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  • Category: Miscellaneous

    Is business possible without middlemen?

    A middleman is a person who plays an intermediary role between producer and retailer or consumer. We hear a lot about middlemen playing havoc with the producers and pocketing more profits than the producer. Is it possible for the producer himself to market the product and get all the profit by himself nullifying the role of middlemen? The Governments try to help the producers by directly purchasing them or providing storage facilities to store until a profitable rate is obtained. The producers will always be under financial stress having invested their own or borrowed money. They want to get back their investment with profit as early as possible. The Governments can help to a certain extent only. Locating a prospective purchaser is also a problem for the producer. The middlemen fit in perfectly in this situation. Considering all the above, is it possible to avoid the middlemen in a business?
  • #638432
    If the producer and client are in the same place direct business without middlemen is possible.
    The concept of local markets in the early days was that only. The concept of 'Uzhavar Sandai' or agricultural producers market is also like that only.

    However if the production is large, the consumers or buyers are also large and at different places, then there may need a middle man/middle men to facilitate the trade . Nowadays all business need middlemen. They earn profits many times more than the producers.

  • #638440
    The problem arises when the original producer is not aware about the complicacies of the process involved for selling directly to the customer. This gap enables the middle man to come into the picture. The middle man is responsible for negotiations in terms of pricing & delivery with the final customer, of which the original producer wouldn't be aware of. This causes the two important implications,
    1. The commodity gets costlier because of commission involved through the middle man.
    2. The high price will lead commodity becoming less competitive in comparison to the other similar commodities available in the market.

    Because of the above implications, the original producer keeps their margin to low & so not earning the good profit. In today's world, it is possible to sell directly to the customer without involving the middle man because of the presence of technology in the form of mobile communications & Internet. The below points could be important,
    1. One can go ahead with their own internet site, briefing their business along the goods & the services, they are dealing onto.
    2. Establishing the local suppliers within different regions. This will also improve the customer's immediate feedback & customer support which will further improve in the increasing sales

  • #638455
    Yes business is possible without middleman. The Army canteen concept, the online marketing companies concept are based on this only. That means they procure items directly from the manufacturers in bulk at the C & F rates and offer discount to their customers. That is why even the bar soaps in canteens are so cheap. The cost of super stockist, whole seller are ridden off the the benefit is passed on the to customers. Like wise two wheeler purchased through canteens would cost four to 5000 rupees cheaper. So direct marketing is very successful without middle man and for that good marketing and timely marketing is essential.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #638468
    In many fields direct marketing is very difficult. The producing company can not go for retail sales. That is why they started the concept of agents. These agents are middlemen only. In many cases the agent will get a concession upto twenty five percent. I know some industries who are giving25% commission to agents. If the consumer can go to manufacturer and purchase definitely that amount is a saving for the customer. I know in some businesses the middlemen are getting more profits than the manufacturer.
    To avoid this problem only for some products and to pass on that profit to the manufacturer only the concept of Rytu Bazar is started and that concept is working alright.If this concept is to be implemented in other areas also the producer has to have the capacity of keeping stocks and selling when the rates increased. But the limitation of storing facility is one big problem.
    The online trading is not without a third party. The manufacturer is not directly dealing here also. The agents will come into picture in this case also.

    always confident

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