Business

Difference Between Wholesaler and Distributor

Main difference

The main difference between Wholesaler and Distributor is that Wholesaler is an entrepreneur, who buys goods in large quantities and sells them in smaller quantities, and Distributor is the seller of products, covering a specific area or market.

Wholesaler vs. Distributor

Wholesalers are bulk buyers who deal in competing products. On the other hand, a distributor is an exclusive supplier. Dealers deal with non-competing items. The scope of the role of the wholesaler is more limited than that of the distributor. Wholesalers, therefore, rely on bulk buyer orders from similar retailers; they rarely work with low-volume buyers as long as there are many in the market. Various wholesalers, distributors supply wholesalers, retailers and other changes in the market continuously even from small entrepreneurs. They operate indiscriminately. A wholesaler makes his profit margin from price discounts on bulk purchases. They buy items in bulk from different origins at lower prices. They break up the volume and sell smaller units to their customers at higher prices. Hence a high profit margin, on the other hand, The main source of income for distributors comes from service fees. Because they are vendors for a manufacturer, they reimbursed a percentage of net sales for offering their promotional services to a particular manufacturer’s products.

Wholesalers are independent merchants. Given your freedom to deal with competing products; they can store any item whenever they want. Rather, a distributor is dependent on the manufacturer of that specific product. A distributor, who is a point of contact or contact for the manufacturer, provides promotional services, that is, markets, finds and sells the products of a specific manufacturer to retailers. . In contrast, wholesalers do not care about this type of service.

Comparison chart

Wholesaler Distributor
A wholesaler claims a trader, who buys goods in large quantities and sells them in much smaller units. A distributor is someone who is involved in supplying goods and services to various companies and customers.
distribution line
Show or present in two and three level channels. Show only on the three level channel.
Contract
Do not enter into a contract with the manufacturers. Enter into a contract with the manufacturers.
Service area
Limited Big
Promotion
Do not participate in promotional activities. Promote the product to increase sales.
Customers
Retailers Wholesalers, retailers and direct consumers.

What is wholesale?

A wholesaler is a person or company that sells products in large quantities at low prices, usually to retailers, allowing the retailer to take advantage of a lower price than buying individual items. The wholesaler will usually buy products directly from the manufacturer, but could also buy from a distributor. In either case, the wholesaler gets huge discounts for buying large quantities of products. The wholesaler is little involved in the actual manufacturing of a product, focusing instead on distribution. A wholesaler needs a license to sell their product to the retailer, and normally their product will not be available to the customer at the same price as the retailer. This is because the retailer makes the profit from it by marking up the price it pays to the wholesaler. In the event that a customer wishes to purchase a product from the wholesaler charges for a dropshipping, this charge is charged to both the customer and the wholesaler by a dropshipping merchant. Typically, a wholesaler is a specialist in a specific product or category of products. Other wholesalers will offer a wide variety of products.

What is a distributor?

A distributor or dealer is an independent agent who has entered into an agreement to offer and sell another company’s product, but is not permitted to use the manufacturer’s name as part of their trade name. Depending on the agreement, the distributor may be limited to selling only the goods of that company, or may be free to market multiple lines of products or services from multiple companies. It is impossible for the producer or manufacturer to reach customers directly to sell goods and services, so they have to rely on intermediaries or distributors, who store and sell the company’s products in their entirety, in opposite places.

Key differences

  1. The name wholesaler is safe as a person or entity, who buys goods in volume or wholesale and sells them in much smaller units. On the other hand, the distributor is one of the main links that supplies goods and services to the entire market.
  2. There are four types of distribution levels, in which the wholesaler is present at two levels and channel at three levels. In contrast, the distributor is present only in the three-tier distribution channel.
  3. Retailers are the fair customers of a wholesaler. On the other hand, a distributor provides goods to many parts of the supply chain, such as wholesalers, retailers, and even direct consumers.
  4. In general, a wholesaler does not enter into a contract with the manufacturer, that is, he is free to offer the retailer products that compete by nature, provided by several manufacturers. Rather, distributors enter into a contract with the manufacturer to deal in non-competing goods or product lines.
  5. As a distributor, it acts as an intermediary to supply specific goods in the market, its area of ​​operation is greater than that of the wholesaler, which serves a limited area.
  6. Wholesalers do not involve marketing, promoting, selling products to prospective buyers or retailers. In contrast, sets of distributors manage the producer and engage in promotional activities to enhance sales. Consequently, they act as sales representatives for the producer.

Final Thought

Wholesalers derive their income from the discount applied to the products. Therefore, the amount received from customers, the small amount paid to manufacturers, is the source of income for the wholesaler. While the dealer charges service fees for delivery services as a percentage of net sales.

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