Explain briefly about various types of middlemen.
There are two types of middlemen functional middlemen and merchant middlemen.
Functional Middlemen: They are also called mercantile middlemen. They work on behalf of the owners. They perform general or specific functions related to sale and purchase. Without having the ownership rights, these agents perform various marketing functions. It is of five types;-
- Factors: Factor is the one who keeps the goods of others and sells them after taking the permission of the owner. After he sells the goods, buyer gives him the payment and he receives commission from his principal on the sales at a fixed percentage.
- Brokers: They bring together the buyers and sellers and negotiate terms and conditions of sale on behalf of buyer or seller. Whatsoever services he render, he gets a fixed percentage of the transaction value as brokerage from buyer or seller.
- Commission Agent: He sells goods as an agent of the owner and performs various functions like storage, grading etc. The principal provides him with a remuneration for his services as a percentage of the value of goods sold.
- Del Credere Agents: Such as agent sells the goods on credit and bears the risk of bad debts if any. An additional commission called del credere commission is given to him is order to bear the risk of bad debts as a fixed percentage of amount of credit sales.
- Auctioneers: They are the agents who sell the goods by auction. Date and time of auction are announced to the consumers and goods are displayed for them. Auctioneer invites the bids and goods are given to the highest bidder. Seller or the principal gives the commission to the auctioneer as a percentage on the sale price.
Merchant Middlemen: They enjoy the right of buying and selling goods at a profit. They are the owners of the goods, bear the risks of trade and perform various functions like grading, packing etc. It is of two types.
- Wholesale Traders: These traders purchase the goods from producers or their agents and sell the goods to industrial consumers or retail traders. He performs various functions like price fixation, risk bearing, grading’, transporting goods etc. They sell the goods directly to the retailers.
- Retailers: They act as the final link in the channel of distribution. They buy the goods from producers or wholesalers and sell them to the potential consumers. Retail shop is a shop or business unit engaged in retail selling. However, paddlers, market traders and pavement traders etc, are also known as retailers.