Commercial intermediaries – the unknown business sector

This is particularly true of the part of the business that is handled by wholesalers. After all, sooner or later everyone has to deal with commercial intermediaries and sales partners at the retail level. These include, for example, insurance brokers and insurance agents, real estate agents, financial brokers, vacuum cleaner sales representatives, cosmetics consultants, hosts of Tupperware parties, wine representatives, and also filling station tenants and some collective order-takers from mail order companies. All of them sell their products and services additionally to private end consumers or exclusively to private end consumers.

Commercial agents and sales partners as part of the wholesale business

Commercial agents and sales partners in Germany that do not sell or do not mostly sell to private end consumers are considered to be commercial intermediaries in the wholesale business. They are also viewed and designated as part of the wholesale business by official statistics in Germany. Most of them are commercial agencies and sales professionals. The commercial agency is the business of a commercial agent. A commercial agent is often called an independent commercial agent, which is a pleonasm, because a commercial agent is, in contrast to a salaried field sales representative, always self-employed. Commercial agents are self-employed sales professionals that operate in virtually all industries in B2B business in Germany. Commercial agencies and sales partners in Germany broker goods and services between companies at all levels of the economy: between industry and wholesale and retail, between industrial companies (for example, in the supplier sector), or between wholesale and retail. As sales partners, they take on nearly all sales and distribution tasks for their clients (principals). In addition to commercial agencies in Germany, there are other forms of sales and distribution in Germany that operate in a similar fashion as service providers in B2B business: these include commercial brokers, trade brokers, commission agents, authorised distributors, and sales engineers in Germany.

The commercial intermediaries and sales partners on the wholesale level play an important role in the German economy. The more than 32,300 companies with nearly 86,000 employees broker goods worth approximately 200 billion Euros every year. Including their so-called own sales; that is, sales as wholesalers, this results in a considerable degree of involvement in the domestic flow of goods within Germany. This is a strong position of the commercial agencies and sales professionals in the respective sales and distribution markets in Germany.

Forms and types of sales and distribution

In a sales and distribution company, often more than one type of distribution, also called distribution type, can be found. Many publications also speak of operating forms or operating types in retail or wholesale. For instance, more than one third of all commercial agents and sales partners in Germany are also wholesalers. This means that they not only sell goods or services in someone else’s name and on someone else’s account, but also sell part of their product range in their own name and for their own account. Some of these German commercial agents, who are also wholesalers, operate their wholesale business in Germany as authorised dealers. Authorised dealers have a closer contractual relationship with their supplier or suppliers than wholesalers. Through a framework agreement with agency-like ties agreed for a longer period of time, the authorised dealer is firmly integrated into the sales and distribution organisation of a manufacturer. At the same time, the authorised dealer agreement contains the obligation to sell the manufacturer’s goods on a permanent basis in Germany in the dealer’s name and on the dealer’s own account in a contractual territory which may be provided with exclusivity (that is, the exclusive right to sell to customers).

Certain types of sales and distribution in Germany can often be found in certain industries and sometimes even in certain regions in Germany. Commercial agents and sales professionals of wood and lumber often operate their businesses as commercial brokers or trade brokers. Bavaria is a regional focus of these timber brokers. Unlike commercial agents, these commercial brokers do not work for one or more particular suppliers, but mediate between different German suppliers and buyers on a case-by-case basis.

Another domain of trade brokers, who in Germany often go by the designations of agents, commercial agents, import brokers, or export broker, is foreign trade. Like their counterparts who broker shipping space as ship brokers, foreign trade brokers are concentrated in major port cities in Germany.

In addition, among the commercial agents and sales professionals on a wholesale level in Germany, there are the commission agents. The commission agent differs from the commercial agent, who works in another’s name and on behalf of another, in that the commission agent works in the commission agent’s own name on behalf of a principal. The commission agent takes over the purchase or sale of goods on a professional basis; however, the goods become the property of the commission agent only when the commission agent enters into the transaction himself or herself. Today, the commission agent can be found mainly in the securities business, agricultural product trading, and foreign trade. Frequently, goods are also delivered to the wholesaler on commission. In these cases, the wholesaler also works as a commission agent.

Commercial agents as universal service providers

Commercial agents at the wholesale level in Germany are not only active as wholesalers to some extent. Quite a few commercial agents and sales professionals in Germany also provide a variety of additional services that extend far beyond their actual sales activity. Which additional services are provided in detail depends on the wishes of the customers of the commercial agents both on the supplier side and on the buyer side. These services therefore very much depend on the industrial sector. Many commercial agents in Germany thus fulfil both the functions of rack jobbers and merchandisers at the same time, while others also operate as an engineering office and trade as such. In which German industries which services are provided at the wholesale level is the subject of further articles on this website.

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