Disintermediation: When Cutting Out the Middleman Works

Disintermediation is the process of removing intermediaries from a supply chain or distribution channel so that a brand sells directly to the end customer. In marketing terms, it means cutting out the retailer, the reseller, the broker, or the platform that sits between you and the person who actually buys your product. Done well, it gives you better margins, richer customer data, and a direct relationship you can build on. Done badly, it alienates your existing channel partners and leaves you exposed.

The idea has been around for decades, but it has accelerated sharply as direct-to-consumer infrastructure has matured, digital advertising costs have risen, and brands have started to question how much of their growth they actually own versus how much they are renting from platforms and retailers.

What Is Disintermediation and Why Does It Matter Now?

The classic definition comes from financial services, where it described customers moving money out of banks and into higher-yield instruments directly. But the concept maps cleanly onto consumer and B2B marketing. Any time a brand removes a layer between itself and its customer, that is disintermediation in practice.

What has changed is the feasibility. Twenty years ago, going direct meant building physical infrastructure: warehouses, fulfilment networks, customer service teams, returns processing. The capital requirement was prohibitive for most brands. Now, a mid-sized consumer brand can stand up a Shopify store, connect it to a 3PL, run paid social, and be shipping direct within weeks. The barrier to entry has collapsed.

That collapse has made disintermediation feel like a default strategic move, which is where the trouble starts. Because the infrastructure barrier being lower does not mean the commercial challenge is lower. It just means more brands are attempting it without fully thinking through what they are giving up.

If you are thinking about how disintermediation fits into a broader go-to-market approach, the Go-To-Market and Growth Strategy hub covers the wider strategic context around channel decisions, market entry, and how brands build sustainable commercial momentum.

What Do Intermediaries Actually Provide?

This is the question most brands skip. They look at the margin they are handing to a retailer or distributor and see waste. They do not always look at what that margin is paying for.

Intermediaries typically provide some combination of the following: physical or digital shelf space and the discovery that comes with it, an existing customer relationship and the trust attached to it, logistics and fulfilment capability, credit terms and cash flow management, local market knowledge, and in some cases, active selling and merchandising. When you remove an intermediary, you do not remove the need for those things. You just take on the responsibility for providing them yourself.

I have seen this play out in practice more than once. Early in my career I was much more focused on lower-funnel performance than I should have been. We were optimising for conversion, capturing intent that already existed, and calling it growth. What we were not always asking was where that intent came from. In retail categories, a significant portion of it comes from physical presence and discovery in-store. A customer who walks past a product on a shelf, picks it up, and considers it has already moved a long way down the purchase funnel before your digital ads ever reach them. When you exit that retail environment, you lose that passive discovery mechanism entirely. You have to rebuild it from scratch, usually through paid media, and usually at a cost that erodes a significant portion of the margin you thought you were recovering.

The Demand Creation Problem Nobody Talks About

There is a version of the disintermediation conversation that focuses almost entirely on economics. Margin recovery, customer lifetime value, data ownership. These are all real and important. But they tend to crowd out a harder question: where does your new demand come from?

Retailers and platforms generate demand. Amazon’s search results surface products to people who did not know they wanted them. A supermarket’s end-of-aisle placement creates impulse consideration. A department store’s seasonal campaign pulls traffic that individual brands benefit from without paying for it directly. When you go direct, you inherit the full cost of demand generation. Every customer who finds you now has to find you through a channel you are paying for or building yourself.

This is why go-to-market execution feels harder than it used to for many brands that have made the direct pivot. The economics look clean on a spreadsheet. The reality is that customer acquisition costs in a direct model are often higher than the margin improvement justifies, at least in the short to medium term.

The brands that make this work are the ones that treat demand creation as a core competency rather than an afterthought. They invest in content, community, and brand-building that generates organic discovery. They use creator partnerships and social proof to replace the passive awareness that retail presence used to provide. They think in terms of audience ownership, not just transaction efficiency. Creator-led go-to-market strategies have become one of the more credible mechanisms for brands trying to build direct discovery without solely relying on paid channels.

Where Disintermediation Has Actually Worked

Where Disintermediation Has Actually Worked

It is worth being specific about the conditions under which going direct has delivered genuine commercial results, because the category matters enormously.

Software is the clearest case. SaaS companies that sell direct have structural advantages: zero marginal cost of distribution, the ability to personalise at scale, and a product that can be trialled and purchased without physical handling. The intermediary in software was often a reseller or VAR who added implementation capability rather than discovery. As buyers became more comfortable purchasing and implementing software independently, the value of that layer diminished and going direct made obvious sense.

Financial services has seen genuine disintermediation, with comparison platforms and direct insurers taking share from broker-led models in certain categories. Travel disintermediated significantly, with airlines and hotels reclaiming direct booking share from OTAs through loyalty programmes and price parity policies.

In consumer goods, the picture is more mixed. Brands with a strong existing identity and a clear reason for customers to seek them out directly have fared better. Brands that relied on retail for discovery have found the direct channel supplements rather than replaces their retail presence. Nike is the most cited example of a brand that made a deliberate and largely successful direct pivot, but Nike had the brand equity and the marketing budget to sustain the demand creation cost. Most brands do not.

Understanding market penetration strategy is relevant here, because disintermediation is often confused with a penetration play when it is actually a channel efficiency play. They require different approaches and different success metrics.

The Channel Conflict Question

If you are currently selling through intermediaries and you want to build a direct channel, you will face channel conflict. There is no clean way around this. The question is how deliberately you manage it.

The worst version is the brand that quietly launches a DTC store, prices it at parity with retail, and hopes nobody notices. Retailers notice immediately. They have access to your pricing, they monitor your marketing, and they have leverage: shelf space, promotional placement, and the ability to favour competitor products. If you handle channel conflict badly, you can find yourself losing retail distribution faster than you are building direct volume, which is a genuinely dangerous position.

The better approach is to be explicit about your strategy. Some brands differentiate the direct offer: exclusive SKUs, bundles, personalisation options, or subscription models that are not available through retail. This gives the direct channel a reason to exist without directly competing on the same product at the same price. Others use the direct channel for new product launches or limited editions before wider retail distribution, which gives loyal customers a reason to buy direct without cannibalising retail volume on core lines.

I have been in rooms where this conversation has been avoided because it was uncomfortable. A client wanted to go direct but did not want to have a frank conversation with their major retail partner. The result was a half-built DTC channel that never got proper investment because nobody wanted to commit to the strategy fully. That is an expensive way to not make a decision.

First-Party Data: The Real Strategic Prize

If you ask most senior marketers why they want to go direct, they will eventually mention data. And they are right to. The customer relationship that sits inside a retail or platform model is largely owned by the intermediary. Amazon knows who bought your product. The supermarket knows. You know how many units moved and at what margin. That is a very thin dataset to build a marketing strategy on.

A direct relationship gives you purchase history, browsing behaviour, email engagement, returns data, customer service interactions, and the ability to run surveys and gather qualitative feedback. That data compounds. Over time, it gives you a view of your customer that no intermediary will ever share with you, and it allows you to personalise, retain, and cross-sell in ways that simply are not possible when you are operating through a third party.

Tools like behavioural analytics platforms become genuinely useful when you have a direct relationship to analyse. They are much less useful when you are trying to understand customers you never directly interact with. The data argument for going direct is not just about marketing efficiency. It is about building an asset that has compounding strategic value.

This is something I saw clearly when working across multiple industries during agency years. The clients who had invested in direct relationships, even partial ones, had a fundamentally different quality of strategic conversation. They could test hypotheses about customer behaviour. They could identify their most valuable segments. They could model lifetime value with some confidence. The clients who sold entirely through intermediaries were largely guessing about who their customers actually were.

How to Approach Disintermediation Without Burning the Business

A few principles that hold up across the cases I have seen work.

Start with the why. If the primary motivation is margin recovery, run the full model including customer acquisition cost, fulfilment cost, returns, and customer service before you commit. The margin improvement is often smaller than it appears on a gross basis. If the motivation is data and customer relationship ownership, that is a stronger strategic rationale and it is easier to build a patient, long-term case for investment.

Identify what your intermediaries are providing that you do not currently have a plan to replace. Discovery, trust, logistics, local knowledge. Make a list and then make a plan. If you cannot credibly replace it, you are not ready to remove it.

Be honest about your brand’s current pull. Disintermediation is much easier for a brand that customers actively seek out than for a brand that relies on being in the right place at the right time. If you are a consideration brand rather than a destination brand, the demand creation investment required to go direct is substantially higher. Growth tools and frameworks can help you model and plan that investment, but they cannot substitute for an honest assessment of your brand’s current position in the market.

Manage channel conflict as a communications challenge, not a secrecy challenge. Your retail partners will find out. The question is whether they find out from you, with context and a clear explanation of how the direct channel will be differentiated, or whether they find out by discovering it themselves.

Think about the growth loop. The most successful direct models are not just transactional. They build communities, generate reviews, create content, and turn customers into advocates who reduce the cost of acquiring the next customer. Referral mechanics are one mechanism for this. Loyalty programmes, content subscriptions, and user-generated content are others. The direct model only compounds if you are building something that generates its own momentum over time.

Disintermediation is one of several strategic levers worth understanding in depth. The broader Go-To-Market and Growth Strategy hub covers adjacent decisions around channel selection, market entry sequencing, and how brands build the kind of commercial momentum that does not depend on any single distribution relationship.

The Honest Verdict

Disintermediation is not inherently good or bad strategy. It is a channel decision with significant commercial consequences in both directions, and it deserves the same rigour you would apply to any major go-to-market choice.

The brands that have made it work share a few characteristics. They had genuine brand pull before they attempted to go direct. They invested seriously in demand creation rather than assuming customers would find them. They managed channel relationships deliberately rather than hoping the conflict would not materialise. And they treated first-party data as the strategic asset it is, building the capability to use it rather than just collecting it.

The brands that have struggled typically moved for the wrong reasons, chased margin without accounting for the full cost of going direct, and underestimated how much of their existing demand was being generated by the intermediaries they were removing. I have seen this pattern across enough categories and enough clients to know that the financial model almost always looks better before you do it than after.

That is not an argument against going direct. It is an argument for going in with clear eyes about what you are taking on, a credible plan for what you are replacing, and the patience to build a direct channel properly rather than treating it as a quick margin fix. The pipeline and revenue dynamics of a direct model look very different from a channel model, and your forecasting and planning need to reflect that from the start.

About the Author

Keith Lacy is a marketing strategist and former agency CEO with 20+ years of experience across agency leadership, performance marketing, and commercial strategy. He writes The Marketing Juice to cut through the noise and share what works.

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