Up and coming companies are making an entrance in a way that has not been executed very well in the past. “e-Commerce companies” are taking tackling the business world, without stores. Instead, new start-ups are finding success through the use of almost purely online stores. By going online and straight to the customers, these companies are cutting out the middlemen. The New York Times article, “E-Commerce Companies Bypass the Middlemen”, mainly follows the structure of one company, Warby Parker. Warby Parker is a new and forward eyewear company that combines style with sensibility, while still manages to mostly sell their product directly to customers via the internet. Company co-founder, David Gilboa, claims that by eliminating the middlemen and “being involved in every part of the process, the companies are able to build relationships with customers and get direct feedback.” This process allows for an efficient supply chain, and for the company to gain knowledge of the customer’s needs.
Warby Parker is not the only company to adopt this strategy. in fact, other companies have begun to catch on as well. Many other companies have cut out the middleman in an effort to increase profit margins, cut costs and sell products at lower prices. As a result, they may seem more appealing than other companies selling their products at higher prices. An example of a company that attempted the same approach is the furniture company “Deal Decor”. They had a goal to sell furniture directly to customers at lower costs. To do so, the company used big factories that were being used by other large companies such as Target to produce the furniture. However, the advantage that Deal Decor had was that they were able to pay the factories as orders rolled in, rather than weeks later. They were able to do this because other big companies, like Target, had to make orders in bulk. Rather than ordering completely new pieces to be ordered, Deal Decor would just tack their order an order that the larger company had made, with similar items. This process is also used by other companies to see what trends other big companies are following.
However, just as many other e-commerce companies do, Deal Decor ran into some problems. Their biggest problem was that the Deal Decor brand was almost unrecognizable. Although they had been somewhat successful, they had failed to build a brand efficiently because of lack of funds to do so. Another problem some of these smaller companies face is that they are sometimes confronted by other companies concerning patent problems due to their use of the same factories.
I think these new start up companies are smart to cut out the middlemen if they can be successful selling things online. I think things such as electronic products sod online can be easier to do, whereas it is much harder to sell something like clothing online because there is a lack of experience. By experience, I mean being able to see how one looks in the clothing and it may look different in person than it does on the website. Also, personally, it is hard to stray from dependable brands and switch to a brand that you do not know much about. Why buy a couch form Deal Decor, which you do not know much about, when you could go to a big name such as Macy’s or Sear’s and buy furniture that you are certain about. I think that the middlemen are definitely something that seems sensible to cut out, but they are what makes a brand. Companies buy space at stores such as Nordstrom just in order to get their product known by the everyday person. Although I am sure that companies will continue to attempt to cut out middlemen, I think they are an essential part of the supply chain for most industries, and therefore will remain to be a large power.
Check out the “E-Commerce Companies Bypass the Middlemen” by following this link to The New York Times website: http://www.nytimes.com/2013/04/01/business/e-commerce-companies-bypass-middlemen-to-build-premium-brand.html?pagewanted=all&_r=0
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