Let’s examine the roles of key players in the distribution channel:

Producer:  Producers oversees the making of a product.  For example, a film producer, music producer, agricultural producer (farmer), radio producer, television producer, theatrical producer, game producer, etc.  The term Producer is synomous with Manufacturer.

Manufacturer:  A Manufacturer produce goods for use or sale utilizing labor, machinery, tools and raw materials.  A Manufacturer transforms raw materials into finished goods.  Manufacturers can make finished goods that are ready for consumer use or they can make items that can be used in other manufacturing processes.  Automobile manufacturers are examples of Manufacturers that assemble manufacturered items to produce a finished product (automobiles).  Note:  some manufacturers also perform the role of Wholesaler.

Resellers: (aslo known as Value Added Reseller (VAR)).  Resellers purchase goods or services with the intent of reselling them for a profit.  They normally enhance the value of the product by including complementary products or services as part of a packaged deal.  An example of this would be a computer store that buys software and hardware from a producer/manufacturer and turn around and sell that software and hardware along with other services. 

Distributors:  (also known as Distributors or Wholesalers, Suppliers or Wholesale Merchants).  Distributors provides the link between the producer/manufacturer and the retail outlets.  Distributors obtain new or used goods from producers/manufacturers (by providing them advance payments), assemble, sort, grade, breakdown, repack and redistribute them to their retail customers, institutional buyers or to other wholesalers.  Distributors do not sell to standard consumers.  Distributors generally do not charge sales tax.  Distributors not only re-package items to fit their retail customers specifications, they also transport and deliver the items to their customers specified locations.  They also partake in advertising campaigns to boost the demand for goods.  Higher demand means they can sell more products and charge a higher price.  This also benefits the producer/manufacterer because it costs them nothing for the added publicity.  Wholesalers quite often pre-order products form producers/manufacturers.  Many retail chains will not work with producers/manufacturers to get items in their stores.  They will only work with their authorized Distributors to get items on their shelves.  Unless the producer/manufacturer is also serving as a Distributor.  Producers/manufacturers often provide additional services such as distribution.

Agents: (also known as a Business Agent).  Agents take on the responsibility of handling another’s business affairs.  The exact duties an Agent performs depends on the requirements of his/her clients.  Some duties performed by an Agent may include negotiating contracts, finding buyers or sellers, etc.  Agents are predominantly used in the sports industry and the movie industry.

Brokers:  A Broker is an independent agent that facilitates transactions between buyers and sellers for a commission.  A Broker may represent the seller or the buyer but not both at the same time.  Some industries rely more on the use of Brokers than others.  Real estate and the Import/Export industry are examples of industries that rely heavily on the use of Brokers.  A great benefit of using Brokers is the knowledge and expertise they may have about the industry and the low cost service that they provide.