Critical Thinking “To cut out the middleman” is a common phrase, usually referring to dropping wholesalers in an effort to increase profit margins for all other players in the channel and pass on reduced prices to the end consumer. Evaluate this statement. Think about the role that wholesalers play in the overall logistics and distribution system for the end consumer.

What impact would the removal of a wholesaler from a channel have on its efficiency and its overall cost structure? In particular, consider how both manufacturers and retailers would be affected by this approach.

Are there any industries or product categories that are more highly reliant upon wholesalers than others?