Suppliers are at the top of the chain and provide products to distributors. Distributors take products from suppliers and sell them to wholesalers and retailers. Wholesalers source products from distributors to sell to retailers, or sometimes directly to consumers. A wholesaler is the middleman between retailers and customers and assumes the role of nothing less than meeting the demands of retailers. A distributor is the supplier of products of a wholesaler and is the intermediary between a wholesaler and the supplier and manufacturer.
A distributor works closely with a manufacturer to sell more products and gain better visibility of these products. Distributors find wholesalers who will resell their products. A wholesaler works more closely with retailers to meet their needs by purchasing products in bulk at a discount. It is essential to understand the differences and comparisons between wholesalers, distributors, and suppliers. Wholesalers are merchants who buy products in bulk and sell them in smaller quantities.
On the other hand, distributors are resellers of products, who cover a specific area or market. For products to be available to the final consumer, a manufacturer or producer must choose the best distribution channel, since they cannot sell them directly to consumers. In this way, a company's supply chain has a big role to play, as it greatly influences its marketing and promotion activities. The two most important links in supply chain management are the wholesaler and the distributor, as they ensure the timely availability of merchandise to the end user. Since these two links are interconnected, it is quite common for them to be confused with each other. Wholesalers play a crucial role in the supply chain process by purchasing products from different manufacturers in bulk, dividing volume into smaller units, keeping inventories in warehouses, providing faster delivery to buyers, reducing risk by taking title the goods, etc.
Since these entities deal mainly with commercial customers, resellers don't pay much attention to location, environment, and promotion. As the name suggests, the distributor is an agent who distributes products and services to various parts of the supply chain network. It is impossible for the manufacturer to reach customers directly to sell products and services, and to do this, they have to rely on intermediate agents or distributors, who store and sell exclusively the company's products, in different locations. The distributor is also known as a channel partner, which deals with manufacturers to promote and sell their products and services to various customers, such as retailers or end consumers. To do this, the distributor enters into an agreement with the producer and buys the right to sell the product from the producer. However, you cannot use the producer's trade name.
Distributors buy non-competing products or product lines from different manufacturers, maintain stock in warehouses, transport them to various locations, and resell them to various parties. Wholesalers generate their income from the discount applied to products; that is they buy products in large volumes from producers at a low price and sell them more to retailers in small batches at a relatively high price. Therefore, the amount received from customers minus the amount paid to manufacturers is the source of income for the wholesaler. On the other hand, the distributor charges service fees for providing services as a percentage of net sales. Tariff is the main source of income for distributors. Suppliers often don't have the resources to sell products or raw materials directly to customers; thus, involving distributors and wholesalers is crucial for meeting consumer demand. In manufacturing OTD stands for On-time Delivery which is typically represented as a percentage of deliveries that a supplier made to a customer on time in a given period of time.
By involving suppliers, distributors, wholesalers and retailers each company's position in the supply chain can be thoroughly realized through industry experience and knowledge; thus reducing risks of error. On one hand suppliers can produce manufacture or import them from other sources while distributors work with channels for distributing products in addition having right marketing strategies that allow them linking between market & consumers. Wholesaler may specialize in selling wide range of different products other companies government agencies or hospitals then supplier will provide product to distributor & then distributor will provide product to wholesaler & wholesaler will provide product to retailer. This is all hypothetical mathematics since exact percentage distributors get from suppliers varies & sometimes one of best kept secrets. To understand difference between wholesaler & distributor & supplier you have understand that supplier cannot supply product directly alternatively manufacturer may choose work directly with supplier for future procurement save on potential costs & strengthen its relationships with suppliers. Distributor buys product from supplier stores them in warehouse & then sells them sellers or end consumers wholesaler places order for 3000 units accommodate three orders from three different retailers. In some cases wholesalers manufacture portion their products so that they can offer low-cost bulk products but they also have other suppliers of bulk products that they don't manufacture who sell companies that then repackage & sell those products.
