Types of Intermediaries

Meaning of Intermediaries

Intermediaries are individuals or companies that behave as middlemen between parties for investment deals, business deals, negotiations, insurances, etc. They are commonly known as consultants or brokers and are specialised in a specific area.

They give all the required information about a product to the customers and also streamline a company’s processes. In other words, intermediaries are third-party agents or individuals between parties for a specific deal.

Types of Intermediaries

The four types of traditional intermediaries are as follows:

Brokers and Agents: Both of these intermediaries sell products and services on a commission or percentage basis. They are legally appointed to impart information about a product to the customers on behalf of the manufacturer or producer, but they never take the ownership of the product sold.

The key function of these intermediaries is to bring buyers and sellers together to make a deal. For example, an insurance or real estate agent gets a commission for their service or a sale, but does not take the ownership.

Wholesalers and Resellers: They typically buy goods from the manufacturer in bulk and resell them to the retailers or other businesses. They are independent businessmen and take ownership of the products purchased from the manufacturers or producers.

Some wholesalers also provide services such as order processing, storage, delivery, and participate in promotion as well.

Distributors: The distributors are selected by the manufacturers to distribute their products to the wholesalers or resellers in different locations.

The distributors are involved in many businesses and cover many geographical areas. A few services distributors offer to the wholesalers are delivery, maintenance of inventory, extension of credit, etc.

Retailers: Retailers are the mediators between wholesalers and customers. They purchase different goods from the wholesalers and sell them to the ultimate customers in small quantities from one place.

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