Disintermediation
What is disintermediation?
Disintermediation refers to the removal of intermediaries from a process, distribution channel, transaction, or supply chain. Often described informally as “cutting out the middlemen,” it allows producers to sell directly to consumers, and vice versa. By bypassing third parties, businesses can reduce servicing costs and improve profit margins, while also gaining more direct control over the customer experience. However, while disintermediation can enhance efficiency and strengthen the relationship between brand and consumer, it may also lead to increased logistics costs, particularly when products are shipped directly to individual customers instead of centralised locations.
Examples of disintermediation in action
Disintermediation appears across various sectors and in multiple forms. Though the term first emerged in the financial services industry, it’s now widely associated with ecommerce and direct-to-consumer (D2C) models. A retailer that stops selling through third-party platforms and instead sells only via its own website is engaging in disintermediation. Similarly, when a traveller books a hotel room directly through the hotel’s website instead of a comparison or booking platform, that too is an example of this model in practice.
