London Taxi

It’s often said that the Internet is leading to a disintermediation of services: that the ability for organisations to communicate and transact with their customers online cuts out intermediators (more widely known as middle men). What’s happening in London with taxi firms these days seems to show an opposite effect.

I’ve written in the past about the way in which London minicab firm Addison Lee purportedly increased its business when it started to allow customers to book cabs via a mobile app. I’ve also argued in the past that this first-mover advantage might turn into a liability in the longer term as Software as a Service providers move in to offer aggregated app services to smaller firms giving them an advantage over the bigger company that finds itself running two businesses -a cab firm and a taxi-booking software business.

It looks like at least the SaaS side of that prediction might be coming true as it seems impossible to move around London at the moment without seeing yet another advert for a mobile app offering taxi booking.

So whilst very large firms may be able to cut out middlemen, we are setting massive expansion in new forms of marketplaces with new intermediators, whether in the taxi industry, software (apps marketplaces), financial services (Compare the Market) or just about anything else (think Amazon). And this then possess an interesting dilemma for bigger firms: if there is a big online marketplace for your products or services, is it worth going direct to your customers?

Well, it depends I guess on whether you want to differentiate yourselves from your competition on something other than price. But that then in turn comes at a cost- not only of building your own channels in competition when marketplaces operating at scale, but also in terms of the marketing effort that will need to be invested to build your direct-to-customer service brand.

One thought on “Intermediation

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