Intermediaries are wholesalers and retailers who specialize in carrying out activities related to the buying and selling of goods in the process of their flow from the manufacturer to the final consumers or buyers. They are located in the marketing channel at points between the manufacturer and the final consumers. Middlemen have continued to go strong despite all the strong arguments for their removal, and not just in business but also in sports. There are many agents attached to athletes and in most cases, their opinions matter a lot. Thus, middlemen continue to survive because the functions they perform for both the producer and the customers cannot be performed by either the manufacturer or the consumers. Therefore, it is quite obvious that they would continue to flourish.

Disadvantages of eliminating intermediaries

One school of thought supports the complete elimination of middlemen i.e. wholesalers and retailers due to the following disadvantages associated with them.

1. Longer distribution channel: Wholesalers and retailers make the merchandise distribution channel longer.

2. Creating Artificial Scarcity: Wholesalers and retailers often create artificial scarcity of products through hoarding.

3. Price increase: Intermediaries also cause unnecessary price increases to the dismay of the final consumer.

4. Misinformation: Intermediaries sometimes misinform consumers.

5. Price fluctuation: Middlemen can also cause price fluctuations, especially when many of them are involved in distributing products.

6. Hidden unemployment: The presence of wholesalers could encourage large-scale hidden unemployment.

Reasons or Circumstances that may justify the avoidance of Intermediaries

Some manufacturers bypass wholesalers and even retailers and sell their products directly to consumers. This is done for the following reasons.

1. Increased profits: Manufacturers can increase their profits if they can sell their products directly to consumers.

2. Warehouse Ownership – Some large retailers have large warehouses and this can cause the manufacturer to bypass the wholesaler.

3. Cheap products: Consumers can buy products at cheaper prices when both wholesalers and retailers are disrupted.

4. Development of the mail order system: There may be no need for intermediaries in the mail order system since most of the transactions are done by mail.

5. Manufacturer Packaging and Branding – Most of the packaging and branding can be done by manufacturers, making middlemen irrelevant.

6. Presence of technical goods: The manufacturer may sell directly to consumers if the goods produced are highly technical and require special specifications, eg computers.

7. Perishables: Middlemen can be cut out when it comes to perishables, eg tomatoes, because the produce can easily spoil.

8. Branded Products: Middlemen can also be bypassed when products are branded for easy identification by manufacturers.

9. Expensive Goods Participation: Manufacturers also prefer to sell expensive goods directly to consumers because they typically have low sales volume.

10. Small-scale production; Manufacturers will prefer to sell directly to consumers when the scale of production of the goods is very small.

Whether or not a producer can sustain themselves without intermediaries, it remains a simple fact that a business will not prosper to its fullest without them. Imagine a business Mugul who has several shipments of goods and then tells you that he doesn’t need a middleman. He may be tempted to shoot you. Middlemen are very essential and key to distributive trading (especially in large trading companies), so they cannot be eliminated.