January 30, 2024

Having a Single Intermediary in a Distribution Channel

Having a single intermediary means that there is only one company involved in marketing and distributing products to final consumers. This is very different from a typical distribution channel where there are many intermediaries in the process.

Intermediaries are often delegated by producers to perform the various flows that create value in a marketing channel because they have the financial resources or technical competence to do so more efficiently than the producer does. Producers also may have strategic reasons to delegate the flow of goods to other parties.

The most common intermediaries are wholesalers and retailers. These are companies that buy from manufacturers in large quantities and resell them to organizational buyers like retailers or to consumer customers who purchase directly from the wholesalers. They often have specialized skills, such as buying, warehousing, and physically handling large volumes of goods. Wholesalers also may provide services that add value such as packaging and shipping products in bulk.

A retailer specializes in delivering a broad assortment of goods to consumers that match their needs. Examples of retail businesses include department stores, convenience shops, and specialty retailers. Retailers often buy from multiple wholesalers to get the right mix of goods to sell to their customers.

Specialized intermediaries, such as advertising agencies and market research firms, are typically engaged to perform specific activities in a distribution channel but do not take title or assume the risk of ownership. They can be a valuable part of a distribution channel by creating brand awareness and providing information that helps other members of the channel make informed decisions.

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