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be required to pay the wholesaler only after the sale is over. The goods could be returned if the sale did
not happen.

(c) Logistics

The word logistics' is used to refer to the entire operation of transportation and storage of goods, till
they finally reach the customer. The intermediaries share the logistics. The costs of logistics form a
significant part of the total costs of the product and have to be carefully managed. Various models are
developed from time to time to enable decision makers on logistics. The decisions will depend on the
conditions of storage (controlled temperatures for medicines), size of product, kind of packing,
frequency of purchase, shelf life, distances between markets and so on. Air freight, despite being
expensive, may be preferred to surface transportation in the case of flowers and meat, in order to
ensure freshness in the market.

(d) Role of Intermediaries

The distribution channel has its own costs. These costs have to be borne ultimately by the consumer.
This data suggests that if the intermediary in the distribution channel is eliminated, the consumer would
have to pay less. The chances are that without an intermediary, the vegetable may not leave the farm,
harming both the producer and the consumer. The distribution channel provides to the consumer the
service of collecting in bulk, sorting out on the basis of size or other relevant consideration, repacking in
more convenient lots, bearing costs of transportation and loss during transportation and storage (thefts
and deterioration).

The advantages of the distribution channel are

 early release of the funds of the manufacturer, as soon as goods are released to the first person
in the chain, instead of having to wait till the ultimate consumers pay
 widespread reach for producer
 maximum convenience to the customers, providing easy access
 support by way of advice, quick replacement of defects, etc
 reduced costs of distribution, both to the producer and the consumer because of spread
(producers as well as consumers)
 a source of market intelligence
 supplement for promotional activities

B. INSURANCE INTERMEDIARIES

(a) Insurance Agents

In the services business, agents and brokers are intermediaries. They find customers for products to be
sold and mediate in the transaction. Agents perform the task of retailers, giving customers information
about the available choices as well as letting the producer know the requirements of the customer. They
may also arrange for financing the transaction, like the way a retailer gives credit.

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