By Alan W
Disintermediation isn’t limited to ridesharing or vacation rentals—it happens in many industries, including recruitment.
Consider this scenario: A recruiting platform discovered companies were hiring employees introduced through the platform without informing the platform, avoiding paying the agreed commission. This led to significant revenue loss and undermined the ecosystem’s fairness.
To address this, the platform reached out to all employees in their database and offered a R5000 cash incentive for notifying the platform if they were hired by a company the platform introduced. This uncovered hidden placements and allowed the platform to hold companies accountable for the commissions owed under their terms and conditions.
This example highlights how platforms can creatively tackle disintermediation by aligning incentives with users and ensuring transparency.
Disintermediation: A Hidden Challenge for Marketplaces
Marketplaces like Uber and Airbnb have transformed the way we connect consumers and providers, offering convenience, trust, and scalability. However, a hidden challenge threatens these platforms: disintermediation. This occurs when users bypass the platform to transact directly, cutting out fees or commissions and undermining the ecosystem.
What Is Disintermediation? Disintermediation happens when users sidestep the platform after an introduction. For example:
A driver exchanges contact details with a passenger for future rides off Uber.
A traveler rents directly from an Airbnb host after an initial booking.
While this might seem like a win-win for users, it poses serious risks for platforms, including lost revenue, diminished control over quality, and weakened trust in the ecosystem.
Why Does It Happen?
Cost Savings: Users avoid platform fees.
Trust Established: After a successful interaction, users feel confident transacting directly.
Lack of Incentives: Platforms fail to provide ongoing value that keeps users loyal.
The Risks for Platforms and Users Disintermediation doesn’t only hurt platforms; it can harm users by exposing them to risks like:
Fraud: Direct transactions may lack the security and accountability platforms offer.
No Dispute Resolution: Platforms often mediate conflicts, which users lose when bypassing them.
Loss of Benefits: Features like reviews, insurance, and guarantees may no longer apply.
Strategies to Combat Disintermediation
Build Trust: Offer security features such as payment protection and dispute resolution.
Incentives: Create loyalty programs or perks that reward users for staying on the platform.
Clear Policies: Enforce rules against direct deals while continuously adding value.
Creative Solutions: As seen in the recruiting platform example, align incentives to encourage transparency.
Conclusion Disintermediation is a significant challenge for any platform that connects users. However, with proactive strategies and user-focused solutions, marketplaces can protect their ecosystems while maintaining trust and loyalty. By addressing this issue head-on, platforms can continue to thrive and deliver value to all participants.
Want to dive deeper into this topic? DM me, and I’ll notify you when the podcast episode is available. You can also listen to other episodes where I talk about platforms here.
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Illustrator: Lisa Williams (Instagram: @artist_llw)