IN the pre-Internet era there was an established supply chain from manufacturer/farmer/producer to the consumer. To make a purchase the consumer usually made a personal visit to a mall, a local shop, a grocery or department store, a bank, a travel agent, a record store, a government agency, a cinema, and many other bricks’n’mortar locations to pay for and pick up their items.
Throughout the years there was limited innovation, such as loyalty schemes, coupons and home delivery. Companies grew large and lazy as the middleman sitting comfortably between consumers and the products and services they bought. The costs for middlemen to operate their business included purchase/leasing of space, floor sales staff and paid media marketing. Some retailers, like Walmart, refined the formula so that they were able to effectively compete on price due to their low cost structure.
Then the Internet happened. And paved the way for the greatest era of disruption and innovation since the factory assembly line concept heralded the Industrial Revolution.
Now we are witnessing the rise of a new breed of middlemen. It began with eCommerce pioneers eBay (launched way back in 1995), iTunes (2001), and Amazon (2004). Buying books, music, clothing, etc. online took business away from the established middlemen, many who ignored this threat to their ‘old’ business model until it was too late.
In the past couple of years we have seen emerging brands like Uber, airbnb, TaskRabbit, Kickstarter, and local startups like AirTasker competing with established brands from diverse industries. They are the new breed of middlemen.
These companies are redefining what it actually means to be a middleman. By putting more power in the hands of the customer: power to negotiate a better deal; to track the progress of a purchase/request; to be more environmentally conscious; to get more value from dollars spent.
Online-only middlemen have two key advantages over their predecessors: nil costs for a physical shopfront, and the ability to scale their business model to serve larger and larger audiences without the limits of geo-political boundaries. Amazon and eBay demonstrated how to build a ‘local’ customer base before launching country-specific websites to cater to local tastes.
The next wave has started to hit retailers and other industries, driven by the dramatic uptake of smartphones across the globe. The power of an Internet connection in your hand – or on your body as ‘wearable tech’ – has dramatically shifted consumer behaviour. Forever.
However, it’s early days for the new breed of middlemen, often taking a mobile-only approach, to prove their worth and longevity.