About Various Types of Middlemen

By | February 13, 2012

A middleman is the member of the distribution channel who links a producer and the final consumer. Middlemen are of two types: Primary Participants and Ancillary Participants

1. Primary Participants: Perform primary functions of buying, selling and risk taking.

Mercantile agents do not take ownership of the products but perform distribution functions like buying, selling and risk taking. They may perform various other functions for the producers. They can be:

Factors: They are middlemen who sell products after the permission of the owner. They have the possession of the goods but can only sell them with the owner’s permission. Buyer pays to them after the goods are sold along with the commission at a fixed percentage.

Brokers: Its main idea is to bring the buyer and the seller together. He negotiates and finalizes the contract to earn commission. They do not acquire the ownership of the products. If the broker acts on behalf of the buyer, he is called buying agent and if he acts on behalf of the seller, he is called selling agent. He gets certain commission for his work from his principal.

Commission agents: They perform transactions of buying and selling for a fixed commission. They negotiate the sale of goods and also take the possession of the goods. He arranges for the transfer of the titles to the goods. He performs various functions like warehousing, packing, grading etc.but does not bear any risk of loss.

Del credere agents: When the commission agents agree to bear the risk of loss in case of credit sales, he is known as del-credere agent.

Auctioneer: Conduct auctions to sell goods on behalf of the seller/principal. The date and time of auction is told in advance.

Describe the services rendered by wholesalers and retailers to different sections of society.

Wholesalers deal with manufacturers and retailers and render services to them.

Services rendered to manufacturers are:

1. Wholesalers buy products in large quantities and often order in advance which ensures smooth production to the manufacturer.

2. Wholesalers store the goods and so manufacturer can save cost of warehousing and storage.

3. They contact retailers and provide information to the producers about the consumers.

4. Promotional cost can be saved by jointly carrying the promotional activities.

Services to Retailers:

1. Provide goods to them.

2. He helps the retailers to meet the needs of the consumer. In case he has small shelf space and less capital, wholesaler helps him.

3. Introduce new products to the retailers.

4. He has knowledge of the market.

5. Provide financial assistance to the retailers.