Write explanatory notes on Functions carried out by distribution channels and Merchant middlemen.
Functions carried out by Distributions Channels:
There are three types of functions carried on by’ distribution channels.
Transactional functions: These functions are important in the transaction of a good. There are two functions that come under this category. They are buying and risk bearing functions. If there is no buying and selling, there would be no transaction. Risk is involved when goods are bought.
Logistical functional: These functions take place in the physical exchange of goods. Various functions like assembling, storage; grading and transportation come under this category. These functions help the goods reach the market place on time and be conveniently sold to the ultimate consumers. Assembling means to classify the products desired by the buyers. By grading and packing of goods, goods can be handled properly, and goods can be sold promptly. If storage is proper, goods can be prevented from any loss on damage. With transportation, goods can reach the place where buyers are located.
Facilitating functions: These functions take place in both transaction and physical exchange of goods. Various functions like post purchase service and maintenance,. financing, market information etc, fall under this category. Sellers provide information, after-sale services and financial help like credit facility to the buyers.
Thus, various functions performed by the channel of distribution are buying, selling, risk’ bearing, storage, grading, transportation, financing, market information etc.
A middleman like wholesaler or retailer who buys and sells goods in his own name and performs necessary functions in that connection is called merchant middlemen. 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: They buy the goods from producers and sell them to industrial consumers or retailers. They sell the goods to the retailers directly. Various functions are performed by such traders like price fixation, grading, transportation etc.
Retailers: They buy the goods from the wholesalers or producers and sell them further to the potential consumers. They act as the final link in the channel of distribution. A shop or business unit engaged in retail selling is called a retail shop. However, paddlers, market and pavement traders all fall under this category.