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Disintermediation is the economic process of removing intermediaries from a supply chain, thereby connecting producers directly with consumers. In the DTC context, this means bypassing traditional wholesalers, distributors, and brick-and-mortar retailers. This structural change allows brands to capture profit margins that would otherwise go to middlemen, while also gaining direct control over their product’s journey and presentation to the market.
The concept of disintermediation gained significant prominence with the rise of the internet, which drastically lowered the transaction costs associated with reaching a large customer base directly. Before the digital age, intermediaries were essential as they provided market access, managed complex logistics, and aggregated demand in ways that individual producers could not afford to. They created efficiencies in the physical distribution of goods.
However, e-commerce platforms, digital advertising, and sophisticated logistics software have replicated and often improved upon these functions at a lower cost. By removing these layers, a DTC company not only improves its financial efficiency but also shortens the feedback loop between the customer and the company. This proximity allows for quicker product development cycles, more responsive customer service, and the ability to build a brand identity that is not diluted or altered by a third-party retailer’s own branding or sales strategy. The success of the DTC model is, therefore, a direct consequence of technology-driven disintermediation.
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