If Your Business Plays the Middle, Watch Out
Competition could disintermediate you if you don’t own the customer or the means of production.
A word that’s popped up more frequently in my recent conversations with business owners is one you don’t hear every day: disintermediation. And unless you aced the verbal section of your SATs, it’s probably worth starting with a simple definition.
Disintermediation is the process of removing or reducing the middlemen from a supply chain or distribution model. In plain terms, it happens when customers interact directly with the producers of goods or services—without wholesalers, distributors, or retailers getting in the way.
This trend began with the internet and the rise of e-commerce, but today it’s picking up speed across industries. If your business operates in the middle of the market, you may already be feeling it—and if not, you will soon.
The Upside of Reducing the Middlemen
Why is reducing the middlemen catching on? Because it offers real value—on both ends of the transaction.
Eliminating intermediaries often results in lower prices for consumers and higher margins for producers. It’s a win-win that explains the success of brands like Dollar Shave Club and Warby Parker. Instead of going through traditional retail, they sell directly to customers, reducing friction, increasing convenience, and maximizing profits.
And this isn’t limited to razors and eyeglasses. I recently spoke with the CEO of a company that manufactures building products. For years, they relied on retail partners to display products in showrooms. When a customer placed an order, the company shipped the product to the retailer—who then charged a markup before handing it off to the customer.
In practice, that meant the CEO had to discount his product by as much as 40% just to make it work for the retailer’s margin. That started to feel like a bad deal.
With customers more comfortable than ever shopping online, the CEO began to wonder: What value is the retailer actually adding?
He asked a better question: What if we offered direct-to-consumer service and shipped straight to job sites—no middlemen involved?
He also explored using online video, digital renderings, and interactive tools to help customers visualize what they were buying. And to reduce the risk for buyers, he added a generous return policy.
With those changes in place, the company no longer needed to rely on retailers—and customers didn’t need to overpay.
If you’re a retailer in that industry, this trend toward reducing the middlemen should give you pause.
Owning the Customer
If your business is at risk of being disintermediated, what can you do to avoid being left behind? One clear strategy is to own the customer relationship.
Consider a hospital. Technically, it acts as an intermediary—it delivers medical services and products to patients. But let’s say a surgical supply company wants to go around the hospital and sell pacemakers directly to patients. Not going to happen, right?
Even if someone could buy a pacemaker online, they’d still need a surgeon to install it. In this case, the surgeon owns the relationship with the customer—and that makes all the difference.
Another example: auto repair shops. Sure, companies like Tesla and Carvana have disrupted car buying by going direct. But when that car breaks down, who fixes it? Even if a customer could order a water pump straight from the factory, they likely don’t have the tools or skills to install it.
That’s why repair shops continue to own the customer, and why they’re protected from the effects of reducing the middlemen.
Controlling Distribution
If you can’t own the customer relationship, your next best bet is to control distribution.
I know of a company that doesn’t make software—but they’ve signed an exclusive contract with the government to distribute it. Under this deal, any agency that needs software or upgrades must go through them.
This company isn’t developing the product, but they’ve positioned themselves as the sole access point. By locking down the distribution channel, they’ve made themselves essential—and immune to disintermediation.
When reducing the middlemen is no longer an option, controlling the gate becomes a powerful competitive advantage.
Beware the Middle
So, here’s the message: If your company sits in the middle of the value chain—between producers and customers—it’s time to take a hard look at your position.
Because if you don’t own the customer or control the distribution, you could soon be bypassed altogether.
Reducing the middlemen isn’t just a passing trend—it’s a full-on shift in how business is done. And it’s one that’s putting traditional intermediaries at serious risk.
Final Thoughts: Reducing the Middlemen Is a Trend You Can’t Ignore
The companies that will survive and thrive in this new landscape are the ones that can clearly articulate and defend their value. That might mean developing direct-to-customer capabilities, investing in digital tools, or building exclusivity into your contracts.
Whatever your approach, doing nothing is not an option. Reducing the middlemen is changing the rules of the game—and if you don’t adapt, you could find yourself permanently out of play.
