Thursday, March 07, 2013

On Disintermediation, Amazon, and Google

Tobe Freeman, PhD, responds to my article "Life, Work and Careers in the Twenty-First Century" and subsequent discussion of a recent news item regarding the possibility of Google becoming a competitor of Amazone by entering the field of "delivering ordered goods" or "order fulfilment":

"Has some important insights relating to ...disintermediation.... The article points out that Google will host and coordinate third party communities of couriers to perform what the industry calls 'fulfilment': express delivery of products purchased online. This contrasts with Amazon's network of large distribution warehouses.

"Google's model will involve more parties than Amazon's. This community will involve highly coordinated activity between producers, local sellers and google as a marketing and coordination player. More intermediation made possible by cheap, top quality electronic back office infrastructure.

"The use of couriers is also an intermediation step: adding couriers to speed up the 'last mile' rather than using the postal service. The business model is great: subsidy from supplier and a premium paid by the user.

"This is exactly why I believe, despite other evidence to the contrary, that the pendulum is about to swing on 'disintermediation'.

"The weakness of my argument is that it will exclusively apply to premium services. And with rising inequality it is clear that fewer will be able to pay the premium. The last time we had such enormous amounts of cheap labour handling the intermediation of premium services was the 19th century. Marx entered and explained that this was a terrible waste of (human) capital. Industrialisation followed and the rest is history."

Sphere: Related Content

No comments: