Thus we say that middlemen today play a vital role in the transfer of goods from the producers to the consumers and moreover an important link between producers and ultimate consumers. In this situation, it is not possible for producers to have direct contact with the consumers. With the rapid development in the field of business activities, the business of today is not confined to a village or a city or a state. Some people say “Middlemen and Agents are nothing but social parasites and the sooner they are eliminated the better for the society.” In our own opinion to say like that is not just, because in the age of ‘division of labour’ and ‘specialisation’, the existence of middlemen is a must. Merchant does buying and reselling but agent may specialize in negotiations of either selling or buying transactions. If he does, then he is a merchant otherwise he is an agent. Hence the difference between the two lies in the ‘title of goods’ he handles. In Chile, this client resorts to SKAN-INVESTIGATIONs customized service to validate the ethics, reputation. A Merchant buys and resells goods while an Agent negotiates purchases or sales or both but does not buy the goods in which he deals. A questionable middleman Business Development. This article was first published in December 2002 and has been updated to include current information and formatting.Middlemen can be classified into two divisions. By offering value to both parties, controlling the transaction, obtaining exclusivity in written agreements, and passing title to the goods through your organization, you will be in a good position to benefit financially as a middleman in international commerce. Remember, it is a natural phenomenon for buyers and sellers to connect directly. The owner of this company explained the above technique and stated that his profits last year exceeded several million dollars not bad for a three-man organization that neither manufactures nor inventories any product whatsoever but simply provides middleman services. I have worked for many years with a three-man company that buys and sells compressors, valves, actuators and flow control industrial apparatus to a pipeline in Asia. You can then sell directly to the end user at a markup and manage all paperwork. The ultimate way to protect yourself is to purchase the product directly from the supplier at an OEM discount. Consider doing all pertinent paperwork and documentation in order to maintain control over your supplier.

Strive to act as a filter for every possible communication between the seller and buyer in order to keep in the loop from beginning to end on all transactions.įor example, you may want to act as the exporter of record in all transactions. The more you control international commercial transitions, the better position you are in to protect yourself and assure payment for your services. They also obtain an exclusive agreement from the buyer that stipulates a predetermined fee or commission payable to the trader for services rendered. Wise and experienced traders take this a step further. This contract should ensure that you receive a fee or commission on all business you generate within a defined set of parameters such as geographic area or industrial application. One of the most effective ways to protect yourself is to obtain an exclusive contract with the manufacturer or the supplier. Demonstrate that you are the best person to structure the best deal for each party. Remind them that the amount of money they pay you, as the middleman, is less than they can perform those services themselves. Make yourself perceived as an indispensable employee by emphasizing the services you are providing to both parties. Hugh Henderson, President of HCI International in Lexington, Virginia, offers this advice:

However, you can employ some techniques to discourage a supplier and/or buyer from taking advantage of you. Unfortunately, there’s no way to ensure 100% fair treatment all the time. But once the suitors have been introduced and the relationship has been consummated, how can you, as a middleman, protect yourself from being cut out of the deal? This matchmaking process can be hard work and deserves to be appropriately compensated. In other words, a bona fide middle person bridges the gap between suppliers and buyers by initiating quality contacts, providing sourcing services for buyers, assuring reliability of suppliers, and ensuring a continuous supply of products.

A middleman is a person or organization that provides services and offers something of value to both buyer and seller.

Middleman business