In Oyo state, statistics have shown that a large percentage of the business people are into trade i. e distributorship, wholesale and retail.
With the population of around 6,000,000 and major FMCG supplies from Lagos, the middlemen have played a good role in ensuring that these goods get to the final consumer. Despite the good role, some have faulted their activities on several grounds. Let us consider some advantages and disadvantages to the roles of these middle-men.
Price Inflation: The most manifest challenge with the middlemen is that they have impacted the prices of FMCG in the state. When the goods leave the manufacturer to the distributor, to the wholesaler who then sells to the retailer where the final consumer would pick it from. By the time the goods get to the final consumer, the price would have significantly impacted and inflated.
Delayed Delivery: Aside from the price been impacted and inflated, the delivery also takes a long time; the goods would not get to the final consumer as expected. Since the goods are changing hands and the consumer cannot jump the queue but wait for the goods to get to the retailer before they can buy; the process increases the supply duration, which by implication delays delivery to the final consumer and artificial scarcity may be created leading to market arbitrage.
Quality Deterioration: As the delivery days of these FMCG increases, the quality of the goods also deteriorates. This effect is mostly on consumable goods. With consumable goods, they have an expiry date which usually ranges from one to six months. Hence, the longer the delivery days the closer to the expiry date and decrease in the quality of the goods. Sometimes, consumers find it very hard to store-up because the expiry dates are very close.
Sell Goods in Smaller Units: Despite the challenges that come with the role of the middle-men in the supply of goods to the final consumers; it also comes with some benefits which cannot be discounted from the process. One of those benefits is that they help to breakdown the goods to units that make it convenient for the final consumer to carry. You can imagine if every household would have to go to the manufacturer who turns out these goods in larger quantity and big packages with trucks to stock their house. These stresses have been taken care of by the middle-men because they buy in big packages and break-it down into smaller units for the final consumers’ convenience.
Resolves Storage Challenges: When the final consumers purchase these goods in smaller units, it saves them the stress of storage. Not many homes have the big storage capacity to store these goods if purchased in large quantity as the middle-men do. Because the larger the quantity purchased; the bigger the storage facility needed.
Affordability: The prices are relatively reduced because they are purchased in smaller units. The affordability of these goods would be very impossible if not broken-down and sold in smaller units. The role of the middle-men makes it easy for people to purchase relatively reduced prices compared to the price of buying them in bulk. While few households prefer to buy in bulk, the majority would only buy in smaller units because of purchasing power.
Though the middle-men had created some bottle-necks because of their role in the supply chain of Fast Moving Consumer Goods (FMCG), however, their importance cannot be underestimated. We should understand that every phenomenon is accompanied by advantages and disadvantages. Because the role of the middlemen has been challenged and criticized, some international marketing companies and manufacturers have adopted the referral marketing strategy, but they have not been able to completely diversify the entire risk that comes with the distribution.