A Frictionless Marketplace Operating in a World of Extremes

by Allen F. Wysocki

Choices 4th Quarter 2005,  20(4) 

If the forces and trends identified in this paper hold, there are at least, two, inter-related dimensions to describe what future grocery supply chains might look like in a frictionless marketplace, operating in a world of extremes.

Frictionless (2000 and beyond). The "Frictionless Marketplace" is characterized by a renewed emphasis on the individual shopper. Redundant supply chain components such as warehouses are eliminated and the retailer once again becomes the "Agent" for the shopper, facilitating the transfer of goods and services from manufacturers to end-users.

A world of two extremes. Traditional segmentation no longer works in a complex and divergent marketplace filled with diverse customers and individualism. Customer behavior appears at times to be schizophrenic: they will demand low prices for goods that are viewed as commodities, yet be willing to pay sizable premiums for products that mean more to them personally. This will result in two extremes: 1) huge mega-retail formats dominating one end of the spectrum, and 2) focused specialists dominating the other. Retailers and suppliers caught in the middle with undifferentiated concepts are doomed for failure.

Full paper available for download at http://www.choicesmagazine.org/2005-4/supplychain/2005-4-10.htm