Skip to main content
EVENT TRACKER
Keep track of rescheduled, canceled industry events with our COVID-affected event tracker - Powered by Snap Finance
Close
Sister Publication Links
  • Rubber & Plastics News
  • European Rubber Journal
tb-logo
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • OPINION
    • CORONAVIRUS
    • AUTO INDUSTRY
    • BUSINESS/FINANCIAL
    • COMMERCIAL TIRE
    • FACTORY FIXES
    • GOVERNMENT & LAW
    • INTERNATIONAL
    • MOTOR SPORTS
    • NEW PRODUCTS
    • RETAIL TIRES
    • SERVICE ZONE
    • SEMA/AAPEX
    • SMALL BUSINESS
    • TIRE MAKERS
    • SPONSORED CONTENT
    • COVID takes dealers for roller-coaster ride
      A year later, pandemic's full tire industry impact unclear
      Tire Cologne canceled; rescheduled until 2022
      New round of Paycheck Protection Program funding opens
    • DTM switches horses mid-stream; awards race tire contract to Michelin
      Icahn Auto trims fiscal 2020 operating loss despite 14% lower sales
      Oshkosh unit gets contract for new USPS local delivery vehicle
      Sumitomo adds treadwear-detection to 'Sensor Core' toolkit
    • Titan eyes solid recovery in 2021 as ag sector rebounds
      4 Wheel Parts celebrates 60th anniversary with deals, promotions
      CarAdvise partnering with RepairSmith mobile repair services
      Goodyear to raise prices by up to 8% on all passenger tires on April 1
    • Michelin launches high-scrub, weight-sensitive X One Multi T trailer tire
      TRAC Intermodal redirects retread biz 100% in-house
      Giti rolling out range of GT Radial-brand urban/regional truck tires
      Conlan Tire buys BestDrive locations in Ark., Okla., Texas from Continental
    • USTMA joins coalition supporting passage of Equality Act
      McMahon's Best-One increases its minimum wage to $15
      Oshkosh unit gets contract for new USPS local delivery vehicle
      Conti recalling 94,000 Conti-, General-, Barum-brand LT/SUV tires
    • Goodyear names Patterson to lead Cooper integration efforts
      DTM switches horses mid-stream; awards race tire contract to Michelin
      Sentury's 10-year global expansion strategy will include plants in North America, Europe
      Rebound in car tire demand drives USTMA market forecast for 2021
    • DTM switches horses mid-stream; awards race tire contract to Michelin
      Bridgestone World Solar Challenge canceled due to pandemic restrictions
      Pirelli, Goodyear ink sedan racing series contracts in Canada, Europe
      Goodyear extends partnership with Nürburgring race circuit
    • Michelin launches high-scrub, weight-sensitive X One Multi T trailer tire
      Giti rolling out range of GT Radial-brand urban/regional truck tires
      Milestar Weatherguard AS710 to be made in Tennessee
      Michelin upgrades 2 lines of Energy-branded truck tires
    • COVID takes dealers for roller-coaster ride
      Investment groups to acquire Mavis Tire network
      Vogue Tyre offers $75 rebate on set of 4 tires during March
      4 Wheel Parts celebrates 60th anniversary with deals, promotions
    • Pennzoil offering carbon-neutral lubricants for passenger cars
      Washington dealership uses new-school solution for recruiting auto techs
      Marinucci: Customers may ignore dangerous conditions
      Automotive Lift Institute introduces Check360 inspection, label
    • TIA seeking nominations for Tire Industry Hall of Fame
      SEMA survey shows resilient auto aftermarket in 2020
      SEMA scholarships and loan forgiveness now available
      WTC hosting webinar Jan. 20 on load-capacity standards
    • SEMA survey shows resilient auto aftermarket in 2020
      Trade groups oppose minimum wage increase proposal
      New stimulus package fixes PPP loan confusion
      Vaccine may usher sense of normalcy
    • Titan eyes solid recovery in 2021 as ag sector rebounds
      Michelin launches high-scrub, weight-sensitive X One Multi T trailer tire
      Goodyear names Patterson to lead Cooper integration efforts
      Giti rolling out range of GT Radial-brand urban/regional truck tires
    • Sponsored By Yokohama Tire Company
      7 questions to ask consumers when they need tires for a crossover SUV
      Sponsored By Yokohama Tire Company
      Stocking Tires for Crossover SUVs
      Sponsored By AppointmentPlus
      Three Important Lessons Learned for the Tire Business During a Pandemic
      Sponsored By Yokohama Tire Company
      7 questions to ask consumers when they need tires for a crossover SUV
  • SHOP FLOOR
    • BALANCING
    • DEMOUNTING
    • SAFETY
    • TIRE REPAIR
    • TPMS
    • TRAINING
    • VEHICLE LIFTING
    • WHEEL TORQUE
    • Video: Balancing Tire
      Choosing the right balancing equipment
      Safety tips for wheel balancing
      An introduction to wheel balancing
    • Video: Demounting
      Demounting Equipment
      Making rims ready for a tight seal
      Tire changer types, tips and trends
    • Video: Safety
      Making friends with OSHA
      Ergonomics on the shop floor
      Customers
    • Video: Tire Repair
      Tire repair: Shining a light on visual inspections
      Staying safe when repairing a tire
      Essential tools, materials and equipment for tire repair
    • Video: TMPS Service
      Decoding sensor data for TPMS diagnosis
      Replacement TPMS sensor overview
      The life-saving work of TPMS
    • Video: Training
      Advantages of apprentice program partnerships
      Options and resources for CE tech training
      Internship ideas to attract tech talent
    • Video:Vehicle Lifting
      All types of lifts for all types of work
      Tips and recommendations for lifting safety
      The gravity of proper lift points
    • Video: Wheel Torque
      Using torque sticks to speed service times
      The danger of too much, too little torque
      The importance of torque specifications
  • Multimedia
    • VIDEOS
    • PHOTOS
    • PODCASTS
  • Events
    • ASK THE EXPERT
    • LIVESTREAMS
    • WEBINARS
    • SEMA LIVESTREAMS
  • Data
    • DATA STORE
  • Resources
    • DIRECTORY
    • CLASSIFIEDS
  • ADVERTISE
  • DIGITAL EDITION
  • Awards
    • Tire Dealer Humanitarian Award
MENU
Breadcrumb
  1. Home
August 16, 1999 02:00 AM

INTERNET POSES CHALLENGE FOR MIDDLEMEN: CAN MIDDLEMEN SURVIVE?

John R. Graham
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    "I'll get it for you wholesale'' are words dear to the heart of every American. Bypassing the middleman long has been a buyer's goal. But with few alternatives available, consumers have had to use basic distribution channels to make their purchases. Much of the success of the ``big box'' merchandisers can be attributed to the way they have positioned themselves to look like ``wholesalers.'' That's the Wal-Mart, Home Depot, Best Buy and Staples story. Pricing, store environments and promotions are designed to create the impression that a costly link in the distribution chain as been eliminated.

    The Internet provides the next step in the devolution of the middleman, as it gives customers what may be the ultimate step in ``going direct.'' Each day, the list gets longer for online buying of airline tickets, homes, clothing, cars, insurance and just about any other product or service. The long-established firewall between the customer and the manufacturer is quickly disappearing.

    The drop in mutual fund sales appears to be a reflection of this developing trend. Sixty years ago, the mutual fund simplified stock ownership at a time when it was awkward for the individual to gather and evaluate information on individual stocks, and brokers only did business with ``persons of means.''

    In effect, mutual funds are a classic illustration of the middleman at work. Now that all investors can research stocks online, determine what they want to buy or sell, and execute the transactions themselves at a low cost, the mutual fund may be something of an anachronism.

    The Internet has changed the equation. Armed with research from the Internet, many individual investors no longer feel the need to depend on the services of a ``fund manager.'' As a result, mutual funds lack the appeal they once held. There's a trend away from placing one's financial fate in someone else's hand, an attitude change that can be traced to the rise of the Internet.

    Given the opportunity, most Americans appear ready to circumvent the middleman and the Internet gives them that capability.

    For business, the implications of this fundamental change are far-reaching:

    1. Protected territories are a myth. They simply don't exist, even though manufacturers continue to act as if they are a reality and attempt to enforce geographical boundaries. The Internet has made a joke of territorial boundaries, dramatizing the inappropriateness of the antiquated reality.

    Whether manufacturers understand it or not, geography no longer defines. There are no boundaries.

    2. The customer is empowered. In the past, one of the primary functions of salespeople was to provide customers with product information, offering only what was absolutely necessary to make the sale. In this environment, it was ``buyer beware.''

    With the Internet, the roles have changed; actually, they've reversed. It's now ``salesperson beware,'' because the customer has direct access to the information necessary to evaluate options and make appropriate comparisons.

    In effect, buyers trust themselves more than they trust salespeople. A recent study indicates that 20 percent of industrial buyers looked to salespeople for information in 1997, while only 12% did just a year later.

    Nowhere has customer empowerment had greater impact than on Wall Street. The long sacrosanct role of the stockbroker in making a trade came to a somewhat ignominious end almost overnight with online stock trading.

    Even staid Merrill Lynch & Co.—with its corps of 14,000 commissioned brokers losing customers to online trading—went with discounting, fee-based accounts and online trading in one fast move. Provocatively, The Wall Street Journal labeled it ``a watershed on Wall Street.''

    The message is clear: The middleman is in jeopardy. Whether it's the stockbroker or real estate broker, the empowered customer is eager to cut out the intermediary.

    3. Seeing is no longer believing. For the past half-century, customers have wanted to see and touch what they were buying. They could walk into an appliance store and view eight or 10 refrigerators lined up and make comparisons.

    Seeing the actual refrigerator before buying was essential, since this was the environment in which information was obtained. Getting you into the store was the key to making the sale.

    However, it is no longer necessary to ``go and see'' in order to make an informed buying decision. Instead, the experience can be virtual.

    Dell Computer was the first to understand the implications of ``seeing is no longer believing.'' Starting with a vision of going direct to the customer, it made sure its systems passed the ``plug 'n' play'' and customer support tests. While its products get high ratings, customers are confident they also will be easy to use.

    Dell has been a major contributor to breaking down the belief: ``I've got to see it before I buy it.''

    4. Convenience is the customer's top priority. As consumers, we're willing to pay more for convenience—sometimes a lot more. ``I want what I want when I want it'' is the customer's mantra.

    What the Internet has done is demonstrate to buyers that this is possible. It's not necessary to go to a big box bookstore to get the book. It can be ordered at 5:03 a.m. or 11:17 p.m. any day of the week.

    This fundamentally changes the customer's expectation level. It's not that you or I will necessarily place an order at 2:23 a.m., it's knowing that we can do it if we want to that makes that difference.

    What do you hear when you call someone's business voice-mail? More than likely, the message sounds something like this: ``I'm away from my desk right now. I'll get back to you as soon as I can.'' That was good enough before the Internet impacted our expectations. But not today. The words sound almost arrogant.

    Given this background, what is the future of the middleman? Is there one? The answer is ``yes, if...''—if distributors and retailers think creatively. Here are a few suggestions:

    Add value that's valuable. Such phrases as ``personal attention'' and ``personal service'' fall far short today. A different approach is required.

    For example, a promotional products distributor (a middleman) makes up free spec samples for customers, knowing that customers are more likely to place an order if they can see the actual product in advance. Of course, there's a cost, but this is a significant way that this distributor sets itself apart from the competition.

    Charles Schwab understands what it means to add value. MySchwab.com isn't just a site for electronic stock trading. It's a financial services portal offering a vast array of information resources that can be customized to empower the individual investor. That's value.

    Make it easy for the customer. ``Let me call you back'' is the killer phrase today. Even doctors are getting the message. Waiting until 4:35 p.m. for a 3:00 p.m. appointment isn't acceptable to many patients. One patient calls in advance and is put in line. When he walks in, his name is called.

    A plumbing company in Pennsylvania stocks special trucks with parts and offers 8:00 a.m. to 8:00 p.m. service six days a week. The combination of having parts on hand and extended hours has high customer appeal.

    Cultivate constantly. The Internet is making it clear that making the sale isn't enough today. Subscribers to the Wall Street Journal's online ``Interactive Edition'' receive regular e-mail messages regarding timely articles along with a URL link that takes the viewer directly to that particular page.

    If the WSJ Interactive subscriber isn't using the site, it's time for an e-mail reminder. Microsoft and others do it, too.

    The objective is to keep pulling the customer closer and closer, a process that requires consistent reinforcement. With intense competition and pressures on time, customers appreciate the reminders.

    The strong customer appeal comes from being offered helpful information, not just something to buy.

    The middle is shrinking. Whether it's a retailer or a distributor, the pressure is on the stockbroker, travel agent and bank teller.

    In the life insurance business, a recent report by Conning & Co. on life insurance distribution strategies reinforces the decline of the middleman.

    Twenty years ago, virtually all life insurance products were sold through agents. That has dropped to 82 percent, and the study projects the figure soon will drop to 68 percent as other channels of distribution drain off sales.

    If the middleman is to find a secure place in the marketing chain, it will take an intense, concentrated effort. Like Charles Schwab and others, the power will be in serving as a valuable resource for the customer.

    Mr. Graham is president of Graham Communications, a marketing services company in Quincy, Mass.

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Newsletter Center

    Staying current is easy with Tire Business delivered straight to your inbox.

    SUBSCRIBE TODAY

    Subscribe to Tire Business

    SUBSCRIBE
    Connect with Us
    • Facebook
    • LinkedIn
    • Twitter
    • RSS

    Our Mission

    Tire Business is an award-winning publication dedicated to providing the latest news, data and insights into the tire and automotive service industries.

    tb-logo
    Reader Services
    • Contact Us
    • About Us
    • Site Map
    • Industry Sites
    • Order Reprints
    • Customer Service: 877-320-1716
    Partner Sites
    • Rubber & Plastics News
    • European Rubber Journal
    • Automotive News
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    RESOURCES
    • Advertise
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Media Guide
    • Editorial Calendar
    • Classified Rates
    • Digital Edition
    • Careers
    • Ad Choices Ad Choices
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • OPINION
      • CORONAVIRUS
      • AUTO INDUSTRY
      • BUSINESS/FINANCIAL
      • COMMERCIAL TIRE
      • FACTORY FIXES
      • GOVERNMENT & LAW
      • INTERNATIONAL
      • MOTOR SPORTS
      • NEW PRODUCTS
      • RETAIL TIRES
      • SERVICE ZONE
      • SEMA/AAPEX
      • SMALL BUSINESS
      • TIRE MAKERS
      • SPONSORED CONTENT
    • SHOP FLOOR
      • BALANCING
      • DEMOUNTING
      • SAFETY
      • TIRE REPAIR
      • TPMS
      • TRAINING
      • VEHICLE LIFTING
      • WHEEL TORQUE
    • Multimedia
      • VIDEOS
      • PHOTOS
      • PODCASTS
    • Events
      • ASK THE EXPERT
      • LIVESTREAMS
      • WEBINARS
      • SEMA LIVESTREAMS
    • Data
      • DATA STORE
    • Resources
      • DIRECTORY
      • CLASSIFIEDS
    • ADVERTISE
    • DIGITAL EDITION
    • Awards
      • Tire Dealer Humanitarian Award