A01 chaf6542 06 se fm indd

partners

(suppliers)

Suppliers

Consumer

customers

Business

customers

Customers

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Part 1  Introduction

Figure 2.7 illustrates disintermediation in a graphical form for a simplified retail channel. 

Further intermediaries such as additional distributors may occur in a business‑to‑business 

market. Figure 2.7(a) shows the former position where a company marketed and sold its 

products by ‘pushing’ them through a sales channel. Figure 2.7(b) and Figure 2.7(c) show 

two different types of disintermediation in which the wholesaler (b) or the wholesaler and 

retailer (c) are bypassed, allowing the producer to sell and promote direct to the consumer. 

The benefits of disintermediation to the producer are clear – it is able to remove the sales and 

infrastructure cost of selling through the channel. Benjamin and Weigand (1995) calculated 

that, using the sale of quality shirts as an example, it is possible to make cost savings of 28 per 

cent in the case of (b) and 62 per cent for case (c). Some of these cost savings can be passed 

on to the customer in the form of cost reductions.

Although disintermediation has occurred,