Manufacturers' sales branches

In an effort to integrate the distribution services which have to be performed, manufacturers have, for many years, operated their own sales branches wherever the volume of business or the type of products warranted such distribution. By numbers, less than 10 per cent of all the wholesale establishments in the country are manufacturers' branches, but these do more than 30 per cent of the total business.
Almost every kind of merchandise is sold through manufacturers' branches, with and without stock. It should be noted, however, that certain lines lend themselves more than others to sales through manufacturers' branches and sales offices. Food, for example, is ideal to sell through manufacturers' branches or sales offices because large chain stores and supermarkets buy direct and are serviced through the manufacturers' warehouses in the field.
Among the most recent developments in manufacturers' branches are the manufacturers' distributing or mixing centers. These, in effect, are large-scale manufacturers' warehouses or branches with stock, strategically located, which receive carload lots of merchandise from the various decentralized factories of the manufacturer. In turn, they mix and assort the goods for carload or truckload shipments to other branches owned by the same manufacturer, or to large direct- buying retail customers.
This development has been especially swift in the food and drug fields, but already the economies noted have led other types of manufacturers to view these distributing centers as possible additions in the near future. Substantial freight savings can be effected by these mixing centers.
To keep clear the difference between wholesale middlemen and functional middlemen, it should be kept in mind that functional middlemen do not take title to merchandise. They seldom see the goods they sell, and their earnings are a percentage of the total net sales price (a commission). Their main function is to facilitate selling, although there are some buying functional middlemen.
These functional middlemen are classified variously, but there are five groups which may be considered the most important. These are as follows:
(a)Brokers: This group operates to bring buyer and seller together. Brokers are especially important in the food, textile, used machinery and real estate markets. Primarily, brokers sell information—information of products available for sale or purchase.
(b)Commission merchants: This group, which is prominent in the agricultural products fields, handles the selling function for large numbers of producers. Like the broker, a commission merchant finds markets for the products for sale, but unlike the broker, he generally handles the goods he sells but does not own them. The
importance of the farm products commission merchants has declined in recent years as more and more direct-buying chains and other large retailers have supplanted them.
(c)Manufacturers' agents: These agents work for several non-competing manufacturers and act as sales representatives for such manufacturers in a territory. The main job of manufacturers' agents is to call on and sell to wholesale and industrial buyers. As a rule, the manufacturer's agent does not handle goods. He sends the orders to the manufacturer who, in turn, ships purchases direct to buyers. Some manufacturers' agents carry limited stocks. These agents work in products that have large volume sales and rapid turnover. Their commission runs around 2 per cent; but with new items and items of limited sales, their commissions may run as high as 15 per cent.
(d)Selling agents: Like the manufacturers' agents, selling agents sell for the manufacturer, but usually handle the entire output of such manufacturers. They take over the entire marketing job, for a commission. The selling agent is prominent in the textile industry, where many small producers have to sell products fast and at the lowest possible cost.