Question

what is disintermediation?think of an example(other than those given in the chapter)of a company that has been disintermediated and one that has disintermediated another type of company. Do you think bricks-and-mortar retailers will ever be completely distintermediated?

Answer 1

Meaning of Disintermediation

Disintermediation in simple words means elimination of the middlemen or intermediaries from the supply network of a business firm. Many companies are adopting disintermediation in order to cut service charges and earn more profit. This may also be called as B to C type of distribution channel where goods or products are directly supplied to consumers.

Examples of Disintermediation

With the arrival of internet disintermediation has gained more importance over the past few years. One perfect example is Amazon which is one of most popular E-commerce Company dealing in online shopping with no intermediaries. Other example would be an insurance company where an agent directly deals with the customer for selling different insurance policies.

It would not be wrong to say that E-commerce industries are gaining a wider market share over the bricks and mortar retailers since online shopping is more convenient and less costly for consumers. Online firms are too making huge profits. But despite of this boom in the online industry it cannot be denied that bricks and mortar retailers do have their position and relevance for those customers who rely on a product only after physical observation and then make their purchase decisions. Also there can be a proper quality check of a product by the consumer which is not possible in case of online shopping.

Thus, I don’t think that bricks and mortar retailers would completely be disinter mediated.