• Greatly reduced search costs on the Internet would encourage consumers to
abandon traditional marketplaces in order to find the lowest prices for goods.
First movers who provided low-cost goods and high-quality service would succeed.
• Market entry costs would be much lower than those for physical storefront merchants,
and online merchants would be more efficient at marketing and order fulfillment than their offline competitors because they had command of the
technology (technology prices were falling sharply).
• Online companies would replace traditional stores as physical store merchants
were forced out of business. Older traditional firms that were too slow to enter
the online market would be locked out of the marketplace.
• In certain industries, the “middleman” would be eliminated (disintermediation)
as manufacturers or their distributors entered the market and built a direct relationship
with the consumer. This cost savings would ensure the emergence of
the Web as the dominant marketing channel.
• In other industries, online retailers would gain the advantage over traditional
merchants by outsourcing functions such as warehousing and order fulfillment,
resulting in a kind of hypermediation, in which the online retailer gained the
upper hand by eliminating inventory purchasing and storage costs.