Understanding disintermediation
Disintermediation is the process by which intermediaries are eliminated from a supply chain. In the context of online sales, this means cutting out intermediaries, such as market place operators, and dealing directly with sellers (or buyers).
For consumers, this practice can have a number of advantages: lower prices, more responsive media, a feeling of closeness to the seller…
On the other hand, it can be interesting in certain ways for sellers, such as avoiding commissions. For example, airlines have started, thanks to the Internet, to sell tickets to travellers directly rather than through travel agencies.
However, for marketplace operators, this phenomenon seems to represent more of a threat. That’s why it’s important to understand it properly so that you can react as effectively as possible.
The challenges of disintermediation for marketplaces
Disintermediation presents significant challenges for marketplaces, both for traditional players and for the overall balance of the ecosystem.
The major challenge lies in the risks for intermediaries such as operators.
With the emergence of direct online sales models, these intermediaries may find themselves bypassed, losing their central role in the value chain. This can happen in a very simple way: the buyer locates the right seller on a marketplace but decides to make the purchase directly on the seller’s own website. This type of situation can lead to a reduction in the revenues and market influence of marketplace operators.
In other words, disintermediation can upset the delicate balance of the marketplaces ecosystem. Successful marketplace models often rely on close cooperation between several stakeholders, including sellers, buyers and operators. When intermediary players are squeezed out, this can lead to tension and disruption in the ecosystem, compromising the trust and stability of the platform.
Marketplaces therefore face complex challenges related to disintermediation. It is therefore essential for companies in this sector to understand these challenges and respond strategically to overcome them, with the ultimate aim of remaining competitive and relevant.
Strategies to limit the impact of this phenomenon
Faced with the challenge of disintermediation, marketplaces need to adopt proactive strategies to maintain their position and added value in the ecosystem.
The first step is to understand what disintermediation entails, by constantly monitoring and analysing data.
Here are the main levers to focus on:
Building solid relationships with your partners
If you want to strengthen your relationships with vendors, suppliers and other strategic partners, you need to be present and helpful.
For example, offer them advice, teach them how to improve their online sales skills and set up forums to help them and encourage them to help each other.
In addition, you can provide them with data and insights to help them better understand the market and implement judicious strategies.
In short, your partners must have a deep interest in working with you.
If they feel listened to, supported and confident, they will have every interest in making a long-term commitment to you.
On the other hand, it can be very interesting for you to put in place measures to strengthen your relationship with buyers. As a marketplace operator, the main objective is to build their confidence, particularly in terms of data security and payments.
Continuous innovation to stay relevant
Equally important, you need to stay at the forefront of innovation by developing new features, adopting new strategies and tapping into new markets.
It is by staying at the cutting edge of technology and responding to the changing needs of your users that you will be able to maintain your competitive edge, and thus your appeal and relevance.
To understand this better, let’s take an example we’re all familiar with.
Amazon, which started out as an online bookseller, has constantly expanded its offering, both in terms of product ranges and functionalities such as the streaming service, or by implementing sophisticated algorithms to personalise product recommendations in a highly relevant way.
With hindsight, we can say that Amazon has managed to avoid the potential impacts of disintermediation and to maintain, and even strengthen, its position as leader in the e-commerce market.
To take your strategies further, you can work on your positioning to differentiate yourself from the competition. If you build a strong and different brand image, you will ensure an attractive position in the market.
Product exclusivity
With a B2C marketplace, you can establish an exclusivity contract with sellers so that their products and services are only available on your platform.
By definition, this method leaves no room for disintermediation.
Buyers are guaranteed to find a unique and exclusive offer on your platform. Not only do they not have the option of bypassing you to buy the products, but this also enables you to strengthen your position and appeal.
What’s more, you strengthen the bond with your sellers and encourage them to make an active, long-term commitment to you. Sellers are motivated to propose a high-quality, differentiated offer to stand out from the competitors on your platform.
Setting up a one-stop shop
The idea of the “one-stop shop” is to offer a very wide range of products and services, so that all your buyers’ needs can be met in one place.
By moving towards this model, you attract buyers and sellers in a virtuous circle.
Demand increases because you meet many of your customers’ needs while offering them time savings and convenience. In fact, it’s in sellers’ interests to offer their products on your platform to gain visibility and boost their sales.
A major benefit of this is the ease with which you can build solid relationships and loyalty with the other players on your marketplace.On the one hand, sellers have everything to gain by staying on your platform, because if they don’t, consumers are unlikely to continue buying from them. Buyers, on the other hand, develop a sense of trust in your platform and their disincentives to purchase disappear. They will generally prefer to return to a platform with which they have had a good experience rather than one with which they are not familiar.
Introducing control and monitoring mechanisms
Setting up control and monitoring mechanisms on your marketplace means supervising and regulating the transactions that take place on this platform.
This is a considerable advantage, as it ensures that all parties can trade safely and securely.
In short, buyers will be more confident about disclosing their bank details and sellers will not have to worry about fraud.
These mechanisms also make it easy to manage requests for refunds or order cancellations.
What’s more, you can ensure that the various parties are impartial and can provide evidence in the event of a dispute. In fact, by tracking all transactions, you have access to all the information needed to reach a fair resolution for everyone involved.
Increase your value proposition
In addition to your traditional business, the marketplace allows you to benefit from a means of diversification by aggregating the offerings of partner suppliers. This makes your value proposition more powerful and ensures an increase in your revenues.
What’s more, by constantly adding value for your customers and setting reasonable levy rates, you consolidate your market position.
For example, it may be a good idea to offer delivery and sales support services on your platform that are real tools for your partners.
In this way, you prevent buyers and sellers from trying to bypass your platform by carrying out transactions independently of it.
Conclusion
As mentioned earlier, disintermediation represents a real challenge for marketplaces.
However, by understanding the issues and adopting proactive strategies, you can not only prevent disintermediation but also take advantage of it to strengthen your position and relevance in the marketplace.
The key levers to use in this approach are innovation, demarcation and your relationships with other marketplace players. You can also use powerful mechanisms such as one-stop shops and exclusive sales contracts to win the commitment and loyalty of your partners.
Ultimately, this phenomenon is not inevitable for marketplaces, but rather an opportunity to reinvent themselves and consolidate their place in today’s digital landscape.
