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Distribution - Role of Intermediaries

Author: Jim Riley  Last updated: Sunday 23 September, 2012

There is a variety of intermediaries that may get involved before a product gets from the original producer to the final user. These are described briefly below:

Retailers

Retailers operate outlets that trade directly with household customers. Retailers can be classified in several ways:

• Type of goods being sold( e.g. clothes, grocery, furniture)
• Type of service (e.g. self-service, counter-service)
• Size (e.g. corner shop; superstore)
• Ownership (e.g. privately-owned independent; public-quoted retail group
• Location (e.g. rural, city-centre, out-of-town)
• Brand (e.g. nationwide retail brands; local one-shop name)

Wholesalers

Wholesalers stock a range of products from several producers. The role of the wholesaler is to sell onto retailers. Wholesalers usually specialise in particular products.

Distributors and dealers

Distributors or dealers have a similar role to wholesalers – that of taking products from producers and selling them on. However, they often sell onto the end customer rather than a retailer. They also usually have a much narrower product range. Distributors and dealers are often involved in providing after-sales service.

Franchises

Franchises are independent businesses that operate a branded product (usually a service) in exchange for a licence fee and a share of sales.

Agents

Agents sell the products and services of producers in return for a commission (a percentage of the sales revenues)

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