Dealer vs Distributor
Dealers and distributors are two important cogs in the wheel that takes products from the manufacturers to the consumers. Manufacturers have more important tasks at hand than getting involved in selling products to consumers. To achieve this purpose of selling, they need the help of dealers and distributors who perform different functions but ultimately help the manufacturer to achieve higher sales. Because of overlap in the functions of distributors and dealers, many people remain confused between these two in the supply chain. This article attempts to make clear the differences between a distributor and a dealer.
Dealer
In daily life, we keep hearing about arms dealer, art dealer, and even an antique dealer. This suffix of dealer in such words only indicates the profession of the person being mentioned. So, if there is an antique dealer, it only means that he sells and buys antique items or works of art. However, the word or the designation of the dealer is important in the world of trading or business where manufacturers require them to take their products to the end consumers. In the world of automobiles, car manufacturing companies appoint dealers to sell their models directly to consumers, and this arrangement is referred to as car dealership. So, if you need to buy a Toyota car, you have to visit the dealer of Toyota cars in your area who has been authorized by the company, to sell its products on its behalf.
There are many different systems in place in different countries and also within a country in different industries. In most cases though, a dealer is the person who is in direct contact with the end consumer and sells the products of a company. In return, a dealer gets margin of profit on the sale of every product or service. Companies prefer to appoint dealers as against the practice of selling in the market to the retailers randomly. This practice lets people in an area know the retailer who is the dealer of the products of a particular company and the dealer gets the benefit of avoiding competition from others selling same products in the vicinity. Dealers have to purchase the products under various schemes from the distributor, but in many cases, companies deal with the dealers directly.
Distributor
A distributor is the person who is appointed by a company, to sell its products in a particular area to dealers or retailers as the case may be. A distributor needs a large investment as he has to buy products in bulk from the manufacturer, but he also benefits from selling the products in large numbers to dealers as against dealers who have to sell products one by one to consumers. As a distributor covers a large area, there may be many dealers under a distributor.
A distributor does not come into direct contact with the end consumers as he sells the products to the dealers or retailers only. A distributor is thus an important cog in the wheel as he plays the link between the retail dealers and the manufacturer.
What is the difference between Dealer and Distributor?
• While both a distributor, as well as a dealer, is important for the purpose of selling the products of manufacturers, it is the dealer who comes in direct contact with the end consumers while a distributor is an intermediary between the manufacturer and the dealer.
• A distributor has to make a larger investment than a dealer.
• A distributor is appointed for a particular area and faces no competition from other distributors selling the same product.
• A distributor can sell products to many dealers in the area.
• Dealers get a bigger profit margin than distributors, but they sell in retail whereas distributors sell in large numbers.