Avoid Middleman Status

Are you a middleman?

I ask, simply because I’m regularly looking over my shoulder at middleman status myself.

If you’re not being pushed into middleman status by technology, then it could be your customers and suppliers who put you there.

Paranoia reigns. Sorry.

This is not a new state of being. Walmart began its attack on independent distributors (middlemen with warehouses) ages ago wiping most of them out. They are so efficiently tied into their supply chain now that orders sometimes bypass headquarters and go straight to factories. (Headquarters as middlemen, who’d of thunk it?)

In the print industry process middleman felt the pinch. First typesetters went, followed by color separators. As newspapers are fast finding out, the entire printing process is being pushed to the side. Moving news to eyeballs quickly means that in some places even editors are seen as middlemen now.

Middlemen. They start as facilitators but become blockages between producer and end-user.

This quarter’s pricing war between Amazon and Walmart indicates that traditional retail warfare has gone virtual big time. While the demise of retail has been predicted since the dawn of the internet age it is surprising to think that even the most efficient big box retail set-up could end up looking like a middleman. Best Buy has been prepping by branding their physical service presence (There’s a reason for our bricks and mortar, parking space for the Geek Squad!). Sears may be finally realizing the power of their old service reputation (probably too late) with the introduction of The Blue Service Crew. But the battle for market share on-line will drive business away from local distribution points that are simply way-stations between UPS shipping points. So when will Walmart buy UPS…or build their own?

Publishers are middlemen, standing between author and outlet. Used to be a reason for that, but with consolidation Amazon, Barnes & Noble and Walmart will move more towards direct control and exclusive deals. Publishers end up looking more like booking agents. That cuts into fees.

Google and Microsoft are even in a bit of a middleman fight themselves. The new tools and offers from Google are a direct attempt to slice Microsoft’s technology out of the information stream between consumer and Google Ads. (And yes it’s also a push to remove Apple’s tech as well.)

So if some of the worlds largest companies are being put in the position of middleman, what’s a poor old soul like me to do?

The question to be asking is: “Where do I add value and why am I interesting?”

I still remember the day I looked up at Hallmark and most of the administrative assistants had disappeared. Secretaries became middlemen. Assistants became middlemen. (While most of them ended up in better jobs, it happened all too quickly by my mind. But then again I still have a portable typewriter sitting around.)

What if the next big idea is how you can be replaced by 30 lines of code and an Erector Set?

Good life requires we push paranoia to the back seat, but what to do? Hide the idea? Avoid the inevitable? That usually doesn’t end well.

There’s a reason the marketing expression “Cut out the middleman” still tends to work.

If you see middleman status coming, then you can see where the functions you provide will be absorbed. The answer may be to sell your company into an organization that is vertically integrating. It may be to shift your customer base to individuals who can’t get access to the replacement technology. It may be to expand into areas around your current skill set. It may be to close up shop and go home (a bit defeatist I know, but it’s always on the table).

The key is: You are in a great position to see how you will be replaced. Use that knowledge to supercharge your radar (as Bill Welter says) to see what is on the horizon and face it head on.

Tagged , . Bookmark the permalink.

7 Responses to Avoid Middleman Status

  1. Brad Shorr says:

    Fred, Having spent much of my career in distribution, I can affirm how tenuous that position can be. Distributors are like policemen and lawyers – people take them for granted or dislike them … until they need them. Good distributors work a lot harder than manufacturers at customer service for that reason, generally speaking. In any event, physical products require space and logistics to distribute, and in those cases a physical distribution network is required. Digital products are a whole different story. The sea change we’re seeing right now is the transformation of written words from physical products to digital products. On the book front, Walmart is doomed. Game over.
    .-= Brad Shorr´s last blog ..Marketing and Really Good Jerky =-.

    • Hi Brad, You’re right, the distribution function is critical and remains regardless of who controls it. Walmart simply vertically integrated up the pipeline replacing independent distribution networks with their own hyper-efficient warehouses. I imagine the pressure on distributors comes from both sides – manufacturers wanting more control and customers wanting higher margins. With that kind of pressure there must be a constant need to adapt and improve efficiency.

  2. Terry Heath says:

    As usual, an interesting and thought-provoking post.

    My mind wanders toward blogging and how bloggers might also make themselves into middlemen. We can (and often do) end up being the middlemen between information and web users.

    Someone wants information and Googles for it. That brings them to your blog, they read and are off again into the webosphere. Information is a commodity and readers feel no loyalty to those who provide it.

    The only way for a blogger to avoid being a middleman is to become the product. If readers are coming to your blog to see you then there is no middleman involved (except maybe a search engine or some other blogger who links or twits to you).

    Hmm. Scary thing, and probably difficult too, becoming the product. That doesn’t mean you can be a source for information, it means you must be the information itself.
    .-= Terry Heath´s last blog ..What’s It All About, [INSERT YOUR NAME HERE]? =-.

  3. But middlemen can create value and extract profits for a period of time in many markets; not forever, but for a period of time, surely. Sometimes it takes awhile for someone to build that 30 lines of code that displaces middlemen :)

    There are many markets where I’d love to be a middleman right now.
    .-= Taylor Davidson´s last blog ..12 seconds from a 2 hour taxi ride in Mumbai, India =-.

  4. @Terry and @Taylor – You both seem headed down the same track and maybe I’m attacking this subject from the wrong direction. To your point Terry to some extent we are always middlemen. And Taylor’s point that there are profits in the middle is dead on.

    It is tiring to realize that the sands are continually shifting underfoot however. To the extent you don’t control a starting point or ending point your fortunes are hitched to forces difficult to control and often out for your lunch. However, it can be a good living and a launching pad for the next tween venture.

  5. J.D. Meier says:

    I’m a fan of staying connected with customers and building mad skills to pay the bills … a life of learning. One thing that serves me well is following the growth … in the market and in myself … and taking on projects that build my portfolio and keep me in the game. I try to avoid projects that will suck my value down.
    .-= J.D. Meier´s last blog ..Lessons Learned from Guy Kawasaki =-.

    • Hi J.D., Absolutely the right path and well expressed at your blog. Continually adding to your skill set both personally and corporately means you won’t be left behind. (Or squeezed out of existence.)