ARTICLES
Internet a frictionless market-know the unknowns
By Robin Trehan, B.A, MIB, MBA electronic business
We all have a desire to find answers to unknown questions.
Sometimes we also know there are a known unknown; that is to say we
know there are some things we do not know and we try to find knows.
Among one of these questions is internet a frictionless market is known
unknowns.
Let us try to find a known answer for it. We know
that fierce price competition, dwindling product differentiation, and
vanishing brand royalty are the hallmark for the perfect market or
creating a frictionless market. A market where we know that a producer
of an article sells it for more than it cost him to make but the
customer buys it only because its worth more to him than he pays for
it, and that's his profit. Internet creates all four conditions that
are requisites for a perfect competition, and therefore creating a
frictionless market. These conditions are
1. Perfect information: negligible search costs
2. No barriers to entry
3. No price discrimination
4. No product differentiation
Is it also true an internet business model is like a milk
stool. It has three legs. The suppliers, the buyers, and the speed
provided by supply chain management. If any of the legs gets too long
or too short, then the stool falls over. Here the supply chain
management is of great importance as it brings cost effectiveness,
efficiency and personalization of product and services.
Yes, there are also unknown unknowns - the ones we don't know we don't
know and answers to those unknowns will come as internet business keep
on maturing. The learning cure has just started and as we will climb on
it we will have more knows to unknowns.
Robin Trehan can be reached at rtrehan@creditcapitalfunding.com