Disintermediation is the removal or bypassing of an intermediary so that buyers and sellers deal directly. On platforms it runs both ways: users take deals off the platform, and platforms bypass partners they once relied on.
Table of Contents
Types of disintermediation
- Going direct: producers sell through their own websites, apps or stores and cut out wholesalers, retailers or agents.
- Platform leakage: two sides that met on a platform complete later deals off it to avoid the fees.
- Bypassing partners: a platform or large user replaces a supplier it depends on, for example by building its own payments or maps.
Key factors
- What the intermediary adds. Reach, trust and convenience often outweigh the fee, so cutting out the middle can cost more than it saves.
- Repeat ties. Leakage rises when the same buyer and seller expect to deal again, and stays low for one-off jobs.
- Coordination-heavy work. Limiting outside messaging cuts leakage most for complex, time-sensitive jobs and for cost-sensitive buyers.
- Benefits only the platform gives. Payment protection, insurance and ratings give users reasons to stay.
- Scale. Large users bypass a supplier once their volume justifies building their own.
Examples
Nike. From 2020 Nike pushed sales through its own apps, website and stores and cut many wholesale accounts. Direct sales reached $21.3 billion, about 44% of Nike brand revenue, in the year to May 2023. In 2023 Nike began rebuilding ties with retailers such as Foot Locker and DSW, which resumed selling Nike that October, to regain their reach.
American Airlines. In April 2023 American Airlines removed about 40% of its fares from the booking systems travel agents use, to push sales to its own channels. Corporate customers moved to other airlines. On 28 May 2024 it cut its revenue outlook, its commercial chief left, and it later began returning fares to agents.
Frequently asked questions
What is the difference between disintermediation and reintermediation?
Disintermediation removes a middleman. Reintermediation puts a new one in its place, often a digital platform, so markets that cut out old agents frequently end up dealing through a new intermediary instead.
How do platforms stop users from going around them?
By offering benefits that exist only on the platform, such as payment protection and insurance. Many also hide contact details in messages, charge referral fees or make off-platform deals a breach of their terms.
How common is platform leakage?
It varies widely. Published estimates range from almost none on some home-cleaning platforms to about a quarter of potential activity on others, depending largely on how often the same pairs deal again.
Is disintermediation good for customers?
Often, through lower prices and closer contact with the seller. Customers can also lose the protection, choice and easy price comparison an intermediary gave them, so the net effect depends on the market.
Full guide: What is disintermediation?