Andrew Howard

I’ve spent three decades watching businesses succeed and fail. The ones that make it rarely do so because they followed the rulebook.

They made it because they rewrote the rules entirely.

TL;DR: Trade Depot grew from a Trade Me account to a $150 million retail empire by eliminating traditional distribution layers and going direct from factory to customer. Their 30% annual growth shows that removing middlemen creates better pricing, faster operations, and stronger relationships. The Warehouse Group pioneered this exact model in 1982 and dominated New Zealand retail for decades before losing their way through over-expansion and diversification. Trade Depot’s real test is whether they’ll maintain focus or repeat The Warehouse’s mistakes.

• Trade Depot bypassed distributors, wholesalers, and traditional retailers to connect factories with customers

• Direct sourcing delivered better quality products at lower prices whilst building stronger supplier partnerships

• Physical depots complement their direct model, serving as showrooms and distribution hubs

• Their lean structure proved more resilient during economic downturns because fewer intermediaries means healthier margins

• The strategy works in any industry: map your value chain, identify layers that add no value, and test removing them

Trade Depot is one of those businesses. From a Trade Me account to a $150 million retail empire in two decades. Three depots across Auckland, Hamilton, and Christchurch. Annual revenue growth of 30%. A new Christchurch superstore is planned for 2027.

The numbers tell a story. But the how is what matters.

Trade Depot won by doing retail differently, not better.

But here’s what makes this story worth your attention: they’re not the first to do it. Someone else pioneered this exact model four decades ago, dominated New Zealand retail, then threw it all away. That story is the real lesson.

Why Traditional Retail Structure Fails

Traditional retail has layers. Manufacturer to distributor. Distributor to wholesaler. Wholesaler to retailer. Retailer to customer.

Each layer adds cost and delay. Each layer dilutes the relationship between the person making the product and the person buying it.

John Christie and Scott Riley looked at this model and asked a straightforward question: What if we removed the layers?

Not some of them. All of them.

Direct from factory to customer. No middlemen. No ticket-clippers. No markups that serve no one except the people in the middle.

This approach is straightforward in theory. But most businesses talk about cutting costs whilst keeping the same structure. Trade Depot rebuilt the structure from scratch.

Key Point: The problem with traditional retail is structural, not operational. Each intermediary layer adds cost without adding value to the end customer.

How Removing Intermediaries Changes Everything

When you remove intermediaries, the effects ripple through the business.

Pricing becomes competitive. Without distributor margins, wholesaler fees, and retailer markups, you offer better prices or better quality. Trade Depot chose both. They stock high-quality products and sell them at prices traditional retailers won’t match.

Operations move faster. Fewer handoffs mean faster decisions. Faster restocking. Faster response to what customers want versus what a buyer three layers removed thinks they want.

Partnerships strengthen. When you work with factories, you’re building partnerships. You understand the product better. You influence quality. You negotiate terms that work for both sides.

Trade Depot partnered with Midea, the world’s largest manufacturer of smart appliances. That relationship was built by being worth their time.

Key Point: Direct relationships create three advantages: better pricing, faster operations, and stronger supplier partnerships.

What Direct Models Demand From Your Business

When I work with business owners, everyone wants efficiency. Few want to do the hard work that efficiency demands.

Removing middlemen sounds straightforward. It’s hard work.

You need operational discipline. When you’re the only layer between factory and customer, there’s nowhere to hide. Inventory management matters. Logistics matter. Customer service matters. Every breakdown is visible.

You need supplier relationships that work. Going direct means you’re doing the job that three other businesses used to do. You need volume. You need reliability. You need trust on both sides.

You need a value proposition customers believe. People are conditioned to think cheaper means lower quality. If you’re offering both better prices and better products, you have to prove it. Trade Depot did this by focusing on stock quality from day one.

You need patience. Trade Depot grew consistently over two decades. Thirty per cent annual growth is exceptional, but it’s the result of doing the right things, year after year.

Key Point: Direct models require operational discipline, strong supplier relationships, credible value propositions, and patience to execute properly.

How to Identify Unnecessary Layers in Your Business

Most businesses I advise are not in retail. But the principle applies everywhere.

Where are your middlemen?

I’m talking about the layers that exist because “that’s how it’s done.” The processes that slow you down. The intermediaries who take a cut without improving outcomes.

In professional services, it’s often internal. Approval processes that involve five people when two would do. Reporting structures that add delay without adding insight.

In manufacturing, it’s distribution networks that made sense twenty years ago but now add cost.

In B2B services, it’s the gap between the people doing the work and the people paying for it. Every layer between you and your customer is a layer where value leaks out.

Trade Depot’s model works because they own the entire customer experience. From sourcing to delivery. From first contact to after-sales support.

You don’t need to rebuild your business model overnight. But you do need to ask: where are we paying for complexity that serves no one?

Key Point: Unnecessary layers exist in every industry. Look for processes, approvals, or intermediaries that add delay or cost without improving the outcome.

Why Physical Locations Still Matter in Direct Models

Trade Depot started online. Trade Me was the entry point. But they didn’t stay digital.

They opened physical depots in Auckland, Hamilton, and Christchurch. A superstore in Christchurch is planned for 2027.

This is an evolution of the direct model, not a retreat from it.

Physical locations serve a different purpose when you’re not relying on traditional retail economics. You’re not paying rent to sit between a wholesaler and a customer. You’re creating a showroom, a distribution hub, and a trust signal.

Customers see the products. Touch them. Ask questions. Then buy with confidence.

Where online-first businesses get it wrong is assuming physical presence is outdated. Physical and digital are tools, not opposites. Trade Depot uses both.

The lesson here is flexibility. Don’t get locked into “we’re an online business” or “we’re a physical business.” Ask what your customers need and build around that.

Key Point: Physical locations complement direct models when they serve as showrooms and distribution hubs rather than traditional retail stores.

How Lean Structures Build Resilience

Trade Depot grew through challenging years. Economic uncertainty. Retail downturns. Conditions that end businesses with weak foundations.

They kept growing.

Their model is structurally resilient.

When margins are tight, businesses with layers suffer first. Every middleman wants their cut. When the end customer is price-sensitive, those cuts add up.

Trade Depot doesn’t have that problem. Their costs are lower. Their margins are healthier. They weather storms that would sink a traditional retailer.

Most business owners miss this when they think about growth. It’s not revenue. It’s building a model that survives when conditions turn.

Resilience comes from simplicity. Fewer dependencies. Fewer points of failure. Fewer people taking a slice of the pie.

Key Point: Businesses with fewer intermediaries have lower costs and healthier margins, making them more resilient during economic downturns.

Steps to Remove Unnecessary Layers

You’re probably not going to build a $150 million retail empire. That’s fine. Neither am I.

But you steal the thinking.

1. Map your value chain. Write down every step between your supplier and your customer. Every handoff. Every approval. Every layer.

2. Ask what each layer adds. Be honest. Some layers add real value. Others exist because they always have.

3. Test removing one layer. You don’t have to rebuild everything. Pick one intermediary step and see what happens if you cut it out. Go direct to a supplier. Eliminate an internal approval process. Talk to the end customer instead of through a distributor.

4. Focus on quality and relationships. Trade Depot won by being better, not cheap. Quality products. Strong supplier relationships. Customer trust. That’s the foundation.

5. Be patient. Thirty per cent annual growth sounds fast, but it took twenty years to reach $150 million. Sustainable growth is better than explosive growth that collapses.

Key Point: Start small by mapping your value chain, identifying one unnecessary layer, and testing what happens when you remove it.

What Trade Depot’s Success Means for You

Trade Depot’s success is questioning assumptions.

Everyone else accepted the layers. They assumed you needed distributors, wholesalers, and retailers. That’s how the industry works.

Christie and Riley asked: what if we don’t?

That question led to a $150 million business.

The same question works in your business. What are you accepting because “that’s how it’s done”? What layers are you paying for that serve neither you nor your customers?

You don’t need to be radical. Look at your business the way an outsider would. Without the baggage of “we’ve always done it this way.”

Trade Depot proved the direct model works in practice. Real revenue. Real growth. Real resilience.

The question is: what’s your version of cutting out the middle?

The Cautionary Tale: What Happens When You Lose Focus

Here’s the part that matters most.

Trade Depot isn’t the first New Zealand retailer to win with this model.

Someone else did it first. Dominated for decades. Then lost their way entirely.

The Warehouse Group.

Sir Stephen Tindall founded The Warehouse in 1982 with the same strategy Trade Depot uses now. Direct sourcing. Minimal store fixtures. Parallel imports and bulk procurement. Going straight to factories and bypassing traditional distribution.

They called it the “Red Sheds.” They reset New Zealand pricing norms. By 1999, The Warehouse was the largest retailer in New Zealand.

Then they made three mistakes.

First, they tried to export the model without understanding the market. In 2000, The Warehouse paid A$118 million for 117 stores in Australia (Clint’s Crazy Bargains and Silly Solly’s). They underestimated the market and failed to deliver a clear brand offering. The Australian operation bled $30 to $40 million in losses annually. By 2005, they sold the business for A$92 million. Total damage: over $200 million when you add the purchase price loss, operational losses, and the A$33 million distribution centre they built.

Second, they diversified away from their core. Noel Leeming. Torpedo7. Financial Services. TheMarket.com. Baby.co.nz. Pet.co.nz. R&R Sport. SchoolTex. They acquired everything. They moved away from direct sourcing and tried to build an “ecosystem.”

Third, they took their eye off the product. In 2024, The Warehouse Group reported a $54.2 million net loss. They sold Torpedo7 for $1. Sales fell 6.2% to $3 billion.

Their interim CEO admitted: “Our ecosystem strategy was too ambitious, and we took our eye off the ball on product. We held onto Torpedo7 and TheMarket.com too long, reacted too slowly to changing customer spending, and fell out of step with what Kiwi families want.”

The Warehouse forgot what built them. They abandoned the direct model. They added layers. Acquisitions. Digital platforms. Marketplace models. All the complexity they originally avoided.

Trade Depot is doing what The Warehouse used to do. Direct sourcing. Lean operations. Focus on quality and pricing. No unnecessary layers.

The question is whether they’ll learn from The Warehouse’s mistakes.

Growth is seductive. You start winning and everyone tells you to expand. Add new categories. Enter new markets. Build platforms. Buy competitors.

You forget what made you win in the first place.

This is the lesson for every business owner reading this. The model that builds you is the model that sustains you. When you abandon it for complexity, you’re betting against what already works.

Trade Depot’s success isn’t about retail. It’s about discipline. Staying focused on what matters. Saying no to distractions that look good but dilute your strengths.

The Warehouse proved what happens when you lose that discipline. Trade Depot is proving what happens when you keep it.

Key Point: The Warehouse Group dominated New Zealand retail with the same direct model, then lost their way through over-expansion, diversification, and complexity. Trade Depot’s challenge is avoiding the same mistakes.

Frequently Asked Questions

How did Trade Depot grow to $150 million?

Trade Depot eliminated traditional distribution layers and went direct from factory to customer. This let them offer better quality products at lower prices whilst building strong supplier relationships and maintaining healthy margins.

What does “cutting out the middleman” mean in practice?

Removing intermediaries between you and your customers or suppliers. Instead of going through distributors, wholesalers, or other layers, you build direct relationships that reduce costs and improve speed.

Does the direct model work outside of retail?

Yes. The principle applies to any business with unnecessary layers. Professional services firms remove approval processes. Manufacturers streamline distribution networks. B2B companies connect with end customers. The question is: which layers add cost without adding value?

What makes a business model resilient during economic downturns?

Resilience comes from simplicity. Businesses with fewer intermediaries have lower costs and healthier margins. When economic conditions tighten, lean structures survive because they don’t have to support multiple layers taking a cut.

How do I identify unnecessary layers in my business?

Map your entire value chain from supplier to customer. Write down every handoff, approval, and intermediary. Then ask honestly: what does each layer add? Some add real value. Others exist because “that’s how it’s done.”

Do I need to remove all layers at once?

No. Start with one area, one process, or one relationship that feels inefficient. Test removing that layer on a small scale. See what happens. Then expand if it works.

Why did Trade Depot open physical stores if they’re a direct model?

Physical locations serve a different purpose in a direct model. They’re showrooms and distribution hubs, not traditional retail stores. Customers see products, build trust, and buy with confidence. Physical and digital are tools.

How long does it take to see results from removing layers?

Trade Depot took twenty years to reach $150 million. Sustainable growth takes patience. You’ll see operational improvements faster, but building a resilient model means doing the right things consistently over time.

What happened to The Warehouse Group?

The Warehouse dominated New Zealand retail from 1982 using the same direct model as Trade Depot. They abandoned it through over-expansion (paying A$118 million for Australian stores, bleeding $30-40 million annually in losses, then selling for A$92 million), diversification (acquiring Torpedo7, TheMarket.com, and others), and losing focus on their core product. In 2024, they reported a $54.2 million loss and admitted their “ecosystem strategy was too ambitious.”

Key Takeaways

• Trade Depot’s $150 million success came from eliminating distributors, wholesalers, and traditional retailers to connect factories directly with customers.

• Direct models create three core advantages: better pricing, faster operations, and stronger supplier relationships.

• The Warehouse Group proved the model works at scale, then lost $54.2 million by abandoning it for an “ecosystem strategy” of acquisitions and diversification.

• Removing intermediaries requires operational discipline, strong supplier partnerships, credible value propositions, and patience to execute properly.

• Every business has unnecessary layers. Look for processes, approvals, or intermediaries that add delay or cost without improving outcomes.

• The model that builds you is the model that sustains you. When you abandon it for complexity, you’re betting against what already works.

• Lean structures are more resilient because fewer intermediaries means lower costs and healthier margins during economic downturns.

• Start small: map your value chain, identify one unnecessary layer, test removing it, and expand if it works.