is towards to beginning of a distribution chain, the larger the number of intermediaries, which is not surprising. Intel, the micro-processor manufacturer, although it doesn't sell on its own site, benefits from electronic commerce thanks to tens of thousands of online distributors, via chains of varying length.

In the case of Dell, there is only one intermediary : the computer manufacturer, before the final customer. But for other manufacturers, such as Packard Bell, whose equipment is distributed by computer equipment aggregators such as Wstore-http://www.wstore.com, this represents another link in the chain. Intel also sells to wholesalers, who sell the computers to retailers, who finally reach the customer via their website. And to locate these sites, you have to use a portal site or a comparison shopping system, such as Juste Prix-http://www.justeprix.qds.fr with the result that 5, 6, 7 intermediaries have been added to the circuit.

The multiplication of value chains is not a problem in itself, and it's a unavoidable fact. For a business, the trick is nevertheless to analyse it well in order to understand it, and if relevant, direct it.


 

 

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If you enjoyed this site, we obviously share values: we have written it in 1999 !

We haven't updated it online as the vision still is more and more relevant: the more the internet matures, the closer it gets to our vision.

We still believe in innovation, creativity, rigour and results control.

Contact us if you need webmarketing services:

Raphael Richard, founder

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