Is “Cutting Out the Middle Man” Just Marketing Hype?

Modern menswear companies are awash, advertising the supposed benefits of “cutting out the middleman.” Today, we examine what that really means, and answer whether it really saves you money or if it’s just an overhyped marketing term.

If you’re unfamiliar with that term, it’s a sales model in which the producer sells directly to the consumer rather than having an intermediary like a retail store. And because there’s one less person involved to turn a profit, it’s often assumed that the product will cost less.

This system is called the “direct-to-consumer model” and many online retailers use similar terminology. Does this inherently benefit you? It’s widely advertised that using the shopping model is an innate benefit. It assumes that the products that you’re looking for are available at the best possible prices. So, let’s determine if that is actually true. 

Touching on Transparency 

When examining claims about cost and benefit, it’s really important to have all the information at your disposal. After all, how can you know that you’re getting a good deal “cutting out the middleman” unless you know exactly what’s being saved.

For instance, in their “About Us” section, noted direct-to-consumer brand Spier & Mackay ponders, “Why does great-fitting, high-quality menswear cost so much? The truth is it doesn’t have to. Bloated distribution models, unnecessary markups, and greedy profit margins all lead to artificially inflated prices.”

The clear implication here is that the traditional model of doing business clearly does you a disservice. But, if you cut out all the incendiary and unnecessary adjectives like “greedy” and “bloated,” what are you left with? Next to nothing. You’re left to assume that, by cutting out one part in the supply chain, it’s going to benefit you financially and there’s no proof of this.

Consider this chart by shoemaker Beckett Simonon. There’s no explanation for how these numbers are calculated. They’ve simply stuck a normal price for their shoes on top of the chart in a vibrant, attractive color and imagined a competitor’s price for a comparable shoe that appears to be on the bottom in a bland, gray color.

This is a great example of psychology in marketing and how the color of the choice that they want you to make is bright and engaging versus the competitors, which is dull and gray. This chart really doesn’t tell us anything that we need to make an informed, buying decision. You aren’t told exactly how much you’re supposedly saving on the Beckett Simonon product because you aren’t shown a specific price breakdown in raw materials, labor, and markup, and you also can’t compare that to the price of the traditional retailer shoe because you’re given no information. It’s not even comparing apples to oranges because it’s almost like you’re not even able to compare them.

We’ve reviewed Beckett Simonon shoes before, and we’ve determined that they’re a serviceable shoe at their price point. So, in our opinion, using the direct-to-consumer model, you’re really not saving anything even though this model tries to make you believe that you’re getting a $200 shoe at a $600 quality level.

Fast fact: I’ve also owned several Beckett Simonon shoes. I really like their sneakers, but they tout them to be on the level of Common Projects and they’re not.

You’re Not Told What You Really Need To Know

Many direct-to-consumer companies dedicate web page after web page to tell you why this model is so great. But, ultimately, the amount of money that you’re saving really doesn’t matter if the quality level isn’t good anyway. Most of the time, additional information like what it’s made from, how it’s assembled, and systems for quality control will give you a much better idea about the quality of the product, rather than giving you a crash course on the science of “cutting out the middleman.”

As an example, let’s look at our own shop and the shop that I manage on a day-to-day basis, Fort Belvedere. In many ways, Fort Belvedere is effectively a direct-to-consumer company. We work directly with skilled artisans to create unique products; we sell them exclusively online, directly to you without any retailer in the middle.

This means minimal overhead costs. But, do we fill up the Fort Belvedere website with colorful graphics that trumpet how beautiful and amazing our business model is? No, not at all. Instead, you can see that we’ve dedicated our website to helping you make the best buying decision when buying some of our products.

I mean, after all, no one needs an abbreviated TED Talk about how to sell their products, what makes them great, or explaining their whole supply chain. That’s a whole lot of corporate jargon, and I need to stop going on before I explain to you about logistics and shipping and all the rest of that good stuff.

Buyer Beware

This emphasis on the direct-to-consumer model might seem effectively benign. After all, if that’s how a company wants to focus their marketing, that’s entirely their choice. But, from a practical perspective, exaggerating the ways that you sell your products is effectively a hook, and smart consumers like smart fish should avoid hooks.

What are “hooks,” after all? Well, they’re effectively a marketing way to hook your attention or grab you and make you buy the product.

Some common examples of hooks are inflated regular prices that are slashed through and are called “sales,” making you think that you’re getting a really good deal. It also includes meaningless and confusing buzzwords. These trigger an emotional response, and they prey upon confusion like “affordable luxury” or “custom.” And also bait-and-switch where customers lured in for one product and eventually sold something else.

So, in effect, marketing a product as good for you because it’s available to you in this model is a hook. After all, you’re being hooked into something that doesn’t necessarily have anything to do with the quality of the product.

To be really clear – we’re not saying that all products from direct-to-consumer companies are all bad. But, what we’re saying is that if a company spends all of its time telling you how they sell their products, what aren’t they telling you? And after all, what can you really guarantee about the product?

The matter of fact is being on guard against hooks is very tricky. You can defend against them by carefully examining the product; reading reviews to see if you’re really getting a good deal. But, that can also become really exhausting if you do it for every product that you buy. And, frankly, doing all this homework takes a lot of the fun out of buying something new.

If you look for companies that offer actionable information about products and not just spiels about how they sell, it will make it a more enjoyable buying process. without always being on the lookout for hooks.

Direct-To-Consumer Isn’t Just for Your Benefit

As part of their advertising, many companies will actually give you the impression that they’re doing you some sort of favor.

Recently, Nike has pivoted hard towards direct-to-consumer models. And Nike makes sure to emphasize how much of a benefit this is to you. But, the sales model also benefits Nike after all it reduces their waste overhead and their need to rely on distributors. And yes, this can benefit you, too, but it’s a two-way street.

Also, there’s proof out there that Nike is enjoying massive profits as a pivot to this business model. And it’s difficult to tell how much it actually benefits you. Direct-to-consumer Nike products might be cheaper than in stores, but you’re paying for that reduced price in other ways; especially while other direct-to-consumer models might save you money, they also come with their own intrinsic cost.

There are Downsides to Direct-To-Consumer

At this point, you can see that many direct-to-consumer companies like to paint a very rosy picture of themselves, but this model often introduces many inconveniences.

First, you have to wait weeks or months to receive your product because the company doesn’t want to pay for warehouse space. Secondly, you can’t try on those products in stores because they have no brick-and-mortar presence. And you have to rely on the company to keep you informed because you can’t inspect the products firsthand until you receive them.

If a company is trustworthy and sells quality products, this is less of an issue. The company will have taken steps to mitigate these inconveniences and not let them hamper the buying process. But, then again, companies of this ilk aren’t really relying on direct-to-consumer modeling to lure in their customers.

The companies that do rely on it are much more likely to gloss over and not pay attention to these issues. This can give you quite the headache when items arrive and they don’t fit correctly or they don’t look at all like they’re advertised.

Yes, direct-to-consumer companies do sell products at lower prices, but are you really getting a better deal if those low prices come with a burdensome buying experience?

Furthermore, many direct-to-consumer companies like Casper, Warby Parker, and Nectar are embracing brick-and-mortar stores to deal with all the hassles that go with online sales, which seems to indicate that the direct-to-consumer model isn’t all sunshine and rainbows for them either.

“Cutting Out the Middleman” vs. “Becoming the Middleman”

As online retails have exploded over the last decade, more and more companies are using it to boost their sales, but these products still need to be advertised, stored, and shipped, so who does it? The answer is the manufacturers themselves.

In the traditional retail model, obligations like liability, supply, chain management, shipping, and logistics are all handled by third-party distributors, retailers, and warehouses. Because these companies specialize in these endeavors, they have large-scale, well-built-up processes to do so. This means they’re often very expedient and cost-effective.

But, because direct-to-consumer companies have to assume all these responsibilities themselves, it actually raises their costs – especially because it has to be done on an individual level rather than on an effective scale.

So, these companies actually have to develop beyond their traditional capacity in order to take over roles done by middlemen. This transition is often very difficult and it can lead to a really poor buying experience. Complaints about shipping costs and buyer experience are often some of the highest complaints in the direct-to-consumer model business.

Conversely, larger companies simply expand in order to assume these operations. Because Adidas is expanding into more direct-to-consumer sales, the fastest-growing part of its business is its operations and fulfillment. Warehouses, shippers, and labor are expensive and, ultimately, add to the cost. And in the end, you, the consumer, pay for it.

So, it’s clear that, in many respects, these companies cut out the middleman and then became the middleman themselves.

Responsibly Navigating Direct-To-Consumer Marketing 

So, in summary, are we concluding that all direct-to-consumer businesses are bad and should be avoided at all costs? No, not at all.

As a sales model, direct-to-consumer marketing can be a viable option and benefit everyone. This is provided that businesses create a robust supply chain and have a great customer experience, and provided that customers understand the cost benefit of a direct-to-consumer model. The issue arises when a company uses the direct-to-consumer model as the central point of its advertising.

As we’ve shown before, the direct-to-consumer model doesn’t necessarily give you access to the best products at the best prices, and any company that wants to give you that impression really doesn’t have your best interest in mind.

Direct-to-consumer marketing is not a bad thing. Just be wary.

If a company primarily focuses on marketing their direct-to-consumer system and withholds information about the materials they utilize, though, how their products are made, quality control standards, and satisfaction and customer service guarantees, then your guard should definitely be up.

So, if you encounter sales pitches about direct-to-consumer marketing with shiny graphs and bars, don’t get dragged by this tactic. You have to ask yourself, “Is this a good quality product? Do I need this product? And is it worth its cost?”

Fortunately, we teach you how to determine these qualifications in our Is It Worth It? series, where you can benefit from our careful research and unbiased opinions.

Conclusion 

Ultimately, cutting out the middleman has its advantages and disadvantages like any other sales model. Just be aware that in many cases the obligation of the middleman is assumed by someone else. So, it’s not actually clear how much money is actually saved; most especially when companies aren’t transparent about their costs.

Do you buy products sold by companies said to have “cut out the middle man” and do you think it really saves you money? Share your thoughts in the comments!

Outfit Rundown

In today’s outfit, I’m wearing a variety of products from different companies. I’m wearing a checked Spier & Mackay jacket with colors of cream, brown, and blue and a pair of charcoal flannel Suit Supply trousers. My shirt is a custom, made-to-measure shirt. It’s an Oxford cloth fabric with a button-down collar by Proper Cloth.

My shoes are a pair of chocolate brown suede Chelsea boots from TLB Mallorca. My tie is one of our Fort Belvedere brown grenadines and it is untipped. My socks are also from Fort Belvedere. They’re our two-tone solids in a shade of gray. And my pocket square is also from Fort Belvedere. It’s navy blue with a rabbit pattern.

Check out all these products and many more in the Fort Belvedere shop!