Updated: Sep 1
The supply chain of a business depends on distributors, wholesalers, or a combination of the two. What these two organisations do, though, is frequently unclear. Understanding the nuances between the two and what each offers to different businesses.
The Supply Chain
To better understand the distinction between a wholesaler and a distributor, it may be useful to first define a supply chain.
A supply chain is a vast network of organisations that are all directly or indirectly related to one another and dependent on one another in order to serve the same clientele.
It consists of:
Vendors who provide raw materials, producers that turn those materials into finished goods, warehouses that store those goods, distribution centres that ship them to retailers, and retailers who transport the finished goods to the final consumer Or, to put it more succinctly, a supply chain is a network of businesses, people, events, information, and assets used to transport goods from a supplier to a buyer.
Here is actually a bit of a hierarchy, or order, to the entire supply chain, and that’s where distributors and wholesalers come in:
Manufacturers –> Distributors –> Wholesalers –> Retailers –> Consumers
What is a Distributor?
Distributors are essential to maintaining good communication between producers and consumers. They can improve a company’s reach, speed up reaction times, and even produce value-added bundles. Businesses engaged in distribution may purchase goods from manufacturers and resell them to retailers, as well as sell them straight to customers. Distributors can assist manufacturers with storage and logistical needs.
Businesses must be able to react swiftly and in real time to customers in today’s fast-paced, demand-driven business environment. If a customer cannot locate what they require from a single source, they will immediately search for an alternative or another business that can meet their requirements. Distributors can frequently provide a quicker response to fulfil clients’ needs since they are more nimble.
Wholesaler vs. Distributor
A distributor collaborates closely with a manufacturer to increase sales and raise brand awareness for the products. Distributors seek out wholesalers to resell their goods. In order to meet their demands, a wholesaler works more directly with retailers by purchasing goods in larger quantities at a discount.
While the distributor does carry out some of the same duties as a wholesaler, they are typically more involved. Additionally, distributors are more proactive in training resellers about new items.
The fact that the wholesalers’ main objective is to meet the needs of the retailers actually helps distinguish between the wholesaler and distributor. They are not liable if the goods are sold to customers or if all of the goods are sold by the merchants.