This chapter will review the relevant literature in the area of disintermediation with focus on e-commerce. It begins with a general introduction about the origins of the term disintermediation and the traditional role of intermediaries. This is followed by an examination of the influencing factors on the disintermediation decision of a company as well as particular elaborations of the impacts of disintermediation on manufacturers and end-consumers.
Within this initial part of the literature review, a short introduction about the origination of disintermediation is presented. In this context, the definition of the term in the financial sector is explained, before the wider meaning in the area of supply chain management is highlighted. Afterwards, the focus is laid on the value-adding role of traditional intermediaries to allow a more detailed discussion about the concept of disintermediation.
Originally, the term ‘disintermediation’ was related to a development in the financial sector in the late 1960s as the definition above indicates. Due to traditional bank regulations, the usual interest rates offered to customers did not aggregate up to the level of other available rates in the market (Gellman, 1996). After a rise of interest rates consumers realised that the financial institutes did not pass on the actual profit margin, especially on their saving accounts (Sampson & Fawcett, 2001). They began to bypass the local banks in order to invest directly in other financial institutions, thus to obtain more favourable terms (Jallat & Capek, 2001). Induced by the changes, traditional intermediaries were no longer necessary as consumers could invest their savings directly (Gellman, 1996) and generate a higher effectivity (Alexander, 1992). This led to the financial definition of disintermediation.
It happened only many years later in the mid-1990s before disintermediation became a wider, more general term. Hoffman (1995) mentioned the concept as essential factor in the area of supply chain management, especially for business-to-business relations. Whereas one of the earliest references of disintermediation in the general meaning of displacing intermediaries of any sort (Baker, 2000) was published in 1996 in the Wall Street Journal, discussing the drive to a direct connection between manufacturers and their end consumers (Bank, 1996).
Since then a number of definitions and publications about disintermediation followed. Campbell (1998) for instance reported about several industry sectors, including banking, music and the publishing business already being affected by “the removal of intermediaries such as distributors or brokers that formerly linked a company to its customers” (Chaffey, 2009, p. 65). In the early beginnings, disintermediation was particularly reported in context with traditional libraries, where Fourie (1999) for instance discussed the information being redirected from centralised locations to secondary sources. In 1999, the largely scaled Delphi study was supposed to foresee the effects of disintermediation on traditional travel agents (McCubbrey, 1999). It was later recapitulated by McCubbrey and Taylor (2005) to re-examine the predictions made earlier. Around the turn of the millennium, the potentials of disintermediation already encompassed other branches such as auctions, the automotive industry, music stores or insurance agencies as Atkinson (2001) illustrated in his publication about ‘middlemen’ struggling deposition. In order to complement this brief extraction of publications about the topic of disintermediation, the paper from Oxborrow and Brindley (2014) about the changing structure in the fashion supply chain represents only one example of the most recent discussions in this area.