This is portion of MOTLY FOOL article for this evening:
Second, e-commerce has generally been thought of as a process of disintermediation whereby buyers and sellers can now
bypass those parties that once took a slice of the profits despite adding little or no value to the transaction. The clearest
example may be the way discount brokers like Schwab (NYSE:SCH - news) reduced stock transaction fees by convincing
millions of investors that full-service (that is, high-priced) brokers didn't add enough value to justify their commissions. Now,
online brokers like E*Trade (Nasdaq:EGRP - news) have convinced millions more that even talking to an order-taker over the
phone is of minimal value.
What the gold rush in the online brokerage business really suggests, though, is that traditional business-to-consumer commerce
is undergoing a process of re-intermediation. Old business is being conducted through new (or simply different) intermediaries
that offer customers a new value proposition and thus depend on different profit centers. What used to cost a lot of money (a
stock trade) is increasingly inexpensive or free. Companies that provide excellent service and a competitive price on this repeat,
commodity business will be positioned to benefit from other revenue streams (say, getting you to invest in their own mutual
funds) or from a greater volume of traditional, though once-downplayed revenue streams (say, from interest on margin loans).
You have to be lean, though, to make money this way.
LOLLLL, LMMMM, LEAN MEAN MONEY MAKING MACHINE. |
