Our landlady just had a baby. We wanted to get her something, so we ordered a nice little plush bunny from a company in Montreal. They make these adorable creatures from locally-made, organic, or recycled materials. It's a great little bunny. Very cute. Giant eyes. Gender-neutral brown. Because we ordered the bunny directly from the company that makes it, we get to put a little more money in their pocket. I know at least two places in Toronto where we could have gotten the bunny, and it would have been about the same price. We didn't save money by buying the bunny online, we just made a decision about whether or not we want to give some of that money to a retailer. This is disintermediation in action. Because this company offers their products for sale directly through their website, we get to deal with just them instead of engaging with a middle man.
One of the big problems with disintermediation is discovery. And it seems like discovery is always brought up as a problem when a digital practice starts to replace a physical one. How did we find out about the company that makes the cute little plush bunnies? From a retailer. Coming out of an art gallery in Montreal about a year ago, we noticed this store across the street, with really neat throw cushions in the window. I bought one. We call it "Sheep" because it looks like a sheep. That store offered the opportunity to discover something new. Loads of somethings, really. The animal throw cushions were only one of the product lines they carried. That's what's great about stores. Someone curates a collection of products which they think of as cohesive, interesting, or in some way linked together and puts them all on display. A really good retailer, like that little store in Montreal, does the leg work necessary to put a good collection together and to wrap it up in an appropriate experience. That sheep cushion smelled like vanilla for a month after I bought it, just because it had absorbed the ambient smell of the store.
The discovery argument has been around for a while. It's in libraries, where we worry about losing the serendipitous finds that come from browsing the stacks near something you know you want. A lot of work has been done in music to improve discovery as purchasing and consumption move to digital platforms. Services like Pandora and Rdio aren't just notable for their streaming capabilities, but for the ways they help their users find new music. The argument is starting to play out with electronics stores. There's a worry (See, for example, this Economist article) that people are using bricks-and-mortar retailers as showrooms, just trying out products, before then going online to buy them at lower prices. The stores continue to be sites of discovery, but they lose the sales essential to keep them running. This is where it gets thorny, though.
A move from bricks-and-mortar to online isn't necessarily disintermediation. If shoppers are buying their electronics from Amazon, there's still an intermediary. On the flip side, the Apple stores are a beautiful example of disintermediated physical retail environments. They offer both a showroom and direct contact with Apple. They can promise an authentic experience of their products, and get all the benefits of cutting out a middle man retailer. This kind of disintermediation has been exceptionally common in clothing stores for some time. Walk into a mall, and you'll find that the majority of clothing retailers only sell their own lines. And they use very specific retail environments to support those lines. But it's different with clothing, because one size doesn't fit all. Products with fewer variations have an easier time breaking out of the bricks-and-mortar selling environment. And products with less brand baggage than Apple may see less need for physical stores. Besides, most companies aren't Apple. Discovery in third-party retailers matters more for small companies, like the people who make those nice plush bunnies.
One of the big problems with disintermediation is discovery. And it seems like discovery is always brought up as a problem when a digital practice starts to replace a physical one. How did we find out about the company that makes the cute little plush bunnies? From a retailer. Coming out of an art gallery in Montreal about a year ago, we noticed this store across the street, with really neat throw cushions in the window. I bought one. We call it "Sheep" because it looks like a sheep. That store offered the opportunity to discover something new. Loads of somethings, really. The animal throw cushions were only one of the product lines they carried. That's what's great about stores. Someone curates a collection of products which they think of as cohesive, interesting, or in some way linked together and puts them all on display. A really good retailer, like that little store in Montreal, does the leg work necessary to put a good collection together and to wrap it up in an appropriate experience. That sheep cushion smelled like vanilla for a month after I bought it, just because it had absorbed the ambient smell of the store.
The discovery argument has been around for a while. It's in libraries, where we worry about losing the serendipitous finds that come from browsing the stacks near something you know you want. A lot of work has been done in music to improve discovery as purchasing and consumption move to digital platforms. Services like Pandora and Rdio aren't just notable for their streaming capabilities, but for the ways they help their users find new music. The argument is starting to play out with electronics stores. There's a worry (See, for example, this Economist article) that people are using bricks-and-mortar retailers as showrooms, just trying out products, before then going online to buy them at lower prices. The stores continue to be sites of discovery, but they lose the sales essential to keep them running. This is where it gets thorny, though.
A move from bricks-and-mortar to online isn't necessarily disintermediation. If shoppers are buying their electronics from Amazon, there's still an intermediary. On the flip side, the Apple stores are a beautiful example of disintermediated physical retail environments. They offer both a showroom and direct contact with Apple. They can promise an authentic experience of their products, and get all the benefits of cutting out a middle man retailer. This kind of disintermediation has been exceptionally common in clothing stores for some time. Walk into a mall, and you'll find that the majority of clothing retailers only sell their own lines. And they use very specific retail environments to support those lines. But it's different with clothing, because one size doesn't fit all. Products with fewer variations have an easier time breaking out of the bricks-and-mortar selling environment. And products with less brand baggage than Apple may see less need for physical stores. Besides, most companies aren't Apple. Discovery in third-party retailers matters more for small companies, like the people who make those nice plush bunnies.
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