Sales agent

From CEOpedia | Management online

Currently, about 95% of goods reach the final buyers on the market through retail trade supplied in approx. 70% of wholesalers and almost 30% directly by producers. Consumers buy directly from producers only 5% of goods.

A distributor is a person who has the right to buy, sell and distribute goods manufactured by other entities in a given area. These goods are usually purchased directly from the manufacturer and then resold in various ways to individual customers. Intermediaries in distribution channels are:

  • sales agents - known as wholesalers, retailers - acting on their own behalf,
  • intermediaries agents - agents acting on behalf of the client,
  • cooperating companies - banks, advertising agencies, insurance companies - entities facilitating the conclusion of transactions.

Wholesalers

Wholesale is the sale or purchase of large quantities of goods at lower prices than in retail.

Wholesaler is a commercial intermediary, the main type of business which is the purchase of large and homogeneous batches of praducts for resale, at a price higher than the purchase price, institutional buyers - retailers, institutions, manufacturers, and very rarely also individual purchasers.

Wholesale activities mean the purchase of a unified batch of products in significant quantities that are resold to institutional customers, e.g. retailers, manufacturers, etc. This action is intended to bring the benefits to the wholesaler.

The main functions are performed by wholesale distributors

The basic activities of wholesalers include:

  • Market research and coverage. Output markets for producers mainly consist of customers from different geographical areas. Wholesalers collect information about a given market in order to cover it well, so that tpwars are available and easily available to any consumer who needs them.
  • Search and maintenance of business contacts. The cost of maintaining sales staff is high. If the manufacturer sells his goods to many customers who are scattered over a large geographical area, the costs of reaching all customers are too high. Sales staff of wholesale distributors reaches all customers, thanks to which the manufacturer can significantly reduce the costs of maintaining external business contacts.
  • Sales and determination of terms of purchase and sale transactions. Finding and establishing business contacts is only part of the task. An important step is to make a sale and determine its terms.
  • Acquisition and storage of products, maintenance of stocks. Wholesale distributors take over products, check their quality, collect and store stocks. They also acquire the right to ownership of the goods. Wholesalers can help producers plan their production schedule, by maintaining inventories and by selling finished products.
  • Processing orders. Thousands of consumers buy products in small quantities, which means that producers receive small orders from a large number of customers. Wholesalers are responsible for the sorting and classification of products in the relevant lots; ensuring proper product flow - transport, loading, forwarding; offering convenient payment terms. Wholesale distributors operate on their own behalf, which means they bear the risk of selling, set the level of sales prices and organize promotions.

Typology of wholesalers

We can distinguish two basic groups of wholesalers:

I) Wholesalers performing a wide range of wholesale functions:
  • wholesalers operating on the consumer goods market - this group includes:
a) wholesalers wholesalers = universal wholesalers - the vast stock of products they collect comes from various industries,
b) industry wholesalers - they sell products belonging to one industry,
c) specialized wholesalers - they offer only selected products for sale,

wholesalers operating on the market of capital goods - have a wealth of technical knowledge, provide installation and repair services, wholesalers operating on the agricultural produce market - their task is to purchase agricultural products, store, process and sell them.

II) Wholesalers who have limited scope of wholesale functions - entities acquiring property rights to products, possessing narrow wholesale options, to this group include:
  • wholesalers organizing transit supplies - they are intermediaries in the purchase and sale transactions between producers and retailers, do not purchase or store products,
  • wholesalers selling goods for cash only - they offer their offer especially to retailers, who are obliged to collect goods on their own and immediately pay in the form of cash; wholesalers offer low prices, which results in these entities obtaining a low wholesale margin,
  • wholesalers supplying retailers in the form of sales by road - acquire a limited range of products which they store and then sell for cash, with delivery to the place; an example of this is the provision of such services to hotels, restaurants,
  • wholesalers supplying retailers on a commission basis - products are not stored but delivered to retailers directly from the producer, payment is made only when the sale of the delivered products is completed,
  • wholesalers selling goods for postal orders - send catalogs to retailers and other institutional buyers, offering for sale, among others, jewelery, cosmetics, clothing, household items, accept orders via e-mail, and deliver the order using e-mail or your own means of transport,
  • agricultural producers' cooperatives - conduct purchase of agricultural products and sell them on local sales markets, and the obtained profit is divided once a year between affiliated members.

Agents

An agent is a natural or legal person negotiating the terms of purchase and sale or concluding a transaction in someone's name on someone else's account. It is a trading broker between producers and purchasers of products as well as between wholesalers and retailers. Agents sell information on demand, supply and prices in a given industry, deal with wholesale transactions, but do not store inventories and do not bear the risk related to the physical distribution of goods, they also do not carry out financial settlements.

Agents and wholesale buyers

The essential differences between agents and wholesalers include:

  • agents do not become the owners of products - transfer of ownership does not apply to them,
  • the agent's task is primarily to establish new contacts in the market, agreeing the terms of the transaction,
  • agents receive remuneration from the entity involved with them.

Agents classification

We can distinguish the following types of agents:

I) trading agents - we can divide them into two groups:
  • an industrial agent - works on behalf of one or several producers from complementary industries, seeks buyers of goods of the company he is a representative of, organizes deliveries, promotions; charges commissions on successful transactions - producers do not incur any costs if they are not sold. The industrial agent may obtain from the producer the exclusive right to sell a specific group of goods, i.e. licenses.
  • Anget for sale is a sales representative of the producer who appears in distribution channels when the producer has no qualified sellers or is not interested in creating or improving the sales function. Agents accept orders, create reports, maintain contacts with current and potential buyers of goods, examine the market environment, and all this if the producers of goods are not interested in the implementation and development of sales.
II) purchasing agent - represents institutional purchasers of products, fulfills orders by retailers, purchasing goods directly from the manufacturer, on behalf of and on behalf of the retailer - this way retailers can get the best products at moderate prices. Often agents also deal with the organization of deliveries, storage of goods, their shipment and transport.
III) agents of the commission = commission traders - under the contract, the agent (commissioner) accepts the order under which he sells products on his own behalf, but on behalf of the producer-principal; the committee decides only on the terms of sale, and the remaining issues belong to the agent who charges the commission, and the remaining part transfers to the producer - the situation takes place most often on the market of crops. Agents take products from farmers, deliver them to the local market and sell at the highest price. The determination of the price of the commodity is of significant importance in the commission contract.
IV) Auction agents - at the request of major producers or retailers - take part in the auction, they conclude purchase and sale transactions for products that require evaluation through the senses - products such as coffee, tea, wool.
V) brokers = brokers - unlike ordinary agents, they act in transactions between third parties, primarily in the insurance market, their activities are subject to control and require a license from the Ministry of Finance, they act for the benefit of the insurer . Brokers are not connected with commercial agents permanently, they are bound by their agency contract and commission amount.

Retailers

A retailer is a natural or legal person involved in the purchase and subsequent sale of goods and services to the final purchaser for his private use. The main functions of retailers are similar to the functions performed by wholesalers. These include:

  • purchasing products, storing them,
  • sale,
  • organization of promotional campaigns,
  • delivery of products.

Wholesale and retail

The differences between wholesale and retail sales result from various consumer requirements regarding the size and structure of purchased product batches as well as the places and forms of their purchase. The most important features of retail trade include:

  • a substantial increase in the number of clients, in comparison to wholesale,
  • sizes of batches of products are adapted to the consumer needs of individual buyers, products are sold in small batches,
  • payment for products purchased is immediate,
  • close and personal contact of sellers with the final recipients of the product.

Classification of retailers

Two basic categories of the division of retailers can be distinguished:

I) Types of retailers due to the form of ownership:
  • independent retailers - owners of one store - the most common form,
  • organized retailers - they have a network of centrally managed stores - they include:
a) multi-wise companies,
b) subsidiaries,
c) chain enterprises,
d) cooperatives,
II) Types of retailers due to marketing strategy:
  • retailers with a multi-disciplinary / specialized assortment,
  • retailers selling products at fixed points of sale or bypassing fixed points of sale,
  • retailers managing their activities in a concentrated / distributed network,
  • retailers offering a traditional / self-service / mail order sales system.

Examples of Sales agent

  • A Sales Agent is someone who works as an intermediary between a business and its potential customers. They work to promote, sell and distribute the products of their employer to customers. Examples of Sales Agents include:
  1. Retail Sales Representatives: These sales agents are responsible for selling consumer goods to retailers. They may visit stores to promote the products, answer questions about the products, and provide information about special offers.
  2. Business to Business (B2B) Sales Representatives: These sales agents are responsible for selling products to businesses in order to help them increase their profits. They may visit clients in person to present their products and services, and they may also use email or phone to contact potential customers.
  3. Technical Sales Representatives: These sales agents specialize in selling products that involve an in-depth knowledge of the product, such as software or complex machinery. They often provide customers with technical advice and support, as well as helping them to choose the right product for their needs.
  4. Pharmaceutical Sales Representatives: These sales agents are responsible for selling prescription drugs to physicians and hospitals. They provide information about the drugs, their benefits, and any side effects they may have. They must be familiar with the latest medical research and understand the regulations governing the sale of drugs.

Advantages of Sales agent

Sales agents are intermediaries between a seller and a potential buyer. They provide numerous advantages to businesses and customers. Some of the advantages of using a sales agent include:

  • Reducing marketing and sales costs - Sales agents can help to reduce the cost of advertising and other marketing activities, as well as the cost of sales staff, since they already have a network of customers, who they can approach with your product.
  • Accessing new markets - Sales agents are knowledgeable about the needs of their customers, so they can help to identify new markets for the business and reach new customers more quickly.
  • Expanding market reach - By using a sales agent, businesses can reach more customers and increase their market share.
  • Establishing relationships - Sales agents can help to build relationships with customers, which can result in repeat sales.
  • Providing expert advice - Sales agents can provide expert advice and guidance on the best ways to market and sell products and services.

Limitations of Sales agent

Sales agents have a number of limitations that can affect their performance when it comes to selling products. These include:

  • Limited access to markets - Sales agents typically have limited access to potential customers, limiting their ability to reach more prospective buyers.
  • Limited product knowledge - Sales agents may lack the expertise to effectively explain and demonstrate the features and benefits of the product, which can lead to a lack of sales.
  • Limited ability to address customer needs - Sales agents may not be able to identify and address customer needs accurately, making it difficult for them to persuade customers to purchase products.
  • Limited follow-up - Sales agents may not follow up with customers after the initial sale, making it difficult to ensure customer satisfaction and repeat sales.
  • Limited incentives - Sales agents may not be offered sufficient incentives to motivate them to sell products, leading to a lack of enthusiasm and motivation.

Other approaches related to Sales agent

Retail trade is a common approach to supplying goods to the final buyers, but there are other sales strategies that can be used to reach the market. These include:

  • Sales agents - These are independent contractors who represent producers, manufacturers or wholesalers and sell their products on their behalf. They often have exclusive rights to represent a company or product line and are compensated based on commissions.
  • Direct sales - This approach involves selling products directly to consumers without the use of a middleman. This can be done through door-to-door sales, telephone sales, or online sales.
  • Direct marketing - This involves targeting consumers through direct mail, email, or other forms of communication to promote and sell a product.
  • Dropshipping - This involves the seller taking orders from customers but having the product shipped directly to them from the manufacturer or wholesaler. This eliminates the need for the seller to keep an inventory.

In summary, there are several alternatives to retail trade when it comes to selling goods to the final buyers. Sales agents, direct sales, direct marketing and dropshipping are all approaches that producers, manufacturers and wholesalers can use to reach the market.


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References

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