Issue: Retail's Struggles Short Article: Making a Market With No Middleman - SAGE Business ...

Issue: Retail’s Struggles

         Short Article: Making a Market With No Middleman

                                          By: Sharon O’Malley

                                                                                                Pub. Date: August 7, 2017
                                                                                           Access Date: January 5, 2021
                                                                                         DOI: 10.1177/237455680323.n6
Source URL: http://businessresearcher.sagepub.com/sbr-1863-103735-2827566/20170807/short-article-making-a-market-with-no-
                                                                                                              middleman
                                                                          ©2021 SAGE Publishing, Inc. All Rights Reserved.

©2021 SAGE Publishing, Inc. All Rights Reserved.

“There are many different ways to the consumer”

Executive Summary
Manufacturers are finding pathways to market their products directly to customers without going through the usual retailing channels. The
success of this strategy creates yet another challenge to an industry already struggling to find stability. A key takeaway:
      Products that found a large audience without going through a middleman range from fidget spinners to hoverboards and e-
      cigarettes.

Full Article

           The fidget spinner rose to popularity without a retail middleman. (Chesnot/Getty Images)

The product that is dominating Amazon’s most-popular toys and games category so far this year is one that began without a store to sell it
or a brand name to claim it. 1
Some analysts say the fidget spinner’s unlikely journey to sales success could be a harbinger of another sort of disruption to the retail
industry, one in which manufacturers sell their wares online directly to consumers, without enlisting the middlemen traditionally involved with
retail sales and distribution.
“There are many different ways to get to market; they all depend on your circumstances,” says Mark Mathews, vice president of research
for the National Retail Federation, the world’s largest retail trade association. “If you’re able to do a deal with a retailer and get it in a store
nationwide, that’s a fantastic way to do it. But there are many different ways to the consumer, and they’re all going to have some appeal.”
The tiny spinning wheel with three dull-edged, propeller-like blades has sold in the millions; an exact count is elusive because a single
company does not produce the palm-sized plastic gadget and it has multiple names. Reportedly, a Florida engineer designed a spinning
toy in the early 1990s to quiet the anxiety of children with attention deficit disorder, but let her patent expire a few years later. 2
Entrepreneurs, prompted by schoolteachers in search of a way to calm fidgety students, started selling similar gadgets online, as did
Chinese manufacturers who produced them by the millions. 3
The gadgets’ viral appeal was immediate. After one version showed up at the North American International Toy Fair in February 2017, an

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Short Article: Making a Market With No Middleman
SAGE Business Researcher

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estimated 200 million of them shipped to dozens of suddenly interested chain stores such as Walmart and Target. Many outlets designed
their own versions, at prices ranging from $2 for plastic to $16,000 for solid gold. 4
The fidget spinner was not the first product to skip traditional retail channels and rely solely on online sales.
Hoverboards also got their start online, and eventually were sold in stores by Walmart, Target and others. Some 2.5 million hoverboards,
worth a collective $997.6 million in revenue, were sold in the United States in 2015 before the U.S. Consumer Product Safety Commission
deemed their batteries unsafe and both e-commerce and physical stores pulled them from their shelves. 5 Similarly, the $10 million
vaping industry, still in its infancy, is expected to sell $32 billion worth of electronic cigarettes and related products by 2021 without a major
chain store or brand behind it. Instead, entrepreneurs opened small shops and websites to sell their products. 6
                                  That does not mean retail giants won’t come knocking once the product takes off, à la the fidget spinner.
                                  “Once you’re successful and people see that success, it blows up and you’re everywhere,” Mathews says.
                                  “Many stores offer products that were difficult to get to market, once they became a phenomenon online.”
                                  For some entrepreneurs, however, online sales are the best – or only – way to reach consumers. Mathews
                                  points to a $30,000 bicycle, custom-made by KGS Bikes in San Antonio and designed for extreme bike
                                  enthusiasts such as triathletes. 7 “There is a market for that, but it’s a small niche and [its maker] may not
                                  find retailers to carry stuff like that,” he says. “So they’ve got to go directly to the consumer and figure out
                                  how to put the product in front of people who have the interest and the spending power.”
                                  That notion has a long track record. Before men’s clothier Bonobos, eyeglass seller Warby Parker or
                                  athletic apparel retailer Lululemon opened a single physical store, they enjoyed a meteoric rise in popularity
Marketing Professor Matt
                                  as online-only sellers. So did sportswear site Athleta, jewelry seller BaubleBar, women’s clothier Boston
Quint                             Proper and shoe retailer JustFab. 8
“The fact is, women, especially young ones, shop … differently now,” beauty journalist Dana Wood wrote in a May blog. “They want the
immediacy of an Amazon Prime, and product validation from their bestie or fellow mommy rather than a saleswoman in a smock parked
behind a counter.” 9
Wood pointed to three sales models that are trending despite cutting out traditional retail channels:
      House parties are back. Like the Tupperware and Avon parties of decades past, non-store sellers of cosmetics, clothing, jewelry,
      and even pots and pans are bringing the store into the homes of willing consumers who invite lots of friends over for a sales pitch
      and some socializing. The hostess usually wins free merchandise for her trouble.
      Digital-only sellers are achieving “huge buzz and sales” without any physical presence by hawking new brands and targeting digital
      natives – the youngest consumers.
      Social, or peer-to-peer, selling counts on teenage and young adult shoppers to sell entrepreneurs’ products to friends and friends-of-
      friends through social media networks.
The ease of internet sales guarantees that more, not fewer, entrepreneurs will start their businesses in
cyberspace instead of the shopping mall. Josh Loerzel, vice president of marketing at Zing, a toy
manufacturer, told the Financial Times that even retailers who hurry to stock a quick-selling e-commerce-
only product could not do it fast enough. “Things take a while to get to every Walmart,” Michelle Malashock,
a Walmart spokeswoman, said. 10
And it is hard to predict which online-only merchandise is going to go viral. “In our modern age, an internet
meme can become a manufacturing meme,” said Matt Quint, a marketing professor at Columbia
University’s Business School. A product like the fidget spinner, he said, “is for a generation that grew up on
YouTube. The whole thing is sort of a mystery.… It’s a real lesson for retailers and manufacturers.” 11

About the Author
Sharon O’Malley is an assistant professor of journalism at Anne Arundel Community College in Maryland
and an adjunct instructor at the Philip Merrill College of Journalism at the University of Maryland. She is a
freelance writer, editor, consultant and trainer who has published articles in dozens of newspapers and
magazines, including USA Today, Ladies’ Home Journal, Working Woman and American Demographics.
Her reports for SAGE Business Researcher include Shopping Malls, Internships, Product Recalls, the                   Josh Loerzel
Business of Christmas and Paid Leave.

Notes
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©2021 SAGE Publishing, Inc. All Rights Reserved.

[1] Deborah Weinswig, “The Weinswig Product Watch: Fidget Toys Going Viral,” Forbes, May 19, 2017, http://tinyurl.com/y9r9sjt6.
[2] “Meet the Woman Who Invented the Fidget Spinner, Who Isn’t Making a Dime Off the Popular Toy,” Inside Edition, May 5, 2017,
http://tinyurl.com/y7ooxbwt.
[3] Leticia Miranda, “Your Fidget Spinner Is Reshaping the Retail Industry,” BuzzFeed, June 6, 2017, http://tinyurl.com/yas7uyor.
[4] Matthew V. Libassi, “This $500 million trend is spinning the toy business out of control,” New York Post, May 12, 2017,
http://tinyurl.com/yax2kq5w; Weinswig, op. cit.; and John Lyon, “Someone Is Actually Offering a Solid Gold Fidget Spinner,” Robb Report,
July 21, 2017, http://tinyurl.com/ybfbg8w2.
[5] “Hoverboard/Self-Balancing Scooter Industry Statistics,” Statistic Brain, 2015, http://tinyurl.com/ybm8k7ut.
[6] “Global Vape Market Worth USD 32.11 Billion by 2021,” Business Wire, June 30, 2016, http://tinyurl.com/y9eloqcl.
[7] Nate Herpich, “Buy Buy, Baby: A $30,000 Bicycle,” The Street, May 22, 2009, http://tinyurl.com/y9kwehzh.
[8] “10 online retailers going from clicks to bricks,” CNBC, undated, http://tinyurl.com/ycc22z4d.
[9] Dana Wood, “Cutting Out the Middleman,” The Robin Report, May 8, 2017, http://tinyurl.com/y7a9xdvp.
[10] Anna Nicolaou, “Fidget spinner craze turns the toy industry on its head,” Financial Times, May 19, 2017, http://tinyurl.com/ydag7zxv.
[11] Ibid.

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Short Article: Making a Market With No Middleman
SAGE Business Researcher