Top 10 arguments in favor of Middlemen in Distribution Channel
Arguments in favor of Middlemen in Channel of Distribution
Although there have been certain criticisms leveled against the middlemen, the functions performed by them are very important. The following are the top 10 arguments in favor of middlemen.
1. There are many producers who may not have funds to perform the task of distribution. In such a case, it is only the middlemen who relieve such producers of their problems.
2. The consumers of a product are scattered throughout the country. It is, therefore, not possible for a producer to contact each buyer personally. The middlemen, thus, help the producers by distributing their products to the consumers living in different places.
3. The wholesalers, as middlemen, buy in bulk quantities from the manufacturers. Thus, a high inventory turnover is made possible because of the presence of middlemen.
4. The consumers usually buy in small quantities. The wholesalers sell in small quantities to the retailers and thereby enable still smaller quantity sale.
5. The retailers, as middlemen, provide even ‘door delivery service‘ to their consumers. The consumers can book their orders also by phone. Some retailers have also introduced ‘internet‘ placement of orders.
6. The wholesalers, who are bulk buyers, maintain their own godowns. They store large quantities of goods in such godowns and sell to the requirements of the retailers.
7. Provision of credit is another important service of the middlemen. The wholesalers provide credit to the retailers and many retailers, these days, accept credit cards of their customers.
8. Certain goods are produced only during a particular season but are demanded throughout the year. On the other hand, there are certain goods, which are produced throughout the year but are in demand only during a particular season. In either case, it is only the middlemen who arrange to provide the goods when required.
9. The retail outlets are located in residential areas. As a result, it is possible for a consumer to buy what he wants at any time. He need not have to buy and keep stock of every item.
10. The role of Middlemen is indispensable for producer as they provide market information from time to time. With this market information, the manufacturers are able update their products to time to cope up with the demanding needs of the buyers.
To conclude, if middlemen are eliminated, then the manufacturers themselves may have to undertake all the functions hitherto performed by middlemen. But manufacturers neither have time nor resources to perform all such functions. It, therefore, goes without saying that middlemen cannot be eliminated.