DECA Retail Merchandising Practice Exam

What does disintermediation refer to in retail?

1. The elimination of intermediaries in the supply chain

2. The increase in retailer profits

3. The process of returning goods

4. The relationship between suppliers and retailers

The correct answer is: The elimination of intermediaries in the supply chain

Disintermediation in retail primarily refers to the elimination of intermediaries in the supply chain. This process occurs when businesses or consumers choose to bypass traditional middlemen—such as wholesalers, distributors, or even retailers—in order to deal directly with suppliers or manufacturers. This shift can result from various factors, including the rise of e-commerce, which enables consumers to purchase directly from manufacturers with ease through online platforms. By cutting out intermediaries, retailers may achieve greater control over pricing, reduce costs, and potentially increase profit margins. Additionally, disintermediation can facilitate a more direct relationship between manufacturers and consumers, which can enhance customer service and satisfaction. The other options discuss aspects that may be related to retail but do not encompass the core definition of disintermediation. For instance, while disintermediation can lead to increased retailer profits, it is not the definition of the term itself. Similarly, the process of returning goods and the relationship between suppliers and retailers also do not capture the essence of eliminating intermediaries from the supply chain.