Data Management

Cutting Out The Middleman Isn't Always Best For The Consumer

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Executive Summary

The Internet and other information technologies have complicated the relationship between manufacturers and retailers. Whereas the traditional distribution model had four levels - manufacturer, wholesaler, retailer, consumer - many manufacturers now sell directly to consumers. Apple, Nike and Hewlett-Packard are among the companies that have adopted the strategy, which can expand markets and give manufacturers control over product price and selection. But the approach has drawbacks. Retailers see direct-to-consumer as a competitive threat. And to the extent that the strategy does promote competition, it lowers profits for both retailers and manufacturers.

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