#8 – The Current Predominant Way Consumer Products Are Distributed Through Middlemen Is Outdated

A chat with William Wolfram about Article 1 of our Manifesto: The current predominant way consumer products are distributed by 3rd parties and through middlemen is massively flawed and outdated.

TRANSCRIPT

Kat: Hi, I’m Kat and today I’m here with Galton Voysey’s Chairman and CEO, William. I thought we could talk today a little bit about our manifesto. It goes through some really interesting ideas I thought we could go maybe through every single article in slightly different videos so there’ll be multiple parts to this.

 

William: First of all, I think every company should be built with a set of beliefs and assumptions that preferably differ from the conventional beliefs and assumptions out there, so you need to have a thesis and you need you think differently about the world in the future. I think Galton Voysey does that and we try to communicate how we think differently to an investor.

 

So, the first article, we highlight how we believe that the current predominant way how consumer products are distributed, marketed and sold is really flawed. The reason why we think it is flawed is because you have all these importers and middlemen and brick-and-mortar third party retailers peddling the inventory and standing between the brand and the end consumer. This adds costs, ties up the inventory for longer periods of time, so more working capital is stuck in the supply chain. It is very unnecessary for the first you know hundreds of years of retail. But, if you were doing it today you probably wouldn’t do it in that system.

 

Kat: So, it might seem obvious to us that like what direct to consumer actually means and how different it is to going through many, many, many people in the traditional model. So, can you explain exactly direct to consumer is and why it is so different?

 

William: Sure, so let’s say you go into the department store and you buy a product.

 

Kat: Let’s say I want to buy a pan.

 

William: So, you go into Sears and you’re walking around Sears and you want to buy a pan. By the time you buy that pan and check out to the cashier, that pan has been on a very long journey just to get to that store. It has been traded around from one company to the next and each company has had their own costs to pay for and having so creates the price for the consumer. So, you end up paying 2 to 6x more of that product, because you want that convenience of going to Sears and buying that pan.

 

Kat: Right, because it’s not only the brand, e.g. I might by Brand X and Sears. That’s 2 different parties that are involved.

 

William: There are distributors, there are importers, there are all kinds of folks between you and that brand who are raising the prices and tying up working capital unnecessarily.

 

Kat: So, let’s say I also still want to get my pan, but I go online, and I get one direct to consumer so how is that different.

 

William: So, you would go to the pan brand’s website and you’d add to cart and checkout. Hopefully, you get the product the same day assuming you live in a major city or places in the United States. As you know delivery times get faster, this e-commerce becomes more prevalent. I think we are going to see a lot more people saying “Hey, I don’t want to pay 2-6x more at Sears when I can go straight from the brand’s own website and get that product at a fraction of the cost and so Galton Voysey believes that the mould is outdated, flawed and what we’re doing here is going direct to consumer and helping brands and founders rethink the way that they operate with distribution.

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