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Retail is the prime example of middleman business. The middleman businesses don't produce anything by themselves and attempt to extract profits via information

Retail is the prime example of middleman business. The middleman businesses don't produce anything by themselves and attempt to extract profits via information asymmetry and/or some value adds such as geographically closer availability. Eventually both of these should be done by machines. Throughout the history technology has been killing off middleman businesses such as travel agents, insurance agents, stock brokers and so on. Retail is not an exception and I would expect most middleman businesses to be extinct eventually.

brango 9y ago
They're aggregators. There's value in going to a single shop to buy everything instead of going to 200 individual suppliers for your weekly shopping.
- sytelus 9y ago
  Aggregation, filtering, sorting, recommendations could be best handled by machines. All businesses specializing in this using human efforts are at grave risk.
  - brango 9y ago
    Yeah but presumably as the end user you'd still want to interface with a single entity, even if behind the scenes they're then aggregating, filtering, etc. But yeah any humans employed by them doing that work are probably at risk.
  - have_faith 9y ago
    > best handled by machines I don't think best is correct in a lot of contexts, but just good enough is enough in most cases.
  - yardie 9y ago
    > Aggregation, filtering, sorting, recommendations could be best handled by machines. That only changes who those middlemen are and their scope. Based on what I'm currently seeing on search machines can only deliver exactly what I'm asking for. Rarely do they recommendations that aren't patterns. For example, I was looking for backup software a few months ago, I get tons of ad pages on backup software now. I purchased that software months ago and no longer need backup software. It's probably going to be many more months before my search history cycles out of ad networks. Another example. A road was recently converted to pedestrian only in my neighborhood. Would you like to know the number of Lyft/Uber drivers that follow Google Maps end up at a dead end and have to double back? And that is coming from the world's most powerful search engine.
  - bsenftner 9y ago
    Do you foresee middlemen like Amazon eventually going away, or being even more essential?
    - omarchowdhury 9y ago
      Middlemen will go away, The Middleman will stay.
  - Spivak 9y ago
    Potentially but when you're at a store you can immediately tell the if the store has a good or bad purchasing department. It does provide tangible positive value. You're silly if you think that the industry isn't already using large data analysis to do this job. There's still plenty of value by having a human at the end of the tunnel to actually interpret it though.
  - rm_-rf_slash 9y ago
    I disagree. Amazon is an utter failure when I don’t know the exact product I want to buy: reviews are faked and many of the products are of low quality, with no way to test them except for a terribly inconvenient return process. I’d rather just try on clothes in a store and not buy ones that I don’t like instead of having to sigh and package them up and wait for a refund. You may see retail employees as unnecessary middlemen, but they provide a value a machine cannot. I can talk to GameStop employees about which new games they played to see if they’ll be fun; I can talk to petsmart employees about proper pet care; I can go over installation prodcedures with the Geek Squad folks at BestBuy; I can get recommendations on outfits at the upscale men’s clothing store I frequent...and so on. There is no superior specialization in this regard. Many of these examples are because of the relationships I have cultivated with long-term retail employees, who know me and my preferences far better than any machine learning algorithm has attempted to match.
- excalibur 9y ago
  It's not really relevant, but I'm having a hard time picturing a household that consumes 200 unique items every week. Must be pretty fancy.
  - mjevans 9y ago
    Try to think of a house using ingredients and some portion of 200 complete items. Also the odd item you occasionally need when something goes out of stock locally (like a trash bag, clothing reaches end of useful life etc).
  - bsenftner 9y ago
    200 unique items is just a basic house. You are forgetting all the essential products used to operate said house as well as all the family members inside, plus pets. 200 is average.
  - hinkley 9y ago
    Well the number was pulled out of the air, but you don’t think a family of four has 200 distinct items in their trash + recycling every week?
    - gorbachev 9y ago
      Durable goods would take that number way up from 200 for an average US family.
      - hinkley 9y ago
        After I posted I had the same thought. But then I realized that durable goods from a store usually come in packaging, so measuring outgoing material isn’t as inaccurate as it sounds as first. Most of us are really pretty bad at tracking our purchases. We don’t want to look at them because it means admitting we have a problem. But we know the trash is full all the time and don’t think about how that correlated with consumption. Basically I was trying to trick people into an honest conversation about something nobody likes to be honest about. And at any rate if the quantity is “more than 200” then it just reinforces GGP’s point.
- agumonkey 9y ago
  Fair point but this function grants them immoral control of both ends of the market. Often they lie to producers to lower prices then lie to consumers by selling these deal at the usual rate (or faking a false discount week for appearances and then put back products back on the normal shelves). As other said, economic and information asymmetry is not good. Honestly .. aggregators should be a national thing, there's almost no competition to be had there. Kinda like internet, it should be way more neutral, except maybe on safety check (again, something to nationalize).
  - gremlinsinc 9y ago
    There's already a national aggregator... Amazon. Anything more 'nationalized' would smell of socialism and nobody's ready for that.. Though I wouldn't mind socialized medicine/education personally.
    - agumonkey 9y ago
      Come on, I'm talking about a storage space, not controlling peoples life.
- deleted 9y ago
  [deleted]
ataturk 9y ago
I work for a major wholesaler. I disagree that my company adds "no value." The shops that stock our products don't/can't do this work. Just negotiating prices with overseas suppliers is a big enough value add all by itself.
ISL 9y ago
Amazon, Facebook, Google, AirBnB, Uber, Match, etcetera are all middlemen. They provide an interface between parties who wish to exchange information, goods, services, and time. The nature of middle-people businesses is changing, but they're not going away.
- agumonkey 9y ago
  Google used to provide rare value: large scale of organization of information. They also philanthropically raised standards f the web: way better mail service, map service.
  - s73ver_ 9y ago
    They raised the standards, but you're delusional if you think they did it philanthropically. They did it because they thought they could get more info to sell ads.
    - agumonkey 9y ago
      Oh yeah, I missed an edit I never meant to say it was out of pure altruism. But it was a new kind of move at the time.
- radix07 9y ago
  Right, but the point is how many jobs does Amazon create delivering all those goods to you compared to say a Sears or Walmart? The modern day middlemen are doing a better job with way less people. Hence the Retail Apocalypse...
  - emodendroket 9y ago
    But if you read the article it describes a lot of businesses which are profitable and could plod along, except they're saddled with tons of debt from leveraged buyouts.
    - deleted 9y ago
narrator 9y ago
I know all you alpha-nerds just never want to leave the house and could live in a 20foot square cube and sit on the toilet with your laptop while only consuming auto-delivered soylent and a caffeine IV drip for all you care, but let me help you all out with a little in understanding this retail thing: Retail is mostly about entertainment now, primarily for women. Women like to shop for clothes and try stuff on. They like to be taken out to restaurants and movies and go to these with their friends. They like to go see their personal trainer at the gym. They like to go and get their hair and nails done and gossip. They send their kids to the math tutor. They send their littler kid to gymboree. They have a coffee at Starbucks. If you look at some of the retail REITs and listen to their conference calls, a lot of stores are going out, but a lot are going in. Things are definitely changing to be more service and health oriented and the Big Box and Mega Mall trend is certainly over. The smaller format residential and mixed use stuff is going to be fine because they are more about services and entertainment as opposed to merely transactional delivery of mass market goods. People still want to leave the house and go somewhere.
- lotsofpulp 9y ago
  Fewer people can afford those experiences. There's usually one or two nice parts of town with (search for Apple store, Nordstroms, or Whole Foods), where you can find new development. But buying stuff made in China was cheap, even people who made $30k/year could do that. But going out for coffee, brunch, movies, massages, trainers, that stuff is way more expensive, and so is limited to the nicer parts of town.
  - narrator 9y ago
    On the low-end there's Dollar Tree (DLTR) and Ross(ROST). Mid-market Costco(COST) has also been doing well. Prices at Ross are much much lower than Amazon if your time is cheap or you like shopping. Similarly, grocery delivery is expensive if your time is cheap.
- 52804375092485 9y ago
  If you've got a point to make, don't squander it with an insult and a patronizing tone. It doesn't contribute anything to the conversation.
boyce 9y ago
Retail, where it still works, is about curation. I've been working recently with a specialised retailer and his stocking of a particular product is effectively a seal of quality. The few shops I go to, I don't go there because they have every possible product, I go there because I know their purchasing reflects the opinions and qualities that I also value.
olegkikin 9y ago
Retail businesses provide services, just like barbers, who also don't produce anything. - Transportation - Breaking wholesale packs into something an average person can actually buy - Holding and efficiently managing huge inventories - Allowing you to touch, see, and sometimes try items before you buy them - Dealing with broken items, instantly replacing them - Providing all these services locally

brango 9y ago

They're aggregators. There's value in going to a single shop to buy everything instead of going to 200 individual suppliers for your weekly shopping.

sytelus 9y ago
Aggregation, filtering, sorting, recommendations could be best handled by machines. All businesses specializing in this using human efforts are at grave risk.
- brango 9y ago
  Yeah but presumably as the end user you'd still want to interface with a single entity, even if behind the scenes they're then aggregating, filtering, etc. But yeah any humans employed by them doing that work are probably at risk.
- have_faith 9y ago
  > best handled by machines I don't think best is correct in a lot of contexts, but just good enough is enough in most cases.
- yardie 9y ago
  > Aggregation, filtering, sorting, recommendations could be best handled by machines. That only changes who those middlemen are and their scope. Based on what I'm currently seeing on search machines can only deliver exactly what I'm asking for. Rarely do they recommendations that aren't patterns. For example, I was looking for backup software a few months ago, I get tons of ad pages on backup software now. I purchased that software months ago and no longer need backup software. It's probably going to be many more months before my search history cycles out of ad networks. Another example. A road was recently converted to pedestrian only in my neighborhood. Would you like to know the number of Lyft/Uber drivers that follow Google Maps end up at a dead end and have to double back? And that is coming from the world's most powerful search engine.
- bsenftner 9y ago
  Do you foresee middlemen like Amazon eventually going away, or being even more essential?
  - omarchowdhury 9y ago
    Middlemen will go away, The Middleman will stay.
- Spivak 9y ago
  Potentially but when you're at a store you can immediately tell the if the store has a good or bad purchasing department. It does provide tangible positive value. You're silly if you think that the industry isn't already using large data analysis to do this job. There's still plenty of value by having a human at the end of the tunnel to actually interpret it though.
- rm_-rf_slash 9y ago
  I disagree. Amazon is an utter failure when I don’t know the exact product I want to buy: reviews are faked and many of the products are of low quality, with no way to test them except for a terribly inconvenient return process. I’d rather just try on clothes in a store and not buy ones that I don’t like instead of having to sigh and package them up and wait for a refund. You may see retail employees as unnecessary middlemen, but they provide a value a machine cannot. I can talk to GameStop employees about which new games they played to see if they’ll be fun; I can talk to petsmart employees about proper pet care; I can go over installation prodcedures with the Geek Squad folks at BestBuy; I can get recommendations on outfits at the upscale men’s clothing store I frequent...and so on. There is no superior specialization in this regard. Many of these examples are because of the relationships I have cultivated with long-term retail employees, who know me and my preferences far better than any machine learning algorithm has attempted to match.
excalibur 9y ago
It's not really relevant, but I'm having a hard time picturing a household that consumes 200 unique items every week. Must be pretty fancy.
- mjevans 9y ago
  Try to think of a house using ingredients and some portion of 200 complete items. Also the odd item you occasionally need when something goes out of stock locally (like a trash bag, clothing reaches end of useful life etc).
- bsenftner 9y ago
  200 unique items is just a basic house. You are forgetting all the essential products used to operate said house as well as all the family members inside, plus pets. 200 is average.
- hinkley 9y ago
  Well the number was pulled out of the air, but you don’t think a family of four has 200 distinct items in their trash + recycling every week?
  - gorbachev 9y ago
    Durable goods would take that number way up from 200 for an average US family.
    - hinkley 9y ago
      After I posted I had the same thought. But then I realized that durable goods from a store usually come in packaging, so measuring outgoing material isn’t as inaccurate as it sounds as first. Most of us are really pretty bad at tracking our purchases. We don’t want to look at them because it means admitting we have a problem. But we know the trash is full all the time and don’t think about how that correlated with consumption. Basically I was trying to trick people into an honest conversation about something nobody likes to be honest about. And at any rate if the quantity is “more than 200” then it just reinforces GGP’s point.
agumonkey 9y ago
Fair point but this function grants them immoral control of both ends of the market. Often they lie to producers to lower prices then lie to consumers by selling these deal at the usual rate (or faking a false discount week for appearances and then put back products back on the normal shelves). As other said, economic and information asymmetry is not good. Honestly .. aggregators should be a national thing, there's almost no competition to be had there. Kinda like internet, it should be way more neutral, except maybe on safety check (again, something to nationalize).
- gremlinsinc 9y ago
  There's already a national aggregator... Amazon. Anything more 'nationalized' would smell of socialism and nobody's ready for that.. Though I wouldn't mind socialized medicine/education personally.
  - agumonkey 9y ago
    Come on, I'm talking about a storage space, not controlling peoples life.
deleted 9y ago
[deleted]

ataturk 9y ago

I work for a major wholesaler. I disagree that my company adds "no value." The shops that stock our products don't/can't do this work. Just negotiating prices with overseas suppliers is a big enough value add all by itself.

ISL 9y ago

Amazon, Facebook, Google, AirBnB, Uber, Match, etcetera are all middlemen. They provide an interface between parties who wish to exchange information, goods, services, and time. The nature of middle-people businesses is changing, but they're not going away.

agumonkey 9y ago
Google used to provide rare value: large scale of organization of information. They also philanthropically raised standards f the web: way better mail service, map service.
- s73ver_ 9y ago
  They raised the standards, but you're delusional if you think they did it philanthropically. They did it because they thought they could get more info to sell ads.
  - agumonkey 9y ago
    Oh yeah, I missed an edit I never meant to say it was out of pure altruism. But it was a new kind of move at the time.
radix07 9y ago
Right, but the point is how many jobs does Amazon create delivering all those goods to you compared to say a Sears or Walmart? The modern day middlemen are doing a better job with way less people. Hence the Retail Apocalypse...
- emodendroket 9y ago
  But if you read the article it describes a lot of businesses which are profitable and could plod along, except they're saddled with tons of debt from leveraged buyouts.
  - deleted 9y ago

narrator 9y ago

I know all you alpha-nerds just never want to leave the house and could live in a 20foot square cube and sit on the toilet with your laptop while only consuming auto-delivered soylent and a caffeine IV drip for all you care, but let me help you all out with a little in understanding this retail thing: Retail is mostly about entertainment now, primarily for women. Women like to shop for clothes and try stuff on. They like to be taken out to restaurants and movies and go to these with their friends. They like to go see their personal trainer at the gym. They like to go and get their hair and nails done and gossip. They send their kids to the math tutor. They send their littler kid to gymboree. They have a coffee at Starbucks. If you look at some of the retail REITs and listen to their conference calls, a lot of stores are going out, but a lot are going in. Things are definitely changing to be more service and health oriented and the Big Box and Mega Mall trend is certainly over. The smaller format residential and mixed use stuff is going to be fine because they are more about services and entertainment as opposed to merely transactional delivery of mass market goods. People still want to leave the house and go somewhere.

lotsofpulp 9y ago
Fewer people can afford those experiences. There's usually one or two nice parts of town with (search for Apple store, Nordstroms, or Whole Foods), where you can find new development. But buying stuff made in China was cheap, even people who made $30k/year could do that. But going out for coffee, brunch, movies, massages, trainers, that stuff is way more expensive, and so is limited to the nicer parts of town.
- narrator 9y ago
  On the low-end there's Dollar Tree (DLTR) and Ross(ROST). Mid-market Costco(COST) has also been doing well. Prices at Ross are much much lower than Amazon if your time is cheap or you like shopping. Similarly, grocery delivery is expensive if your time is cheap.
52804375092485 9y ago
If you've got a point to make, don't squander it with an insult and a patronizing tone. It doesn't contribute anything to the conversation.

boyce 9y ago

Retail, where it still works, is about curation. I've been working recently with a specialised retailer and his stocking of a particular product is effectively a seal of quality. The few shops I go to, I don't go there because they have every possible product, I go there because I know their purchasing reflects the opinions and qualities that I also value.

olegkikin 9y ago

Retail businesses provide services, just like barbers, who also don't produce anything. - Transportation - Breaking wholesale packs into something an average person can actually buy - Holding and efficiently managing huge inventories - Allowing you to touch, see, and sometimes try items before you buy them - Dealing with broken items, instantly replacing them - Providing all these services locally