Relevance of Disintermediation, Reintermediation, and Cybermediation for MSMEs in E-Commerce

Introduction

In the realm of Electronic Commerce (E-Commerce), it is often agreed that an exchange, preferably a mutual one, has to occur between buyer and seller in order for a successful transaction to occur. The buyers and sellers in question are usually consumers and suppliers respectively (Sen & King, 2003). However, more often than not, in order for these transactions to occur, intermediaries and middlemen play a crucial role in setting up and supporting the matching between those buyers and sellers (Meck, 2001).

The current e-commerce trend advises businesses to change from the previous business model of “standardised products, homogenous markets, and extended product life cycle” to the new business model of “varied and personalised products” (Fensel et al., 2001). E-commerce necessitates the company's capacity to meet the diverse demands of its clients and supply them with a broader selection of items.

E-Commerce is one of the most important emerging technology that has taken the commercial world by storm. Today’s economy has seen a rapid increase in the number of Micro, Small and Medium-sized enterprises (MSMEs) operating in the Electronic Commerce (e-Commerce) industry, especially in developing economies. Developing countries often have younger and faster-growing populations, higher income growth rates than mature economies, and higher savings rates (Nichter & Goldmark, 2009). Due to the numerous potential opportunities presented by Internet technologies, it is now possible more than ever for MSMEs to start up, grow and even compete successfully against larger organisations in the e-Commerce industry. Internet technologies has virtually lowered barriers to entry for MSMEs to enter and compete, and this is due to the advent of digital technologies that had potentially allowed next to nil cost of production. The rapid growth of E-Commerce initiatives in the world reflects its undeniable benefits for MSMEs, such as lower cost structure, easy access to consumer feedback for product improvements, broader scale and scope of products and services, availability and transparency of data that boosts consumer confidence, access to more consumer bases regardless of geographical locations, and transactions that can be conducted faster than ever without ever leaving the houses.

In some industries, organisations that have their operations based on retail outlets instead of e-Commerce platforms are slowly closing down due to lack of consumers and the shift in consumer habits towards online shopping and e-Commerce. This is especially true in the United States, where the ‘Retail Apocalypse’ happened which involved the closing down of numerous brick-and-mortar retail stores that are located in North America (Mao, 2021). E-Commerce are particularly important in emerging economies such as China, whereby presence of e-Commerce continues to increase every year (H. Zhang & Okoroafo, 2013; X. Zhang, 2019). With over 668 million Internet users in 2015, China's online shopping sales reached $253 billion in the first half of 2015, accounting for over 10% of the entire retail sales in China in that particular period. In the case of another emerging economy such as Malaysia (Lim et al., 2015; Paynter & Lim, 2001), there is an approximate 20.8% increase in e-Commerce growth from 2015 to 2020 due to the rapid increase in number of Internet users. India has an Internet user base of over 400 million (Ahmad et al., 2017), and although the penetration of Internet is low compared to developed markets such as the United States, United Kingdom, France and Germany, e-Commerce in India is growing at a much faster rate, adding around 6 million new entrants and MSMEs every month. Thus, developing economies can enjoy more benefits brought about by e-Commerce compared to developed economies due to the presence of massive number of populations in emerging economies. In total, over 6 billion people or an approximately more than 75% of the world's population lives in an emerging economies (Chatterjee & Kar, 2015). With this rapid increase in the number of internet users every year, it is imperative that MSMEs take this opportunity by entering and competing in the e-Commerce industry, more so in emerging economies where more than half of the whole population are resided in.