You typically buy furniture from retailers. That retailer instead specializes in purchasing inventories of furniture and then assembling these in locations that consumers find convenient to visit.Īnd understand that you yourself could buy furniture for your home directly from furniture manufacturers and at prices lower than you pay at retail furniture stores. Or recognize that, say, the furniture retailer that brags of “eliminating the middleman” by “buying direct from the factory” doesn’t itself manufacture sofas, beds, and dining room tables. But doing so would obviously be a much more costly means of presenting an impressive ring to his sweetheart than buying the ring from a jeweler, despite the fact that the jeweler must be paid for his services. A man wishing to acquire an engagement ring could “eliminate the middleman” by steering clear of all retail jewelers and himself personally go mining for diamonds and gold. To see the economic value of middlemen, it’s helpful to realize that retailers themselves are middlemen. In contrast, successful middlemen reduce the costs that consumers pay at retail. These middlemen are indeed “eliminated” - by the market. Middlemen who don’t enable retailers to lower their prices go bankrupt. And these services are valuable only because, and only insofar as, they reduce the prices that consumers pay at retail. But these services are paid for only because they are valuable. It’s true that middlemen (and, of course, middlewomen) must be paid for their services. So if a retailer eliminates the middleman, that retailer apparently has “savings” that it “passes on to you!”īut if middlemen raise retailers’ costs, why would any retailer ever use such parasites? Simply to ask this question about middlemen is to cast doubt on the widespread myth that middlemen raise the retail costs of goods.
#MIDDLEMAN PAYPAL FOR FREE#
After all, wholesalers and other middlemen don’t work for free they must be paid.
The great frequency of the use of this stratagem testifies to its believability, for the claim that money is saved by eliminating the middleman does indeed seem sensible. This stratagem of claiming to “eliminate the middleman” is common in advertising done by retailers. Ronnie Mervis, the owner, boasted that “by importing directly, Mervis eliminates the middleman” - and, thus, sells diamond jewelry at unusually low prices. Driving to the office this morning, I heard on the radio an ad for Mervis Diamond Importers.
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