In economics, disintermediation is the removal of intermediaries in a supply chain. Disintermediation is often the result of high market transparency, in that buyers are aware of supply prices direct from the manufacturer. As a result, buyers will bypass the middlemen (wholesalers and retailers) in order to buy directly from the manufacturer and thereby pay less. Buyers can alternatively elect to purchase from wholesalers. Often, a B2C intermediary functions as the bridge between buyer and manufacturer.
To illustrate, a typical B2C supply chain is composed of four or five entities (in order):
However, disintermediation has often occurred less frequently as a result of the internet than many expected during the dot com boom. Retailers and wholesalers provide functions such as the extension of credit, aggregation of products from different suppliers, and processing of returns. In addition, shipping goods to and from the manufacturer can in many cases be far less efficient than shipping them to a store where the consumer can pick them up. In response to the threat of disintermediation, some retailers have attempted to integrate an virtual presence and a physical presence in a strategy known as bricks and clicks.
See also: Reintermediation