(i) Channels based on middlemen.
(ii) Channels based on the type of goods and services.
(iii) Channels based on national and international markets.

A businessman appoints a person to buy and sell goods on his behalf and gives him the right to borrow money on the security of goods. That person is called mercantile agent.

A Broker is one who bargains for another and receives commission for his service. He is paid 'brokerage' for his services.

According to Cundiff and Still "Wholesaler buys from the producer and sell merchandise to the retailers and other merchants and not to the consumers".
(or)
According to Evelyn Thomas ", a true wholesaler is himself neither a manufacturer nor a retailer but act as a link between the two".

The term 'Middlemen' refers to all those who are in the link between the primary producer and the ultimate consumer in the exchange of goods or services.

The following are the characteristics of wholesalers :
1. The wholesaler buys goods directly from the producers or manufacturers.
2. Wholesalers buys goods in large quantities and sell in relatively smaller quantities.
3. Wholesaler sell different varieties of a particular variety of product
4. They employ a number of agents or workers for distribution of products.
5. They need large amount of Capital to be invested in his business
6. They generally provide credit facility to retailers.

Kinds of Mercantile Agents or Agent Middlemen:
1. Brokers
2. Factors
3. Commission Agents
4. Del-credere Agents
5. Auctioneers
6. Warehousekeepers.

A factor is a mercantile agent to whom goods are entrusted for sale by a principal. He takes physical possession of the goods, though he does not obtain ownership of the goods. A factor sells goods in his own name without revealing the name of his principal.

Factors Influencing Channel of Distribution:
The factors determining the suitability of a channel for a product distribution are as follows:
a) Product Characteristics:
1. Seasonal products are distributed through less layer of middlemen.
2. Non standardized products that are made according to customer specifications may be delivered directly.
3. But standardized products may be passed on through middlemen.
4. Trucks which are heavily needed to be distributed with less layers of distribution.
5. The life of perishable products is limited and should reach the consumer at the earliest. e.g. Flowers and milk.
b) Market Characteristics:
1. The size of the market for the goods is a major factor while selecting the route for distribution of products.
2. Distribution in large geographical area requires more middlemen.
3. Middlemen are not required to distribute products in a limited area.
c) Number of Consumers:
1. Large purchases made by few consumers require centralised distribution.
2. Large number of consumers making purchases in small quantities requires more middlemen.
d) Middlemen factor:
1. Middlemen who are experienced and have produced more sales are wanted by all producers.
2. Long channel naturally increases the cost and price of the product. The number of layers of middlemen should be kept at minimum.
3. The competitor who is efficient in reducing distribution cost will sell more as his price is less.
4. More middlemen means, less control and more problems for the producer.
5. Quality of distribution service. can be ensured and loyal customer base can be created with less middlemen.
6. In some areas there may be scarcity of right middlemen and in some other cases the policies of producers may be not acceptable to the middlemen.
e) Capacity of the Manufacturer:
1. A financially strong producer may select a high technology oriented channel which will reduce cost in the long run.
2. Manufacturers with large volume of production may open direct branches in cities and towns where there is more sales.
3. They can also provide more services expected by consumers.
4. Small and medium, producers require the services of middlemen for selling their products.
5. A producer offering wide range of products can have a long channel as he can defray the cost of distribution over more number of products.
f) Cost and time involved in the channel of distribution :
The channel cost should go along with the quality of service provided by middlemen. Ordinary goods are sent through economical channel even though the time taken by the channel for delivery is more.
g) Service required. along with the product :
Machinery or equipment which need to be installed and demonstrated should be sold with minimum channel. Technical services can be provided by manufacturers or their trained technicians. Therefore shorter channel is preferred for sales.
h) Life cycle of the product:
An established product can select an ordinary channel. But a new product entering into the market should be carefully promoted by experienced middlemen.

Functions of Retailers:
a) Buying:
A retailer buys a wide variety of goods from different wholesalers after estimating customer's demand. He selects the best merchandise from each wholesaler and bring all the goods under one roof. So, he performs the twin functions of buying and assembling of goods.
b) Storage:
A retailer maintains a ready stock of goods and displays them in the shop.
c) Selling:
The retailer sells the goods in small quantities according to the demand and taste and preference of consumers. He employs efficient methods of selling to increase his sales turnover.
d) Grading and Packing:
The retailer grades the goods which are not graded by manufacturers and wholesalers. He packs goods in small lots for the convenience of consumers.
e) Risk-Bearing:
A retailer always keep stock of goods in anticipation of demand and bears the risk of loss due to fire, theft, spoilage, price fluctuations, etc.
f) Transportation:
Retailers often carry goods from manufacturers to their retail outlets.
g) Financing:
Some retailers grant credit facilities to his customers and provide the facility of return or exchange of goods. Door delivery and after sales service are provided by retailers.

Retail trade is a trade that deals with the distribution of goods in small quantities to the end consumers. A retailer has been defined as "a trading intermediary engaged in the distribution of goods to the ultimate consumer".
Following are the characteristics of retail traders :
(i) Retailer generally involves dealing in a variety of items. A retailer makes purchases from producer or wholesalers in bulk for sale to the end consumer in small quantities.
(ii) Retail trade is normally carried on in or near the main market area.
(iii) Generally, retailers involve buying on Credit from Wholesalers and selling for cash to Consumers.
(iv) A retailer has indirect relation with the manufacturer (through wholesalers) but a direct link with the consumers