Ken Uchikura Newsletter Vol. 199 How the Internet is Changing Distribution
Sep
21
How the Internet is Changing Distribution
The internet has changed many businesses. I believe the most significant change is how close the distance between producers and consumers has become. For example, we used to consult with a travel agent and schedule our trips when traveling abroad. It was convenient for both the consumer and the distributor. It eliminated the need to secure human resources and locations, which was a clear advantage. However, this business model doesn’t work the same way now. Today, moving travel agencies online is easier and cheaper as they provide the same services. However, it unclear what will happen to these online agencies in the future.
When I travel for business, I use online agencies for air travel. But for hotels, I try to book directly from the hotel’s website. Although it’s typically more expensive, there’s more flexibility with cancellations and other possible changes when booking directly through the hotel’s website. After the travel industry, I believe the automobile sales industry will change next. In the U.S., dealerships generally handle sales. However, Tesla’s changing this model.
Now, people buy cars online. There’s no price negotiation or anything. Also, manufacturers can have more access to the end-user information, which they couldn’t do before. In the U.S., Ford is working hard to promote this consumer tie-in. Instead of the dealer holding the inventory, the manufacturer will sell the product to the consumer at a fixed price. Then, the dealer will provide delivery and support. I feel that this change will continue to progress in various industries.
The internet's power is in the hands of the consumer and the manufacturer. Intermediary margins will become smaller and smaller. I think we need to understand this and always think of new business models. As a software developer and manufacturer, my company needs to consider what we can offer.
Kenichi Uchikura
President / CEO
Pacific Software Publishing, Inc.
ken.uchikura＠pspinc.com
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