Unless the company that makes a product sells it directly to the customer, they will need middlemen to get the product from the manufacturer to the customer's hands. In business, these middlemen are called marketing intermediaries, and they are an integral part of the supply chain. Functions of intermediaries include providing logistical support for manufacturers that can't afford to outsource those roles, or simply do not have the infrastructure in place to perform them efficiently.

Whether a company should use a marketing intermediary or not depends on the scale of its operations and the cost factor of performing those tasks in-house. There are four types of intermediaries: wholesalers, distributors, retailers and brokers or agents.

The Wholesaler's Role

Wholesalers are independent businesses that buy goods in bulk from manufacturers and then resell them to retailers and other businesses. These types of intermediaries do not sell to the customer; they instead focus on satisfying the demands of retailers and other businesses where the customer will shop.

Retailers use wholesalers for easy access to products at a relatively low price. They also benefit from the time saved by going through wholesalers instead of directly through manufacturers – where the time it takes to receive a good can significantly increase. Retailers that use wholesalers typically do not purchase their own products; they are instead buying other brands' products to sell.

Distributing for Manufacturers

Distributors work much like wholesalers in the sense that they play middleman between manufacturers and retailers, but there are two fundamental differences between them as these examples of intermediaries illustrate: distributors provide more in-depth services and do not purchase the products from manufacturers. Whereas a wholesaler's key customer is retailers, distributors essentially work for manufacturers.

Distributors are actively involved in promoting a manufacturer's products, as well as selling them to retailers and wholesalers. Their job is more than just getting products from manufacturer to retailer; they actively search for market opportunities and ways to expand the brands of the products they sell.

Traditional and E-Commerce Retailers

Retailers interact directly with the customer and are the most common example of a marketing intermediary. Examples can include convenience stores, shopping malls, grocery stores and e-commerce stores online. These types of intermediaries do business with wholesalers and distributors in order to receive their inventory, which usually consists of products from multiple manufacturers.

The customers have the benefit of being able to compare different brands of the same product, and the manufacturer benefits by having a location that gets their products directly into the customer's hands.

With the rise of e-commerce, some marketing intermediaries are starting to become multifaceted. While it has become easier than ever for small businesses to sell products online, it has also given many companies a platform to work as both manufacturer and retailer. Take Amazon, for example. Although the initial products they sold were all made by different manufacturers, they have begun to produce their own products to sell on their platform.

Brokers and Agents

Brokers and agents sell products and services, but do not make any purchases; they instead connect a seller with a buyer and take a commission or percentage of the sale. Common examples are stockbrokers and real estate agents. Neither one of those parties owns the products they sell, they just actively work to find a fit for each client. Brokers typically work as marketing intermediaries on a one-time or short-term basis, while agents tend to have longer-term relationships with the parties involved.