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Cutting out the middleman

Cutting out the middleman, also known as disintermediation, is a business model that bypasses intermediaries in a supply chain. The classic example is a farmers market that directly connects producers and consumers thus cutting out an array of businesses that are typically involved in buying, transporting, warehousing, distributing and selling food.

Disintermediation is the removal of intermediaries in economics from a supply chain, or cutting out the middleman in connection with a transaction or a series of transactions. Instead of going through traditional distribution channels, such as a distributor, wholesaler, broker, or agent, companies may now deal with customers directly, for example, via the Internet.

Disintermediation may decrease the total cost of servicing customers and may allow the manufacturer to increase profit margins and/or reduce prices. Disintermediation initiated by consumers is often the result of high market transparency - buyers are aware of supply prices direct from the manufacturer. Buyers may choose to bypass the middlemen (wholesalers and retailers) and buy directly from the manufacturer, and pay less. Buyers can alternatively choose to purchase from wholesalers.

Disintermediation has acquired a new meaning with the advent of the virtual marketplace.

At INEO we believe that the future of trade lies in direct connections between parties with goods and services to offer and the parties that need them. The secret lies in a good and efficient software platform which is able, in real time, to fulfill those needs.

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