Disintermediary

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Reintermediation

    1. Individuals withdrawing funds from nonbank investments such ...
  2. Middleman

    A slang term for an intermediary in a transaction or process ...
  3. Disintermediation

    1. In finance, withdrawal of funds from intermediary financial ...
  4. Supply Chain Management - SCM

    Supply chain management is the streamlining of a business' supply-side ...
  5. Financial Intermediary

    An entity that acts as the middleman between two parties in a ...
  6. Supply Chain

    The network created amongst different companies producing, handling ...
RELATED FAQS
  1. What is the relationship between research and development and innovation?

    Although it's possible to achieve innovation without research and development and it's possible to conduct research and development ... Read Full Answer >>
  2. How does the notion of the American Dream influence the US economy?

    The notion of the American Dream influences the U.S. economy because it creates the driving force behind the free enterprise ... Read Full Answer >>
  3. How do I calculate a modified duration using Matlab?

    The modified duration gauges the sensitivity of the fixed income securities to changes in interest rates. To calculate the ... Read Full Answer >>
  4. How do I calculate the rule of 72 using Matlab?

    In finance, the rule of 72 is a useful shortcut to assess how long it takes an investment to double given its annual growth ... Read Full Answer >>
  5. How do I calculate the standard error using Matlab?

    In statistics, the standard error is the standard deviation of the sampling statistical measure, usually the sample mean. ... Read Full Answer >>
  6. How do I adjust the rule of 72 for higher accuracy?

    The rule of 72 refers to a time value of money formula that investors use to calculate how quickly an investment will double ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Vital Link: Manufacturing And Economic Recovery

    Manufacturing output is one of the clearest signs that an economy is recovering from a recession.
  2. Insurance

    Free Markets: What's The Cost?

    Some argue that when the free market fails to protect consumers, government regulation is required.
  3. Economics

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  4. Economics

    Understanding Implicit Costs

    An implicit cost is any cost associated with not taking a certain action.
  5. Fundamental Analysis

    Explaining the Empirical Rule

    The empirical rule provides a quick estimate of the spread of data in a normal statistical distribution.
  6. Economics

    Explaining Demographics

    Demographics is the study and categorization of people based on factors such as income level, education, gender, race, age, and employment.
  7. Economics

    What are Deliverables?

    Deliverables is a project management term describing an object or function that must be provided or completed by a certain due date.
  8. Fundamental Analysis

    Calculating Degree of Financial Leverage

    Degree of financial leverage (DFL) is a metric that measures the sensitivity of a company’s operating income due to changes in its capital structure.
  9. Economics

    What Does Capital Intensive Mean?

    Capital intensive refers to a business or industry that requires a substantial amount of money or financial resources to engage in its specific business.
  10. Taxes

    Understanding Write-Offs

    Write-off has different meanings depending on the context in which it is used, but generally refers to a reduction in value due to expense or loss.

You May Also Like

Hot Definitions
  1. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  2. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  3. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  6. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!