Club Insider

Internet Middlemen and the Fitness Industry

Part I

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Stephen TharrettStephen Tharrett

Publisher's Note: This is the first article in a 3-part series on the increasingly important issue of "Internet Middlemen." This first article will give you an overview of the topic and discuss two of the four primary services that are on the market in the United States.

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In the mid-1940s Joseph Schumpeter, renowned economist and author said:

"Situations emerge in the process of creative destruction in which many firms have to perish that nevertheless would be able to live on vigorously and usefully if they could weather a particular storm."

Click forward 70 years and his words could not ring truer. Today's business world has been turned on its head by the newest capitalistic storm: digital middlemen. From food delivery (e.g., GrubHub, U.S. and Just Eat, U.K.) to dining (e.g., Open Table) to lodging (e.g., Airbnb) to massage (e.g., Soothe and Zeel) to ride sharing (e.g., Uber and Lyft) to fast cash delivery (e.g., Nimbl) and now fitness facility access (e.g., ClassPass and Fit Reserve), digital middlemen, or as they are more commonly referred to, Internet Middlemen, have changed the way consumers shop and buyers sell. It's a storm that is driving many traditional businesses to the brink of extinction while making millionaires of the middlemen innovators.

Mark WilliamsonMark Williamson

What is a Digital Middleman?

A digital middleman is a business that leverages the Internet and worldwide web to offer consumers attractive alternatives to traditional shopping experiences. A good Internet middleman provides added value the traditional producer can't provide and offers a service the consumer desires. For example, Airbnb offers homeowners a virtual platform to market and rent their property while offering a convenient and cost effective means for reserving convenient and affordable lodging that consumers crave.

With the emergence and evolution of digital middlemen, such as Airbnb, Amazon, Just Eat, Nimbl, Open Table, Soothe and Uber, comes the billion-dollar question. When is the business relationship between seller, middleman and buyer a symbiotic one that lifts all parties and when does that relationship become parasitic or even cannibalistic, potentially wiping out a business, or even, an industry? Let's take a look at these three relationship constructs.

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