Disintermediation: Biggest threat to any Marketplace

Disintermediation happens when the consumer and the provider “cut out the middleman” and transact directly after the initial match.

The risk is high for marketplaces where there is “high loyalty or a high degree of trust” between the two sides.

For example, people who use Airbnb for long-term rentals, build high loyalty and trust with an individual host. This creates disintermediation risk since the guest and the host might choose to transact directly and avoid paying Airbnb’s service fees.

One of the strategies to defend against disintermediation is to create a homogeneous supply.

When many workers on supply-side can deliver a good enough service, no trust or loyalty builds up with a specific worker.

“This allows the marketplace to hold the trust instead of the individual supply-side worker holding the trust.”

Uber is the perfect example.

People are comfortable riding with a different driver each time since their trust lies with Uber, and not with a specific driver.

Reference: Jeff Fluhr – https://bit.ly/2zOUn3S
Photo Credit: https://bit.ly/2Y1xYbD

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