Despite all the distaste for salesmen, we simply can’t escape them. You’d think that with how most people revile them, salesmen and -women are an ever-present feature of developed (and undeveloped) economies. Why?

The Role of a Salesman

Economically speaking, salesmen belong to a class of workers referred to as “middlemen.” These people, rather than producing a good, act “in the middle” of a transaction, transporting, advertising, and selling goods. Middlemen exist in large part to reduce search costs. Though a salesman may not add any particular value to a good or service which he promotes, the economic role he fulfills is to make it easier for a consumer to find a product; to connect a need and a solution.

The Need of a Salesman

One reason that sales has become such a massive element of business is due to the proliferation of products in the modern age. With so many to choose from, even with the help of the internet, search costs rise. When most products are roughly equivalent, search costs are relatively low. However, when products begin to specialize and improve, catering to more specific markets, search costs rise. Accordingly, middlemen, including salesmen, become a more important feature of the economy. Combined with rising information symmetry, the role of the salesman and his ability to reduce search costs is amplified in a way that matches the modern economy.

The Entrepreneur and the Salesman

This is particularly important for startups and new ventures. The problem of search costs is especially acute for these entities. It’s not very difficult to find a Coca-Cola product, but Prosperi-Tea is an obscure brand. Sales helps entrepreneurs bridge this gap, by overcoming the information gap between consumers and new businesses. With new ventures having disproportionately high search costs, salesmen occupy a disproportionately significant role in these ventures. It is for this reason that sales is inextricably entangled in entrepreneurial ventures, which often live or die by their salesmen.

So why can’t we escape salesmen? In short, it’s because we need them. Really, we’re looking for them, and if we weren’t, we’d be spending a lot longer looking for everything else.

One thought on “The Economics of Sales: Why Sales and Entrepreneurship are so Intertwined”
  1. Very true. I like the last statement about needing salesmen. They make our lives easier because salesmen (companies) come to us. As with entrepreneurship (my major), it is imperative that you can sell. There will always be an information gap with entrepreneurship, therefore sales will never go away. This also sounds a lot like my economics class where we talked about brokers. They provide value by saving contrasting parties’ time searching for each other. Likewise, salesmen provide value by offering solutions with a detailed explanation so that consumers don’t have to figure out why it’s great themselves.

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