Online Platforms, Shopping Malls Oust Middlemen From Trading Chain | Independent Newspapers Limited
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Online Platforms, Shopping Malls Oust Middlemen From Trading Chain

Posted: Mar 16, 2016 at 1:00 am   /   by   /   comments (0)

Olamide Bakare & Bamidele Ogunwusi, Lagos

The spread of shopping malls and growing interest in online trading by Nigerians may have started taking a toll in the fortunes of middle men as many of the manufacturers are beginning to sell directly to retailers.

Findings by Independent revealed that middle men which were commonplace in the past are now much in the receding side as a sizable number of them seems to have been choked out of business on account of rising online traders and shopping malls.

Prior to now, distributors were more or less seen as the surest means to reach out to retailers and consumers in large quantities with some of them known to have distributorship role in several business concerns. But with the increasing rate of internet penetration, all seem to have changed as many distributors are now confronted with declining fortunes.

A cross section of Nigerians, who spoke with our correspondents on the vanishing presence of middlemen, agreed that the marketplace had indeed changed owing to a number of factors.

Ikem Okuhu, Chief Executive Officer of, an online news portal, who spoke with one of our correspondents on phone, said the reduction or decline in the number of middlemen is one strategy various manufacturers are using to save operating cost, stressing that in the long run, end users tend to benefit the more.

He said: “I think if you look at it, you actually answered the question. But the truth is that a manufacturer would rather have a short production cycle if he could afford it. Short production cycle means he meets the end user as quickly as possible. It saves him cost and pushes his turnover faster. And for the end user, he gets to buy at lower costs”.

While emphasizing that the middlemen was a creation of ‘necessity’, Okuhu said the introduction of technology has helped a great deal to ease off the pressure end users or consumers face in getting their goods.

According to him, middlemen and retailers were born because of the difficulty manufacturers have in reaching consumers. Where the manufacturer can afford to reach consumers directly, he has no use for a middleman.

“The implication is that increasingly organs of trade are changing and technology is enabling it. The middlemen and retailers might increasingly be irrelevant in the distribution cycle. What this means is that those in that trade just might have to look for other businesses. It’s like the case of proof readers and typesetters in the newsroom before. Technology took care of these jobs and those who did not develop other skilled naturally lost their jobs.”

Adesuyi Adebiyi, Chief Executive Officer of Wealth Advisor, said technology has done a lot to change the face of business in Nigeria, leaving out the middlemen in the value chain. Although he disagrees with the view that middlemen had largely reduced due to online trading and advent of technology, he noted that many businesses still operate using the same chain of distribution.

While also attributing the shortfall in the number of middlemen to decay in infrastructure, Adebiyi explained that more manufacturers are now devising new means to reach out to the consumers. He pointed out that apart from the fact that companies are applying technology as a means of saving cost by selling directly to the retailers, it has become imperative to ease off pains confronted by consumers in getting their goods especially in the face of dwindling economic fortunes.

He said: “Commerce has become increasingly sophisticated with the introduction of technology. I think the big retailers are yet to constitute a major threat to wholesale businesses that are mainly represented by the distributors. As we speak, we still have some major distributors still being patronized by Nigeria Breweries and Guinness. New retailers who do business online now buy from manufacturers since majority of their stocks run dry as soon as possible.

“Even though big retailers such as,, Megaplaza are fast taking a big chunk, majority of Nigerians still buy from distributors. Take for instance, consumers who live in the village, they still rely on distributors to get their goods. I think in their own case, they have not been bypassed because they still rely on wholesalers.”

Mrs. Idowu Olatunji, owner of Pinnacle Trading Stores in Ibadan, said she was encouraged to go into retail when it was clear to her that end users of products from companies are being exploited by distributors.

“When I started about ten years ago, a notable distributor in Ibadan who distributes products for Unilever and Nestle and others came to me that I was killing their business and I told her that what I was doing was to bring trading to the people and also sell products at affordable prices.

“I have in the last ten years made a statement to companies that what the distributors can do, I can do it better. Let me say here without sounding rude that I get supplies worth millions from companies on daily basis and my customers are benefiting from it.”

She added that she has been able to relocate from her small outlet to a bigger and more convenient one as business continues to grow.

According to a Phillips Consulting survey released in 2014, online shopping and e-retail in Nigeria grew exponentially between 2010 and 2012.

The report indicated that local online shopping sector grew from N49.9 billion in 2010 to N68.4 billion between 2010 and 2011, and from N68.4 billion to N78 billion between 2011 and 2012, representing a 25 percent increase in each period.

It specifically stated that the Nigerian middle class, which currently account for 38.8 million or 23 percent of the population and which earns between 75,000 and N100,000 per month is responsible for the vast proportion of increased spending on consumer products which account for as nearly as 80 percent of the online transactions.

The growth, according to the report, is further driven by the consistent surge in the number of Internet users from 200,000 in 2000 (about 0.06 percent penetration) to 57 million users (about 32.88 percent penetration) in 2012, which has positioned Nigeria as one of the fastest growing Internet consumer markets in sub-Saharan Africa.

Online shopping involves the purchase of products and services from a seller over the Internet, thereby bypassing the middlemen or distributors.