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A Business Strategy – Disintermediation

by Valencia Person (2019-07-12)

Indeed, entrepreneurs need enough money to keep their business running. Even a typical venture uses various strategies to attain growth, profit, and disintermediation to pursue success.  

The word disintermediation sounds a bit complicated but to understand its meaning, individuals need to segregate the word in little parts. Dis- intermediation means to get rid of intermediaries.


It implies that entrepreneurs need to get divest of people, who stand in between the entrepreneur and their customers. In short, entrepreneurs can directly work with consumers, thereby saving a huge amount of money. In this process, people can eliminate some factors such as unnecessary distributors or retailers, who serve no purpose in contributing to the business.


Concept of Disintermediation:


If an entrepreneur eliminates the disintermediation factor, then it considerably lowers the cost, while still enabling the entrepreneurs to obtain revenue from the consumers. Hence, use it as a business strategy. It directly accesses the customers to different products of company at cheaper rates, because it eliminates other costs such as fees and commissions of retailers and distributors.


The chains of supply become streamlined, and the company directly sells the products to customers through internet or through company owned stores. It creates a higher transparency in market, because consumers are aware that they get goods directly form the manufacturers.  Disintermediation exists in offline business world too. Many apparel brands and big retailers have greatly benefited by disintermediation.


It boosts the product sale and establishes a strong rapport between the company and customer, by virtue of which consumers continue to buy products of that particular company only. For instance, many major computer companies provide the user with not only computer, but also with various computer software, and as for developer the company provides them with source provisions, thereby eliminating the marketing cost of software.


The ventures, which use disintermediation, are mostly businesses dealing with computer hardware, musical appliances and accessories, book supplies, software paraphernalia and travel agencies.


The Other Side Of Disintermediation:


Although, there are huge benefits of disintermediation that is used as a way to earn more revenue, sometimes it may bring in loss to small businesses. In addition to this, the concept becomes beneficial only for reputed ventures in market, but what about other small businesses. These small businesses thrive on executives, salespersons, retailers and distributors for sale to generate profits.


If entrepreneurs use disintermediation in their business ventures, then intermediaries who get income from them may have to go jobless.  The best thing is to implement this strategy only in few areas of a venture such as computers and books.


People who run online ventures can safely bet on a disintermediation procedure. Hence, entrepreneurs need to consider the category in which their businesses fall and then opt for disintermediation.