Types of Intermediaries

A wholesaler or distributor is a commercial establishment that purchases products from various manufacturers for stock and offers complete assortments of specified merchandise for resale to the retail store. A merchant wholesaler provides the widest variety of marketing functions and services. They are independently owned and take title to merchandise. Two broad types are full-service wholesales and limited-service wholesalers. Full service wholesalers provide a full set of services (buy, sell, transport, store, standardize, finance, bear risk, and gather market information and research). Wholesaler merchants mostly sell to retailers while industrial distributors sell to producers. Limited-service wholesalers provide limited services. Brokers and agents do not take title to the products. These wholesalers are owned by buyers or sellers and are not independent wholesalers. Manufacturers’ sales branches and offices are owned by buyers or sellers and are not independent wholesalers. These offices usually carry little or no inventory and primarily take orders for merchandise. Miscellaneous wholesalers include agricultural assemblers, petroleum bulk plants and terminals, and auction companies.

• Franchised Distributor: A franchised distributor is a district wholesaler representing one or more manufacturers, having exclusive right to the distribution of their merchandise in the assigned territory.
• Jobber: A jobber is a commercial establishment that buys from various sources for resale to retail stores. It provides broken-package quantities and makes up specified assortments on a job lot basis. Jobbers offer flexibility for servicing small retailers and odd-lot requirements.
• Cash-and-carry wholesaler: A cash-and-carry wholesaler is an establishment, generally handling a limited line of products, which does not extend credit or make deliveries to customers. This wholesaler provides merchandise at a reduced cost to the retailer by reducing service offers and eliminating credit risk.
• Drop Shipper: A drop-shipper or direct-mill shipper is a wholesaler who accumulates orders from retailers and purchases sizable quantities from the manufacturer at a discount. Although drop-shippers take title to products and sell them, they carry no stock and make no deliveries. Through the elimination of the warehousing, inventory, and shipping functions, the firm provides merchandise to the retailer at a reduced cost. It also permits the retailer to share in a discount for quantity purchases.
• Truck Distributor: A truck distributor or wagon distributor employs a wholesaler technique that combines the functions of sales and delivery. The firm generally sells for cash from supplies carried in a truck. Products most often sold include nationally advertised, fast moving brands in small quantities. Frequent calls and contact with the retailer reduce retailer inventory and investment requirements. This produces fast inventory turnover and prompt replenishment of products sold.
• Rack Jobber: At rack jobber is a wholesale establishment that furnishes display equipment and inventory to the retailer and regularly replenishes stock as it is sold. Merchandise is generally on a consignment basis and the retailer pays only for products sold. The firm provides tested and controlled display techniques. It eliminates retailers’ inventories and investment requirements. This results in fast merchandise turnover and assured stock replenishment.
• Voluntary Group Wholesaler: A voluntary group wholesaler is a wholesale establishment serving as a voluntary association of participating retailers or outlets, which buys from manufacturers to obtain quantity discounts. The establishment offers a complete assortment of merchandise as required by members and provides merchandising assistance to members. This enables participating members to reduce costs and compete more effectively with corporate chains.
• Retailer Cooperative Warehouse: A retailer cooperative warehouse is a wholesale establishment owned and operated by a group of independent retailers, organized to purchase collectively for the express service of its participating members. This enables cooperating retailers to meet the chain-store competition more effectively.
• Cooperative Buying Association: A cooperative buying association is a nonprofit organization owned and controlled by shareholders that patronize the business and participate in any savings realized. This enables participating retailer groups to control the warehousing function and tailor it to their particular needs. It reduces their overall procurement cost.
• Exporter: An exporter is a commercial establishment engaged in the sale of products to outlets or purchasers in foreign countries. The firm specializes in the sale of products in foreign countries and performs export functions.
• Importer: An importer is a resource that buys from foreign sellers for resale to outlets in its home country. The firm specializes in the sale of products manufactured or produced in foreign countries and performs the import function.
• Terminal Elevator: A terminal elevator is an elevator located at the point of accumulation and distribution in the movement of agricultural products. Its strategic location facilitates rapid sale and distribution.
• Manufacturer’s Agent: A manufacturer’s agent is an individual or firm acting as an intermediary between the manufacturer and the wholesaler, usually in a specified territory. The agent may handle two or more related but non-competing lines. The manufacturer fixes prices and selling terms governing sales. Compensation is generally on a commission basis. The agent does not take title or stock products sold. The agent’s primary function is selling. He or she may provide market information for the area covered. The agent generally offers specialized technical or marketing skill. He or she is valuable in marginal or new development areas where sales cost to the manufacturer is predictable and minimum investment or risk is incurred.
• Manufacturer’s Sales: A manufacturer’s sales branch is a wholesale establishment owned and operated by the manufacturer. The branch offers maximum control of sales and service to customers. It also provides good maximum feedback.
• Selling Agent: A selling agent is an individual or firm that operates on a contractual basis with a manufacturer and undertakes the sale of the entire output of that manufacturer. The agent takes over full authority in marketing the manufacturer’s product. In effect, the selling agent replaces the manufacturer’s sale department. A broad range of marketing functions and activities — including pricing, terms and conditions of sale, and customer contact — are assumed by the agent.
• Broker and Commission Agent: A broker and commission agent is an individual or firm that negotiates contracts of purchase and sale between parties on a fee or commission basis. He or she does not take title to, stock, or handle the products involved in the transaction. He or she may have physical control but not ownership of the products. The most important function of the broker is to bring the buyer and seller together. He or she is a specialist in market conditions of the products involved, generally dry goods and foodstuffs.