Trading companies

A trading company is a company that specializes in buying and selling products, acts as an intermediary between manufacturers and customers, and organizes the delivery or launch of the products in a specific market.

As the entities that ultimately deliver the goods to the customer, retail companies also set up shops and warehouses in order not to become dependent on a manufacturer’s ability to deliver products on demand. Another peculiarity of trading companies is that they usually act as a point of sale for a number of manufacturers; that is, one point of sale sells goods made by several companies. Although not required, in practice a store that sells only one manufacturer’s products is very likely a point of sale from that manufacturer and not a trading company. In addition, trading companies can initiate all procedures necessary for the delivery of goods, including procedures for international trade.

Depending on the business, a trading company can act as either a retail seller, a wholesale business, or a combination of both. A retail company sells products to end customers, usually in comparatively small quantities. A wholesale company is aimed at other companies (including other trading companies) and usually sells products in large quantities for further distribution, e.g. in retail stores.

Functions of a trading company

The functions of a trading company depend on the particular line of business in which it operates, but generally include the following:

Purchase of goods from manufacturers

Sale of goods to businesses and consumers

Store goods for sale

Allocation of goods in a retail chain

Establishment of storage facilities and sales outlets

Management of international trade

Make logistical arrangements for the delivery of goods

In general, the main function of a trading company is to source goods from manufacturers and deliver them to customers. In this context, a trading company can take on all the tasks required for this purpose. You may also be involved in the negotiation and use of land grants, which enable a company to own, manage, and develop a property, including land and buildings. This is of course an additional option for a trading company as a legal entity and not an essential business function or duty.

Types of trading company

There are two main types of trading companies:

B2B (business-to-business) trading company

B2C (business-to-consumer) trading company