Internet is a distribution channel because it is one of many ways that makes products and services available to consumers. It facilitates the exchange of goods and services between buyers and sellers without the restraints of distance, status, location or language.
Intermediary functions provide an increase in efficiency (reduce # of interaction channel member must undertake) and effectiveness to create value for customers: increase convenience, offer easy returns, credit, delivery service.
2012 Update: Intermediary functions are now provided by many apps (smart phone applications) now available to many mobile phones subscribers. Mobile internet access and mobile email access has reached a 50% penetration and is being seen to increase as more and more brands provide intermediary functions of apps to customers.
Disintermediation is the elimination of channel intermediaries – eliminating retailers and shipping products directly from manufacturer to consumer. The “Internet” enables firms to interact with customers at a much lower cost (inventory and shipping) and higher speed. Example: Dell transfer products directly from manu-consumer and functions from retailer is shifted to manufacturers.
2012 Update: Fresh Direct ships groceries directly from warehouse to customer doorsteps without the need need for stores in every neighborhood that supply to.
Distribution levers: are activities that affect buyer seller relationship through types and number of intermediary, intermediary functions, number of channels, degree of channel integration. These stimulates customers to become aware, explore, or commit to firm and also weaken or dissolve relationships.
2012 Update: Email Marketing has become the most effective and efficient distribution lever today. Email newsletters cause customers to become aware of and give them the immediate opportunity to explore new products and services they care about. Email campaigns are opt-in only thus spam has been reduced significantly making consumers less weary of opening marketing emails. Commitments, sales and feedback has increased through email campaigns because of immediate response capabilities. The dissolution of a email list relationship is also as easy and simple as a single click.