Growing-up in a small agricultural community, I recall listening to many conversations about the monstrosity that is the middleman. That entity that makes all the profit while the poor farmer gets next to nothing for the product, while having all the responsibility and risk.
This notion of the middleman is not unique to agriculture of course and the trend globally is all about cutting out the middleman. While the ‘life without the middleman’ dream has always been there, E-commerce has made it reality and everyone wants to go direct.
In a recent opinion piece for Meininger.de Robert Joseph writes: “While most imported wines in the US still pass through separate importers, wholesalers and retailers, the growth in direct selling by wineries has been dramatic. Over the last six years, the value of this sector has risen by over a billion dollars, to $2.33bn. The average price of the more than 60m bottles sold in this way in 2016 was a heady $38.69.”
He also explains how the traditional way through which French wines were sold is changing. London used to be the heart of the fine wine trade with British wine merchants the middleman between French negociants and international buyers. Buyers today, want to purchase either online or directly from the château / winery.
Not only does cutting out the middleman change the traditional way of selling, but also the value perception. Is this a good thing? If the middleman didn’t add value, why would ‘he’ exist?
In my opinion the strongest argument for the middleman would be that it keeps your business focused on what it does well – whether it would be production, wholesale or running a shop. Cutting the middleman saves costs, but it demands other costs, infrastructure, employees, expertise and less time for your main focus.
Vishaal Melwani, the CEO and co-founder of Combatant Gentlemen is cutting out the middleman. (Read here) In a quest to lower cost to the consumer, he uses his industry expertise and cuts out the go-between. Broadening his focus and including additional infrastructure and overheads must make sense to him, but there is a real danger of this broadened vision taking away from the design and fashion aspect of his brand, resulting in Combatant Gentlemen not being the most fashion-forward brand.
Perhaps when your industry knowledge and business structure allows, cutting out the middleman can save costs and help you grow your business, but perhaps it is not in all instances about cutting out the middleman. Perhaps it should rather be about using him with savvy?