Previously the facilitators and gatekeepers were known as knowledge brokers or intermediaries. Disintermediation has changed the role of historical knowledge brokers and the traditional knowledge. Companies can deal with the customers directly through online process instead of involving traditional intermediaries. This leads to the reduction of operation cost while serving customers. It can help companies to sell products directly to the customers in an economical way. The transaction risk of purchasing items can be decreased by the introduction of disintermediation. This essay highlights the application of disintermediation and its importance in reducing transaction risks.
E-commerce can be considered as an essential mode of purchasing and selling of goods and services. In this modern era of globalisation and technological advancement, each and every multinational organisation is trying to purchase business resources and sell finished products to end-customers online in order to reduce business operation cost.
Disintermediation can be defined as the elimination process of monetary intermediaries. In the 20th century, several organisations used to depend upon the activities of brokers and intermediaries in order to sell their products and services. Organisations had to pay a certain amount of commission to these brokers against the percentage of goods sold. It actually increased the business operation cost of the organisations. Slowly and gradually the management of several leading organisations introduced e-commerce business concept in order to communicate directly with their customers. It eliminated the necessity of brokers. Therefore, the organisations succeeded to reduce additional business operation cost.
The involvement of several traditional intermediaries can create transaction risks as these brokers can do some wrong activities with the personal information of customers. Therefore, disintermediation can help