Is the Long Predicted Elimination of Middlemen on the Horizon - Essay Example

The purpose of this paper is to determine whether or not the long-predicted elimination of middlemen (as opposed to the substitution of one type of middleman for another) is on the horizon. The main function of a middleman in this context would be to maintain an inventory of goods and distribute it to retailers. For instance, a grocery warehouse can serve as a middleman between the food manufacturers and retail grocery stores. The grocery stores actually purchase their food in bulk from the grocery warehouse, whereas the grocery warehouse has already taken care of ordering the various types of food from the manufacturers themselves and having them on hand.

This makes purchasing large varieties and volumes of food easier, faster, and cheaper for retail grocery stores. Another example of a middleman would be a website that sells airline tickets and travel packages, such as Travelocity. The website would serve as a middleman between the airline and the customer. Customers find this arrangement convenient since they can shop various airlines at once for the best prices and even purchase additional travel items all in one spot. There are three types of middlemen that facilitate the flow of goods and services from the manufacturer to the customer.

These are merchant middlemen, agents, and facilitators (Citeman Network, 2008). Who would assume responsibility for certain functions if middlemen were eliminated depends entirely upon where that middleman exists. For instance, in the grocery warehouse example above, the retail grocery store would be responsible for ordering their food from various different manufacturers if their middlemen were eliminated. In the travel example, customers would have to purchase tickets directly from the airlines if their middlemen were eliminated.

The two main places that people shop and purchase are in-person and online. In-person shopping is performed during physical store hours and online shopping can be performed around the clock from the convenience of anywhere an Internet connection is available. The collection of information on existing, potential, and prospective customers by manufacturers will change if middlemen are eliminated from the channel. The manufacturers would then be selling directly to the consumers themselves instead of to wholesalers and retailers.

Customers search for information about products and prices and changes in the distribution of the products they purchase. This is typically done via the Internet. Customers also use circulars and newspapers, as well as coupons, to shop around for the best price. Word of mouth is also a popular means by which customers learn information of this type (Marxists, 2008). There are differences between convenience, shopping, and sought goods/services and elimination of middlemen will not likely occur for one or more of those categories of goods/services.

Even though people are always saying that eliminating the middlemen will result in huge savings, this has not been the case. They are simply too convenient. Manufacturers have an easier time selling to companies than they do millions of individual customers, whereas customers are attracted to one-stop shopping and do not want to go all over the place to find the best deal. Some sellers expect consumers to shop in their "brick n' mortar" stores and these businesses compete against sellers that expect consumers to shop in their web-based stores.  Some people prefer to shop in person where they can see and feel objects before they are purchased.  This is a true disadvantage for online shoppers who usually have nothing more than a photo and a description of a product upon which they must make a purchasing decision.