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Types of Intermediaries

Intermediaries are the middlemen between any two parties that are partaking in a transaction. These middlemen act as the bridge between them and help in exchanging necessary information towards fulfilling the objective of a common goal.

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 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 ownership.
  • Wholesalers and Resellers: They typically buy goods from the manufacturer in bulk and resell them to 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, and delivery, and participate in the 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, an 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.
  • Stockbroker: Such brokers are part of the stock market as they assist in the trading of securities. Although they charge a specific fee for facilitating such trading, their work is more effective than others. One of the most viable reasons behind such efficiency is their knowledge of the stock market.