Distributor vs Wholesaler
If you are a manufacturer making products for people, you need to have a supply chain that takes your products or services to the end consumer. You, as a producer, are not expected to sell your products directly to consumers as it is a waste of time and effort. In a supply chain that starts with the manufacturer, there are often a distributor and/or a wholesaler with retailers at the end of the chain. However, despite both wholesaler and distributor selling goods at less than MRP, they have different functions and responsibilities. This article attempts to highlight the differences between a distributor and a wholesaler.
The supply chain of a company is very important for a manufacturer as it decides its promotional activities and also affects his marketing decisions. There are companies taking the route of distribution whereas there are companies that appoint wholesalers avoiding distribution altogether. Both are ways of reaching the masses though there are differences between the two channels.
A wholesaler is a person who buys products from the manufacturer in bulk and fulfills the requirements of the retailers in his area. He is not under a contract from the company, and he does not assume any responsibility apart from supplying goods to the retailers at wholesale prices that are slightly higher than the prices at which he gets the products from the manufacturer. A wholesaler does not get salary, commission, or fees from the manufacturers, and this is why he does not indulge in any promotional activity on the part of the company.
Distributor is an active partner in selling the products of a company. When the manufacturer appoints a distributor, he has to add his fees in the retail prices as distributors costs nearly a third of the retail price to the manufacturer. In return, distributor offers his infrastructure that includes his warehouse, his network of retailers, and efficient handling and supply of products to the retailers to sell them. Distributor is not passive like wholesaler, and he promotes the products of the company of which he is a distributor by sending his representatives to retailers and informing them about the quality, prices, and other promotional schemes offered by the company. Many distributors also handle customer service, and they are like business partners for the company.
What is the difference between Wholesaler and Distributor?
• You as a company or the manufacturer make use of a supply chain that includes a wholesaler or a distributor.
• Wholesaler buys goods in large quantities from the manufacturer and sells them to the retailers.
• Wholesaler resells products fulfilling the requirements of retailers and he does not assume any responsibility on behalf of the manufacturer.
• Distributor is an active partner in selling the products of a company. He offers his infrastructure that includes his warehouse, his network of retailers, and efficiently handle and supply the products to retailers, also promotes the products.
• Distributor receives his fees or commission from the manufacturer as he takes up promotional activities to sell the products.
• Distributor is costlier than wholesaler, but he has a ready network of dealers, and he also has infrastructure and team of workers.
• Wholesaler is cheap, but he does not indulge in any promotional activities and just resells the products he buys in large quantities from the manufacturer.