Key Difference – Supplier vs Distributor
Supplier and Distributor are two entities that play a vital role in the supply chain, which plays an important role in marketing, but there lies some difference between supplier and distributor when it comes to the purpose they serve on the value chain and the logistics. Both supplier and distributor can be the same or be different. Usually, it’s different as the function each serve is different, and it’s usually wise to hand it over to the specialists. The key difference between supplier and distributor is that the supplier is the provider of a product or service which can be traced back to the provider whereas distributor is any organisation that purchases products from a supplier on a contract basis, warehouses them, and then resells them to retailers. However, neither the supplier nor the distributor can operate in isolation. Both need to work together to achieve their objective and to make the products available to customers. Supplier and distributor are part of an interconnected supply chain.
The role of a Supplier and a Distributor is highly misunderstood and leads to a lot of confusions. In this article, we are going to look at the two terms in detail and thereby elucidate the differences between supplier and distributor.
Who is a Supplier?
A supplier is one who supplies the products or services. It can be the manufacturer or converters or importers. The source which can be easily traced to the product is usually the supplier. But, it may not be the manufacturer all times. For example, iPhones supplier is Apple Inc (USA), but the manufacturer is an unknown entity in China. Supplier is a vital part of supply chain mechanism for any organisation. A supplier can also be a business to business entity, as they can provide the inputs for manufacturing to a producer.
So, the supplier can be defined as providers of any product and the traceable source of such products or service. A supplier can have direct interaction with customers; this is what happens mostly in cases of business to business products & industrial supplies. For example, wind turbines are directly supplied by the supplier to the customer. Intermediaries are not present in such business.
Who is a Distributor?
A distributor is an intermediary who resells the product acquired from a supplier. Mostly, distributors are appointed for business to customer markets where large volumes are transacted. One third of the product price can be attributed to distributors as distributors warehouse the products, advertise among retailers and provide cash advances to suppliers. Due to this factor, the supplier provides a considerable discount to the distributor. The supplier and distributor enter into a contract and returns are not accepted by the supplier if product gets expired.
So, a distributor can be defined as an organisation that purchases products from a supplier on a contract basis, warehouses them, and then resells them to retailers. Distributor does not directly approach end users as they promote the product among retailers. Distributor is a highly influential party in the supply chain due to their cash resources and their specialised distribution skills. They can be a competitive advantage for suppliers at times. Distributors are widely used in fast moving consumer goods due to the complex nature of the distribution channels and large volumes.
What is the Difference Between a Supplier and a Distributor?
Definition of Supplier and a Distributor
Supplier: Supplier is the provider of a product or service which can be traced back to the provider.
Distributor: Distributor is the organisation that purchases products from a supplier on a contract basis, warehouses them, and then resells them to retailers.
Characteristics of Supplier and Distributor
Supplier: A supplier can be a manufacturer, converter, commodity merchant, or an importer.
Distributor: A distributor is the re-seller / intermediary for products derived from a supplier.
Nature of Business
Supplier: Supplier is an individual or an organisation which supplies product to the distributor. Supplier is the sole authority for a product or service.
Distributor: A distributor can be an individual or an organisation which resells the product to retailers.
Supplier: Supplier can provide service along with products.
Distributor: Distributor can only provide products as service cannot be separated from service provided.
We have attempted to explain and differentiate the terms supplier and distributor in this article which will help you to understand the nature of each activity.Image Courtesy: 1. Apple’s Supply Chain by SupplyChain247 2. “Balzac Fresh Food Distribution Center – Dock Doors”by Walmart (CC BY 2.0) via Flickr