What are the benefits of using intermediaries in the service

What are the benefits of using intermediaries in the service distribution channel?

Solution

The benefits of using intermediaries are -

1. They reduce the number of direct contacts between the manufacturer and retailers. This reduction in contacts brings efficiency in the distribution system by eliminating any duplicate efforts in processing and shipping.

2. Intermediaries add value by supplying according to the customers needs. For example, the customers may have a small requirement while a manufacturer produces large quantities. The intermediary reduces the hassle faced by the manufacturer by sorting, accumulating and customising the orders according to the need of each individual customer.

3. Saving cost by routine transactions - The transactions can be standardized in terms of lot size, frequency of order and inter-communication. Manufacturer and the retailer do not need to bargain over every transaction.