Institute Name: Xavier Business School, St.

Xaviers
University Kolkata

Subject Name: Business to Business Marketing

Topic:
Write a note on different types of Industrial Intermediaries with reference
to different industries and illustrate which intermediary is the best choice
for a particular industry and why?

Submitted on: 24.10.2019

Done by: Achal Kedia(02)

Ayush Choudhary(57)
Kausik Chakraborty(62)
Minal Shaw(68)
 Types of B2B Intermediaries

Agents and Brokers

Agents and brokers are nearly synonymous in their roles as intermediaries. In fact, when it
comes to real estate transactions, they are synonymous to any client, despite the differences in
their roles in the industry. In most cases, however, agents serve as an intermediary on a
permanent basis between buyers and sellers, while brokers do this on a temporary basis
only. Both are paid in commission for each sale and do not take ownership of the goods being
sold.

In addition to real estate, agents and brokers are also common in the travel agency.
Companies routinely use agents and brokers when importing or exporting products across the
border.

Merchant Wholesalers and Resellers

Merchant wholesalers, which are also simply called wholesalers, buy products from
manufacturers in bulk and then resell them, usually to retailers or other businesses. Some
carry an extensive range of different products, while others specialize in a few products but
carry a large assortment. They may operate cash-and-carry outlets, warehouses, mail order
businesses or online sales, or they may simply keep their inventories in trucks, and travel to
their customers.

Functional Wholesalers

Also called functional wholesalers, distributors do not buy products from the producers.
Instead, they expedite sales between the manufacturer and retailers or other businesses. Like
agents and brokers, they can be paid by commission, or they can be paid in fees from the
manufacturer.

Traditional and Online Retailers

Whenever a consumer buys a product from anyone other than the company that makes it, the
consumer is dealing with a retailer. This includes corner stores, shopping malls and e-
commerce website. Retailers may buy directly from the producers or from another
intermediary. In some markets, they may stock items and pay for them only after they make a
sale, which is common for most bookstores today.

Any e-commerce website that's not owned by the company that makes a product, which it
then sells to a consumer, can also be called a retailer. However – with companies such as
Amazon, which make their own products and sell them directly to customers in addition to
products made by other companies – the line between producers and retailers is becoming
increasingly blurry.
Manufacturers’ representative
A manufacturers’ representative is any individual who agrees to represent a company and sell
their product or services on a straight percentage fee, which is automatically added to the
selling price of their product or service. They work strictly on a straight commission basis,
and many times are established in some type of commodity or service specialty before they
considered branching out on their own as sales reps.

Example- Pharmaceutical companies employ sales representatives to show & sell

samples of their medicines to physicians.

Industrial Distributors

The average cost of a direct sales call exceeds $100, more producers are relying on industrial
distributors to serve key markets. The distributors are independent firms, usually consisting
of only a handful of sales and support people. Unlike manufacturers’ representatives, who
take on the role of sales representatives and work on a commission basis, industrial
distributors take possession of the products they sell and assume the role of partner
with manufacturers.

Industrial giants such as 3M, Norton, Pfizer, and Mead Paper make a large portion of their
sales through such distributors. To counter competition coming mainly from Japanese
photocopy machine manufacturers, both IBM and Xerox recently named independent
distributors to market their low-priced copiers and typewriters.

Example- Film distributors such as Sony Pictures, 20th Century Fox, Universal Pictures
& Walt Disney Studios Motion Pictures. A film distribution company buys movies &
sells them for theatrical viewing, online downloading/viewing or as DVDs & CDs
according to the contract made with the production company.

Brokers or Cloud Brokers

A cloud broker is a B2B organization that manages the use, delivery, and reporting of a
suite of cloud products and services. The broker is an intermediary between point solution
providers and the end business consumer. The broker acts by funnelling numerous cloud
services into a single client-facing login and payment solution.

For example, Amazon provides 20% or even higher volume discounts in Amazon
Elastic Compute Cloud (EC2). Due to the sheer volume of the aggregated demand, the
cloud broker can easily qualify for such discounts, which further reduces the cost of
serving all the users.

Commission Merchant
The definition of a commission merchant is someone who buys or sells products for a
percentage of the sales price. An example of a commission merchant is a car sales person
who makes 2% of the ticket price of each car they sell.
Value added resellers

Value-added resellers are businesses that sell products manufactured by other companies in
addition to selling their own supplemental products and services, thereby increasing the value
of the resold product purchased by the consumer.

Automobile dealerships most commonly offer value-added products and services in the forms
of extended warranties and service contracts, or custom-made accessory parts or engine
enhancements. Not all value-added services directly produce additional revenue for a
company.
For example, included within the value-added services offered by
automobile dealers are typically things such as offering a free rental car for a
customer's use during a period when the customer's car is at the dealership for repairs.
Such a service is solely aimed at developing customer relationships for repeat business.

Drop Shippers
The Drop shipping is a supply chain management technique in which the B2B online Reseller
does not keep goods in stock but instead transfers B2C orders and shipment to the Supplier
(called Drop shipper), which sends the product directly to Private Customer.

Which Intermediary is important for which industry and why?

Agents and Brokers:

Example can be the company Salasar Insurance service Pvt. Ltd. Or we can take the example
of any broking industry where these broking firms have agents/brokers who do B2B selling
that is they sell policies to various business organisations like Fire Policy to an organisation
which recently started operating and they have built a building. So, it is quite obvious that
they will need various policies like Fire Policy which can be among them. So then here these
brokers/agents come into play where they pitch on behalf of the various companies policies to
these business organisations and ion return get a commission.

Merchant Wholesalers and Resellers:

Agriculture sector:-The consumption and production of marketed food are spatially

separated. Production is primarily in rural areas while consumption is in urban
areas. Agricultural marketing is the process that overcomes this separation, allowing produce
to be moved from an area of surplus to one of need. Food reaches the consumer by a complex
network, involving production, assembly, sorting, packing, reassembly, distribution and retail
stages. In developing countries the linkage between the producer and the retailer is still
usually provided by assembly and wholesale markets, where wholesale marketing takes place
using a variety of transaction methods.
Traditional and Online Retailers:

How B2B companies do business is changing. Just a few years ago, wholesalers and
distributors saw eCommerce as an afterthought. It wasn’t critical to their strategy for long-
term growth and success.

B2B companies today though are thinking of ecommerce differently. Online selling has
become a way to grow revenue and drive new customer acquisitions. It’s a way to
differentiate from the competition.

1. Size of B2B Industry

Did you know that the online opportunity for B2B sellers dwarfs that of B2C?

B2B eCommerce is predicted to reach $1.2 trillion and account for 13.1% of all B2B sales by
2021. The industry is twice as big as B2C. And just like B2C, more sales are shifting to
online.
Forrester also found that manufacturers and wholesalers are the two industries generating this
massive market growth. These two industries are currently relying on home grown systems
that are slowing them down. B2B buyers are demanding a shift to modern processes for a
better experience. This is leading to monumental shifts in how B2B companies are selling
and the technology they’re using.

2. B2B’s Bigger Order Values and Higher Conversion Rates

B2B is able to grow to twice the size of the B2C market because B2B orders have higher
average order values and B2B buyers are quicker to buy.

Unlike B2C, B2B buyers buy large quantities in bulk. They will purchase hundreds, even
thousands of an item in one transaction. The average order value of a B2B transaction is
around $491, opposed to $147 for B2C.
B2B sellers also experience higher conversion rates online than B2C. B2B websites
report average conversion rates at 10%, while B2C experiences around 3%. Once they get
approval, B2B buyers have more confidence to buy.

3. Faster Order Fulfilment with Cloud-Based eCommerce Systems

Selling online gives B2B sellers an opportunity to speed up their order fulfilment processes
when using a modern, cloud-based eCommerce platform.
In the past, eCommerce platforms were built independent of legacy order management
systems. This left B2B sellers scrambling when it came to order processing and tracking
inventory. Accurate data wasn’t synchronized between systems, leaving sellers with
sometimes wrong and untimely information.

Today, cloud-based eCommerce platforms have order management systems built in or they
easily integrate with other software. Sellers can now sync order data across all their channels.
B2B sellers can leverage their systems to automate order fulfilment and inventory updates
along with handling complex processes like partial delivery and multi-warehouse shipping.

B2B sellers can now promise fast, accurate, and transparent delivery to their customers.

4. New Buyers with More Online Habits

Millennials are now the buyers that B2B sellers must attract. How these buyers shop is also
changing. B2B sellers must be where your customers are, which is online.
89% of B2B researchers use the internet during the B2B research process. And, Forrester has
reported that 30% of buyers make half or more of their work purchases online, and 56%
expect to make half or more of their work purchases online in 3 years.
B2B buyers want to research and buy online. Selling online helps you provide the buying
experience they’re looking for.

5. Starting to Look More like B2C

B2B online sites first started as simple “portals” that were thought as a way to replace
customer service reps with technology. Other sites were just online catalogue. B2B sites
historically served only existing customers, allowing them to place reorders.

However, as mentioned, B2B is turning from outbound sales to now inbound strategies.
They’re using online sites to acquire new customers and grow revenue.

It’s no surprise then that B2B sites are starting to look like B2C websites. They’re built to
attract new buyers researching and comparing products. They must be easy to use and focus
on straightforward processes to increase conversions.

This shift has led eCommerce providers like BigCommerce, Shopify Plus and Magento to
add more B2B functionality to their platforms. This gives B2B sellers the opportunity to
upgrade their eCommerce platforms to appeal to online-savvy buyers. They can learn proven
practices from B2C, while still offering a unique B2B experience.
6. Stay Ahead of the Competition
While the B2B eCommerce is growing, it’s still in its infancy. If you take part now, you have
a chance to put yourself ahead of the competition and establish yourself as a market leader
who’s fully taking advantage of what B2B eCommerce has to offer.

Right now, only 18.8% B2B companies say that they received more than half of their
revenues from ecommerce. Not all companies recognize how investing in ecommerce is
critical to increasing sales. Some are easily overwhelmed by online buyer demands and
complexities of online selling.
Before ecommerce is part of the mass market, learn how investing in ecommerce is a long-
term strategy to growth and success. Beat your competitors to this opportunity.

7. Reach New Customers

Technically, online B2B selling has been around for the past 20 years. Like we said before
though, these online portals are very old and mostly serve existing customers only. They
aren’t built to reach new customers.

With new technology though, modern online sites can drive new customer acquisition. As
customers research and compare online, you have an opportunity to appeal to more buyers.
You can expand your reach beyond just buyers that sales rep can meet face-to-face. You can
grow a following of your own.

8. Sell Direct to Consumers

Beyond B2B, your online store can also consider selling directly to consumers. As the B2B
online experience looks more like B2C, your site has the potential to serve consumers.

Improved operational efficiencies and easier processes make it possible for you to market
part of your catalogue to consumers. You’ll be equipped to go beyond traditional B2B selling
models. To do this, you’ll need to invest in strong digital marketing and online
merchandising.

9. Better Customer Experience

Adding ecommerce to your selling strategy allows B2B merchants to provide a true Omni-
channel experience for their buyers. Customers can shop across multiple sales channels.
Finding products, comparing pricing, and submitting orders will be easier online. Delivery
will be fast and accurate. Service will be personal.
B2B sellers that want to compete in the future will have to focus on the customer experience.
ecommerce allows you to deliver an experience comparable to Amazon.

10. Manage Suppliers More Efficiently

B2B manufacturers must manage and control several supplier relationships at once. You have
to know what your current inventory levels are, what your supplier inventory levels are, and
when you’re going to need to order more. Also, your team must communicate with several
suppliers at once to ensure they order the right amount at the best price. This used to take a
lot of spreadsheets, phone calls, and faxed order forms.

These processes become much easier though if you are electronically connected with
suppliers. Through automation and workflows, you can trigger when inventory is low and
who to order from based on your data. It can save you time and money, while eliminating
human error.

Manufacturers’ representative:

Manufacturer’s representative is basically used in the pharmaceutical industry.

Pharmaceutical Sales Representatives (formerly detail men) are salespeople employed
by pharmaceutical companies to persuade doctors to prescribe their drugs to patients.

The Pharmaceutical Representative position mixes the qualities of a Sales

Representative with those of a Pharmacologist. In other words, they’re the Sales Agents of
pharmaceutical manufacturers and producers. Their main job is to visit existing and
prospective customers, usually Physicians, pharmacy owners, and other health professionals,
in order to introduce them to the new medications and products the manufacturer has
designed.

Once they have established a seller-buyer relationship with their customers, they are expected
to perform regular visits in order to help develop customer loyalty, receive feedback on the
efficiency of their products, and introduce new products that may be developed later on

Industrial Distributors:

Amazon Business (B2B) Seller Program

Sell in bulk to lakhs of registered business customers across India

Amazon Business is the B2B marketplace on Amazon, providing business customers with the
pricing, selection and convenience of Amazon, with features and benefits designed for
businesses of all sizes.

We can take the example of our University, like if they want to buy 100+ computers for a
new computer lab and they did it through the Amazon Business Seller Program in buying a
particular brand say HP. Then in this case our University which cannot be said as consumers
but an organisation who is buying from another business online platform.

Commission Merchant:

Textile commission Agents are working on commission base with buyers and sellers they
supply buyer to textile material sellers and manufacturers. Textile commission agent plays
an important role as a mediator for dealing with both of parties.

Value added resellers:

A value-added reseller is a business that creates integrations, products, and features

enhancing existing products or services. These companies then package the existing
product/service with enhancements and resell the offering as a full-service solution. Value-
added resellers often specialize in software, hardware, and other technologies.

One industry not as frequently thought of as a value-added reseller is the furniture industry.
However, to increase sales revenues and create relationships with customers to encourage
repeat business, furniture stores offer additional services such as interior decorating, either in
a consulting or direct service capacity.

An example of this would be an accounting system and a point-of-sale system that work
together, but are manufactured separately. Resellers combine these products as a package and
create a benefit to consumers, who would otherwise have to source them independently and
lack expertise in integrating them.

Drop Shippers:

Drop shipping is best for e commerce industry because :-

 It doesn’t take as much upfront capital to start this kind of company because there is
no costly inventory to purchase or large warehouse to build and staff.
 There is less business risk. Because products aren’t being purchased until after an
order is made, there is no unsold inventory to contend with and shipping is handled by
the wholesaler, so there are fewer concerns there as well.

Product sourcing

Conventional e-commerce stores must source products directly from wholesalers, which are
often in different countries. They also require items to be ordered in bulk, which are then
delivered to the local warehouse prior to being promoted and sold. The entire process
requires a lot of time, money and resources. It often includes the involvement of costly
intermediaries, such as banks, cargo shipments and export-import agents.
However, the drop shipping allows retailers to sell products without having to worry about
sourcing for large quantities of each item.

Storage

A conventional e-commerce store requires large storage spaces, especially when it carries
numerous or large items. Storing ten to 100 items might be imaginable, but storing 1,000 to
1,000,000 items can cost a real fortune, which is not within a start-up's budget. The drop
shipping solves this high warehouse rent problem, as the products stay with the manufacturer
or wholesale supplier until they’re purchased.

Order fulfilment

The drop shipping model allows a hands-free fulfilment as the whole process of packing and
shipping lies in the hands of the wholesaler or manufacturer.

Scalability

Wayfair.com is a giant drop shipping online retailer, which carries more than eight million
products from 10,000 suppliers. Such massive scalability is made possible only by Drop
shipping.

Since the retailer only needs to focus on the marketing and customer service sides, they don’t
need to worry about the skyrocketing warehouse rental and other overhead costs.

In conclusion, the drop shipping model provides small start-ups with limited resources the
opportunity to confidently compete with medium and large-sized online retailers, thus
making the e-commerce world an equal playground for all.
 References
 https://www.nchannel.com/blog/advantages-b2b-ecommerce/
 http://archive.constantcontact.com/fs095/1102467033707/archive/1110645385775.ht
ml
 https://www.vendasta.com/blog/cloud-brokers
 https://archive.india.gov.in/business/manage_business/wholesalers_retailers.php
 https://courses.lumenlearning.com/boundless-marketing/chapter/channel-
intermediaries/
 POLISH JOURNAL OF MANAGEMENT STUDIES 2012, Vol. 6, Szopa P.,
Pękała W. DISTRIBUTION CHANNELS AND THEIR ROLES IN THE
ENTERPRISE
 VALUE ADDED RESELLERS IN INFORMATION TECHNOLOGY:
TRENDS IN ACQUISITIONS, Adam Byard MacLean, Lakehead University, 2008