Disintermediation is a business model in which a company removes the intermediaries, such as a distributor, wholesaler, broker, or agent, that traditionally stood between it and its customers, dealing with customers directly instead, for example by selling over the internet rather than through a traditional distribution channel. It is commonly described as cutting out the middleman in a supply chain or a transaction.
Facts
Core MechanismDisintermediation removes the intermediary from a supply chain or a financial transaction, so a company deals directly with its customers, or an investor puts money directly into securities, instead of routing the transaction through a distributor, wholesaler, broker, agent or bank. It is most visible today in direct internet sales that bypass a traditional distribution channel. 1 Origin YearThe term was first applied to banking in 1967, describing depositors bypassing banks to invest directly in securities after Regulation Q capped the interest banks could pay; it was later extended to commerce generally. Connections
Associated With
Disintermediation, a producer selling straight to buyers instead of through wholesalers or retailers, is the underlying mechanism the direct-to-consumer business model relies on.
Sources
1. Wikipedia, Disintermediation
WikipediaLead section
Disintermediation is the removal of intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transactions.
Wikipedia: Disintermediation, History section
In 1967, the term was originally applied to the banking industry; disintermediation occurred when consumers avoided the intermediation of banks by investing directly in securities
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