How to Thrive as a Middleman
Being a middleman (or woman) has become risky. When you resell other people’s product, you biggest value is your location. However, since content can be streamed or shipped overnight, being local is becoming less relevant. Even if you have a protected geographic territory, pricing information available to your customers through the Internet will eventually grind down your margins.
Dragging down you value
Not only do you risk losing sales and margin to online competitors; being a middleman drags down the value of your company. If you are reliant on a single supplier who provides the goods you resell, you could be in trouble. Having one or two suppliers means you could be at risk of an industry change (like video stores for example) or at risk of your supplier choosing to build their own sales force and start competing directly with you.
Henry Schein: a valuable middleman
The solution is to rethink the value you provide your customers. Instead of assuming it is your location that counts, consider yourself a curator of great products for your customers. Your job is no longer to be the local company but to be the person who sifts through all the noise, tests and evaluates what’s available, and supplies just the very best for customers who value – and a willing to pay for – your services as a curator.
Take for example, the case of Henry Schein, Inc., a FORTUNE 500 company and a member of the NASDAQ 100 Index. Henry Schein is the world’s largest provider of health care products and services to medical, dental, and veterinary office-based practioners. the company is one of Fortune Magazine’s “World’s Most Admired Companies” and all it does to supply other people’s products.
The difference is that they see their job as sifting through all of the suppliers who want to provide products to dentists, doctors, vets, etc. and picking only the very best to recommend to their clients. They are a premier gatekeeper.
Doctors, dentists & vets prefer to see & bill patients and value the role Henry Schein plays in helping to minimize the number of sales people they need to see. This also means that supplies need to go through Henry Schein to sell to these health care professionals. This is the acid test for a middleman – would your customers rather buy from you or go direct?
If you would like to see how we can help your business change the balance of power, contact us.
