Knowing the Difference Between Distributors, Wholesalers, and Retailers
Obtaining the required merchandise involves using a variety of distribution sources. An effective marketing channel includes several middlemen between the consumer and manufacturer. This can include the wholesaler, distributor and retailer. Here are several of the key differences related to the services involved in the retail supply chain:
A well-established distributor is able to build-up a solid relationship with the major manufacturers. Distributors have the responsibility of acting as the main point of contact for the manufacturer. This means the buyer goes direct to the distributor and not to the manufacturer when looking to purchase the goods. Many of the distributors have exclusive agreements with the manufacturers. This can limit the number of companies involved in trading a certain product. A distributor isn’t likely to get involved in selling the goods direct to the end consumer. They are mainly involved in dealing with the large retailers or wholesale representatives who are searching for the latest merchandise to stock in store.
A wholesaler is involved in trades that concern buying large volumes of goods direct from the distributors that are acting on behalf of the manufacturer. Buying the supplies in high volume is certain to help with improving the buying potential for the wholesaler. A distributor can give certain discounts on merchandise purchased at higher volumes. A wholesaler is the perfect source for all-types of merchandise, such as furniture, televisions, clothing, bicycles, auto parts, computers, telephones, etc. These supplies are intended to be sold to retailers who resell to the general public.
A retailer consists of the large and small businesses that market the merchandise to the end consumer. A retailer uses the wholesale supplier offering the most competitive prices in the market to help generate the profit. Retailers purchase stock from the wholesaler or distributor in smaller quantities. Minimum order volume can vary with the different suppliers, so it is necessary for the retailer to shop around in hope of gaining the best deals in relation to order volume and pricing. Minimum order limits may range from 25 to 100 units, so it certainly benefits to try several different wholesalers until the store gets the most practical deal.
All in all, by taking advantage of the established business relationships, communication skills and market research, the retailers, distributors and wholesalers are able to get in the right position to create the most beneficial trading strategies to achieve success in this very competitive industry.