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DisintermediationΒΆ

Everything you purchase comes though different hands and businesses, a value chain.

The iPhone gets manufactured in China, then it gets transferred to a port, then it goes to Apple, then gets distributed to retail locations where it gets sold by different people.

You can look at the value chain and see if you remove steps from the value chain and with one of two things happening:

  • Lower price, same quality
  • Same price, higher quality

Examples:

  • Eye glasses
    • You need to go to optometrist and get a prescription
    • You try various frames at the store
    • You wait for the lenses
    • Pay huge chunk of money
    • A company that solves this - Warby Parker
      • It cuts out the whole retail side of the value chain
      • Website where you enter your prescription
      • Select 5 frames and you get them shipped to you, try them out and select which ones you like
  • Furniture
    • Shipping costs more if you are shipping assembled furniture
    • Ikea removes this assembly process
  • Dell were the first to skip the retail process