Product Sourcing Middlemen
We’ve mentioned Middlemen before, so let’s understand exactly what that means now.
The Product Supply Chain, from manufacturer to retailer, is supposed to go like this:
Manufacturer >> Wholesaler >> Retailer >> Consumer
Many people have the mistaken impression that the second link in the Chain, the wholesaler, is a Middleman, because they are in the middle, between the manufacturer, and you, the retailer.
That’s not true. The Wholesaler, the second link in the Product Supply Chain is there for a very important reason; manufacturers don’t have the infrastructure to actually sell and deliver small numbers of their products directly to you, the retailer. Real wholesalers provide that infrastructure (warehouses, order systems, delivery trucks, account representatives, etc.) for the manufacturer.
So, link two, the wholesaler, is a legitimate wholesale supplier, not a Middleman.
Here’s an example of where an illegitimate Middleman fits into that Supply Chain:
Manufacturer >> Wholesaler >> Middleman >> Retailer >> Consumer
A Middleman is someone who takes your place in the Product Supply Chain, and bumps you down a link. They try to make you believe they are Link Two in the Chain (a wholesaler), when they are really Link Three (a retailer). Sometimes, it’s worse than that. You could end up dealing with a fake supplier who is actually three or four links down the Chain.
How does that affect you? It hits you where it hurts. Right in the profit margin. For every link you drop down in that Chain, your “wholesale” prices go up.
To be successful online you’ve got to buy your products from the Factory Authorized Wholesaler that works directly with the Manufacturer. Otherwise, your profit margin will suffer.