DEFINITION of 'Disintermediary'

Anything that removes the "middleman" (intermediary) in a supply chain. A disintermediary often allows the consumer to interact directly with the producing company. This cuts service costs from purchases made at a retailer and increases market transparency with regards to manufacturers' prices.

BREAKING DOWN 'Disintermediary'

Consumers who are thought to be knowledgeable on the difference in pricing from various dealers are able to directly purchase from the supplier, cutting costs normally incurred through the traditional distribution channel: supplier, manufacturer, wholesaler, retailer and buyer.

The internet is a good example of a disintermediary. Most companies now offer their products through online catalogs, where customers are able to purchase directly from online stores and save on time spent shopping in retail stores and talking with sales representatives. This is one example how a distintermediary can reduce costs for consumers.

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