Reintermediation

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What Does Reintermediation Mean?

Reintermediation is the reintroduction of an intermediary between a goods producer and consumers. While disintermediation removes elements form the supply chain, reintermediation adds new elements to the supply chain. Reintermediation occurs due to many issues associated with the e-commerce disintermediation model, mostly involving issues with the direct-to-consumer model.

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Techopedia Explains Reintermediation

E-commerce has often been seen as a tool of disintermediation as it brings significant cuts in operating costs in many instances. However, the massive customer service requirements, high shipping expenses for small orders and challenges posed by the disintermediated retailers and supply channel partners which happens in some cases helped spur reintermediation. In a disintermediated business model, the producer needs to do all the activities associated with presales and post-sales for the consumers. Huge resources are often required to accomplish all these activities. In a reintermediation concept, the supply chain middlemen acts as the sales people for the producers and leverages their resources and capabilities to handle these activities. These allow the producer to focus only on the goods and thus produce the best final end product.

Similar to disintermediation, reintermediation can bring positive or negative impacts to the business, often depending on the type of industry the intermediaries operate in. Reintermediation has a significant impact on certain organizations such as travel agencies, which thrive as suppliers of travel services. Intermediaries traditionally provide infrastructure for the whole sales life cycle. However, with the introduction of e-commerce, many tasks done by intermediaries can now be automated. In cases where there is less complexity, manufacturers can make use of the internet to directly sell to consumers and provide support. However, in some cases, intermediaries can provide more value-added services and assistance, which leads to reintermediation.

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Margaret Rouse
Senior Editor
Margaret Rouse
Senior Editor

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.