Monday, April 4, 2016

Jobs: Part 2: Disintermediation

Jobs: Part 2: Disintermediation

Whatever happened to all the travel agents, filling station attendants, and encyclopedia salesmen? It turns out they were middlemen – intermediaries between you and what you wanted. Therefore, you can say that, when we found ways to do their jobs more directly, they were “disintermediated.”

These days, it is ever-more-common to “cut out the middleman.” You book your own travel, pump your own gas, and easily search for information about any subject that interests you by using Internet search engines. The Encyclopedia Britannica has stopped printing paper volumes. Voluntary curators and editors contribute articles to Wikipedia, a free on-line encyclopedia with an increasingly solid reputation. Tesla Motors is working toward their vision of bypassing dealerships to sell electric automobiles directly to the public.

Businesses are increasingly likely to buy directly from manufacturers rather than using distributors, wholesalers, brokers, jobbers or agents. Many private individuals also exercise the growing opportunity to shop on the Internet and have their purchases shipped directly from the seller to their home. Fewer people are hired to stock shelves locally or show you their department’s wares in person.

Even a business’ own warehouses are often contracted to massive, highly automated, “order fulfillment” services. Outsourcing cuts out more jobs than you may think. The ideal product company now may have fewer than a dozen employees. They hire outside engineering and design services; they contract-out manufacturing; products are transported on container transport ships directly to a fulfillment partner. The company’s home office may never see their actual products, except as samples sitting on the window ledge.

I worked in industry when the first experiments in Business-to-Business (B2B) private electronic networks were invented. By agreeing to terms and linking their computers, businesses could treat each other like their own specialty departments. Now, as described above, Business-to-Consumer (B2C) organizations can eliminate wholesalers and retailers.

Individuals now have the ability to build products in their home and then sell them internationally. My wife likes to make colorful cloth covers for kitchen counter-top mixers. 
She can make anything that appeals to her and find a buyer on eBay or Etsy. She does not need to maintain a high volume, warehouse or sales force and has even had complete strangers ask her to do custom work. Maybe the old-fashioned craftsmen, cobblers, tinkers and tailors are coming back.

Like many modern authors and musicians, I have been able to publish my books directly to the public without an agent or outside publisher. My books are downloaded directly or printed by highly automated machines, one at a time, as they are ordered. On the one hand, I have to do all of the editing, layout, cover art and promotion myself. On the other hand, I get to keep the lion’s share of royalties that are generated. Instead of teams of sales agents, I depend on word-of-mouth by friends and recommendations by satisfied readers on their social networks.

Disintermediation is a mixed blessing. Some jobs go away; some jobs are created. Everything costs less in the end. New opportunities open up for people willing to invest the effort to change with the times. This is the historically normal and natural course of progress.

David Satterlee

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