What is the difference between a dealer and a distributor: description and differences. Distributors are official representatives of the supplier company

Often, manufacturers of paint, plumbing, electrical goods, heating equipment, instrumentation, repair and construction products, water filters, etc. determine the difference between a distributor or dealer based on the criterion of the volume of purchases of goods. In fact, it is necessary to introduce a difference between a distributor and a dealer in terms of the functionality of their work.

To understand this, let's look at a diagram of a distributor and dealer sales system.

Distributor sales system is focused on working with retail through sales representatives who regularly visit retail outlets to place orders. Distribution (distribution) is the high-quality distribution of goods across each retail segment. The main task of distribution is to ensure that each retail outlet has available goods in the required range, the required stock and in the right place. Without a personal visit of a sales representative to a retail outlet, this cannot be done efficiently.

Dealer sales system focused on working with enterprises to conclude agreements for the supply of goods for a specific project. Dealer (root word "deal" - transaction) is the conclusion of transactions. The main task of the dealer is to meet with the customer and conclude a deal for the supply of goods in a certain quantity and within a clearly defined time frame. These are mainly one-time transactions or with a long order repetition period.

In the era of Internet development, a sales system through online stores can be built by either a dealer, a distributor, or a manufacturer directly.

What I would like to draw special attention to is that the system of working with retail through telephone calls is neither a distributor nor a dealer sales system - it is a wholesale sales system, which, in principle, is how the business of many wholesalers began. At the dawn of the business, they first sat and waited for clients to come to them or call them, and a little later they began to make active calls to order goods. But the essence remains the same - telephone sales, which are inherent in the wholesale sales system.

ANSWERS ON QUESTIONS:

Is an organization that only has a chain of stores a dealer?
No, this is not a dealer - this is a retail business, and it should be considered as a distribution channel - retail.

Is the pricing policy different for working with a distributor, dealer and wholesaler?
Of course it should be different. Distribution costs are much higher than those of a dealer and even more so a wholesaler. There are several pricing models in the distribution sales system. This is roughly what the pricing model should look like for different sales systems. Marginality is conditional and depends on the product group. The focus here is on what the margin difference should look like.

Why is it important to differentiate between a distributor and a dealer?
In order to understand which sales channel is worth developing and, most importantly, through which business partner to do this - “direct contact” or “retail”. Can this be done through existing partners or is it worth introducing additional partners who will work with a different distribution channel.

Can one organization, business partner, operate in the region as a distributor, dealer and retail chain?
Of course, it can if he has separate structures for each sales system. But to be honest, I have never met such universal companies; each has its own distinct specialization. In practice, only 30-40% of companies with a dealer sales system agree to develop a distribution sales system, and half of them will be able to do this.

Is it worth investing money in annual “gatherings” of dealers (distributors)?
It’s definitely worth it, but it would be better if the “gathering” was not common to everyone, but differentiated for each business format. It is important that your investment is in information that will improve your partners' business.

With the advent of a market economy and the active development of trade relations, both between domestic companies and with foreign ones, many terms have appeared that we had never even heard of before. Some of these terms are dealer and distributor.

Even those people who have nothing to do with business have probably heard them. After all, they are actively used in advertising by various companies, trying to emphasize their special status. But what do these words say? Do they provide any benefits, guarantees that the product or service offered by the company is of high quality?

Dealer and distributor are parts of a kind of hierarchical chain that is built when selling goods from manufacturer to consumer. This chain may not always include these two professions. The main links here are the producer and the consumer. And the dealer is needed in order to bring the product to the consumer as quickly as possible and on conditions favorable to the manufacturer and himself and to encourage him to make a purchase.

This is an individual or legal entity that sells goods and services that are not produced by it. He can set the price at his own discretion, because his main goal is to earn as long as possible.

In some cases, a dealer has the right to sell only the product of one company with which he cooperates, if this is agreed upon in the contract. Although, if there are no such conditions, then they can be employees of several companies at once.

You can take, for example, car showrooms, where products from several manufacturers, both domestic and foreign, can be offered at once. It is profitable for a dealer to offer products from several companies at once, because he expands the range and increases his chances of selling as many cars as possible.

They can purchase products either directly from the manufacturer or from an official distributor. This depends on what sales scheme the manufacturing company uses.

Official dealer

It is not some kind of special status that gives any privileges. Many dealers emphasize the fact that they are official dealers, increasing their status in the eyes of potential buyers. There is nothing wrong.

Under the terms of standard contracts concluded with dealers, they have every right to call themselves official. It really works well and increases sales.

A company producing a particular product must not only produce it, but also sell it. If previously many companies had their own sales departments, now most of them prefer to use the services of distributors. These are organizations that distribute products and promote them on the market.

The distribution company can be independent, that is, not connected in any way with the manufacturer, or created by him. Large manufacturers may have several distributors at once. For example, if we take the same cars, their manufacturer, in order to promote them in several large markets at once, must enter into a contract with several distributors.

What do distributors do? They buy products wholesale from the manufacturer and become its official representatives. They then look for dealers to sell the products to them. And it doesn’t matter whether he can sell the product or not, because the distributor has done his job - he sold the product.

Although, of course, it is better that the product is sold and the demand for it is high. The distributor is responsible for the quality of the product because he is the official representative of the manufacturer. He must also search for and attract new dealers, create and expand his dealer network in order to increase sales. The distributor also promotes the product or service.

Even if he doesn’t have resellers yet, he prepares the ground in advance, promotes the goods so that they will be impatiently waiting for it and quickly take it apart. Various marketing and advertising companies are used, etc. They can also provide loans to dealers. The manufacturing company, if the distributor does his job well, can reward him, etc.

Exclusive distributors

The functions of such organizations are the same as those of ordinary ones, except that they are the only ones who offer the products of the manufacturing company. An exclusive dealer may be the only one for the manufacturer.

Although, sometimes there may be several exclusive ones. For example, if we take an Asian company producing modern special equipment. It may have an exclusive distributor in our country, with which dealers from all regions can cooperate. Thanks to this, such special equipment will become available in different parts of the country, and sales will increase.

Dealer and distributor: differences

The standard chain looks like this:

Manufacturer - Distributor - Dealer - Final buyer.

It is more profitable and convenient for manufacturers to work with distributors, because the tasks of promoting the product, its further sale, and expanding the geography of sales fall on their shoulders.

The distributor purchases the goods in large wholesale, then in small wholesale he sells it to dealers and it is they who set the final cost. In most cases, the reseller has the right to set his own prices. The difference between them is that the dealer simply buys the product, throws a little on top and sells it, making his profit from it. Bought cheap, sold dear. He is an entrepreneur.

The distributor needs to look for dealers, expand its geographic presence, and promote the product. Only proven, reliable, large organizations can be distributors, while there are much fewer requirements for dealers.

The dealer bears virtually no responsibility for the quality of the product, he is simply an intermediary. And the distributor bears official responsibility for the products promoted on the market.

Watch also the video about the differences between the concepts:

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Despite the fairly high level of economic literacy of the population of our country, few will be able to tell what the difference is between a dealer and a distributor, or give these concepts a precise definition. Among the huge number of different terms that have firmly taken their place in our lexicon over the past decade, these two are the leaders in frequency of use.

What is the difference between a dealer and a distributor

But only people with an economic education or representatives of professions related to wholesale trade can explain their meaning and the differences between them in an accessible language. This article will help some readers bridge the gap in education, and will also provide an opportunity to understand all the nuances of the concepts: dealer and distributor.

Even if you are not involved in trade and business, this knowledge will be useful in everyday life, for example, to understand the essence of what is written on the packaging of any product where these terms are used quite often.

In order to understand the difference between a dealer and a distributor, it is necessary, first of all, to define these terms and understand where and when they are used. Only after careful analysis can the main differences between them be identified. If we take a literal translation from English, then “distributor” is a distributor, distributing to many. But what is its activity related to in modern market conditions, and what are the main functions performed by this subject of trade relations? First of all, a distributor is a legal entity or individual that sells products purchased directly from manufacturers. That is, there are no other intermediaries between the manufacturer and distributors.

The distributor purchases goods in large wholesale quantities and sells them through its distribution channels, mainly using an established network of intermediaries and almost never working with the end consumer of these products. The distributor, if you look at it, is not limited in any way in his actions, he works on his own behalf, basically, single-handedly determines the pricing policy, and his relationship with the manufacturer is built on the basis of a bilateral agreement regulating all issues of their cooperation.

The main point of this contract is to determine the territory in which the distributor operates. In fact, the company receives a monopoly right to sell goods in a specific region. The distributor’s freedom of action also has a downside: he himself is responsible to the buyer for the quality of the products sold, but on the other hand, having a quality certificate from the manufacturer in hand, you can always shift the responsibility onto someone else’s shoulders.

As for payment for goods, basically, the distributor buys the product and pays for it upon shipment, but sometimes companies agree on a deferred payment, partial prepayment, or turn to a financial institution for help. In the latter case, bankers offer to use a form of lending such as factoring. Its essence is that the bank pays for the products that the distributor receives and acquires all rights to the product (legally) for the period until the loan amount is transferred to a special bank account.

Another important point that needs to be emphasized is that a distributor company for a certain product can simultaneously sell any other product. No one has the right to dictate terms to her regarding the formation of the assortment. Therefore, do not be surprised when you come across a situation where the same company is a distributor in your region for several product items.

Dealer

Let's move on to the next subject of trade relations, the study of which will help establish what the difference is between a dealer and a distributor. Both the first and second work with wholesale quantities of goods, but the scheme of their cooperation is as follows: the distributor purchases products from the manufacturer and sells them through its network, which includes dealers, and the latter sell the goods either to subsequent intermediaries or to end consumers.

In this case, the dealer acts on behalf of the manufacturer, his functions include maintaining the image of the product, its advertising, promotion, warranty service, etc. That is, all the efforts of this subject of trade relations are aimed at finding consumers of products, as well as increasing the customer base by awakening interest in the product being sold. The attentive reader may wonder why the dealer does not work directly with the manufacturer.

This fact can be explained very simply: in a specific region, according to the contract, only the distributor has the right to sell goods. He is the first link in the chain after the manufacturer, even the dealer must work through the distributor. But, despite this, the dealer signs a separate agreement with the manufacturer, which discusses all possible nuances, as well as the rights and obligations of the parties.

It is also necessary to clarify that the dealer is a legally independent business entity that independently sets prices for the products sold on the basis of an agreement with the manufacturer. Considering this fact, we can say that the main source of income for the dealer is the difference between the set price for the products sold and its purchase price offered by the manufacturer. But there are other opportunities to make money: the manufacturer pays good bonuses and premiums for large sales volumes and the development of a customer base, and the contract also discusses the amount of remuneration for warranty service of products.

Differences between a distributor and other business entities

To summarize, we can say that a distributor differs from a dealer in many respects:

the first uses an established marketing network to sell goods, and the second independently creates a customer base;

the distributor enters into an agreement with the manufacturer that he is its only representative in a given region, the dealer works according to a different scheme;

the distributor's sales volume is significantly greater than that of the dealer;

the distributor, having complete freedom of action, bears responsibility for the quality of the product, and the dealer shifts it to the manufacturer;

these subjects of trade relations have different functions in the chain producer - final consumer;

If you have problems with any product, you need to contact your dealer for warranty service;

the dealer receives premiums and bonuses from the manufacturer, the distributor only his margin.

The presented article will be incomplete without revealing some issues related to this topic.

Sometimes, novice entrepreneurs do not know the difference between a distributor and a wholesaler, and this can cause negative consequences. A wholesaler works with manufacturers without agreeing on any terms of cooperation. Very often, this may be a one-time deal. A serious, well-promoted manufacturer tries to cover the market with the help of distributors, avoiding transactions with random companies.

At the same time, manufacturing plants that have problems selling their products are ready to sell them to anyone. Therefore, you can buy less liquid goods from a wholesaler, but at low prices, and cooperation with a distributor is a guarantee of stability, high quality and reasonable cost of the purchased products. How, and most importantly, with whom, it is more profitable for you to work, decide for yourself, based on your goals and strategic plans.

Many readers are interested in the question of what is the difference between a distributor and an importer. The first works directly with the manufacturer, selling products through its marketing network in a certain territory. If the manufacturing plant is located in another country, then this company is an importer. The main goal of the second is to buy goods/services, etc. in one country and import them into another for the purpose of sale or consumption. To summarize, we can say that these can be either completely different companies or one legal entity (an individual entrepreneur is not a subject of international relations).

One of the main tasks of a market economy is the sustainable sale of manufactured products. Without a system in this matter, goods do not turn into money, and they do not turn into goods again. Today, dealers and distributors play an important role in this process.

Why do you need a dealer?

A dealer can be called a company or an individual. His business is wholesale purchase of products from specific manufacturers for its subsequent implementation. It is usually sold at retail . Dealers act in the market on their own behalf and bear the costs associated with sales. They receive their income from the difference between wholesale and retail prices or exchange rates, and the provision of related services. Suppliers are interested in increasing sales growth at their dealers and maximizing profits.

At the same time, the world's leading manufacturers of technically complex goods focus their dealers on long-term cooperation with their customers. For example, a dealer selling cars accompanies their buyers throughout the entire life of the cars. This means providing a full range of services to maintain equipment in proper condition. This approach is stimulated by specially developed programs.

Dealers may differ in the types of goods sold or their brands, depending on the region. The regional dealer is fully responsible for the distribution of the goods supplied to him in a certain region. Region can mean a specific region, region or a specific zone, which may include several territorial-administrative units. At the same time, the goals and methods of work established by the manufacturer, and its ethical principles remain unchanged.

The dealer enters into a dealer agreement with the supplier, in which he can undertake the following obligations:

• Act only in the interests of customers, ensuring their requests.
• Organize a dealership or sales network.
• Provide staff training.
• Provide your customers with attractive sales conditions.
• Inform customers about the prices of products offered, service features, etc.
• Do not resort to price manipulation and do not use distorted information in relations with customers.

Most dealers should have a list of the specific products they carry along with model and brand names. The buyer usually has the right to select the product he needs from such a list and immediately buy it. If the required product is not available, the dealer is obliged to help fill out an application for a specific model and inform him when the product will be delivered. An important part of a dealer's job is preparing products for sale and inspecting them.

During the period of operation it is organized warranty service. To do this, the dealer must have the appropriate material and technical base, its own warehouse of branded spare parts and materials.

How does a distributor work?

Distributor is called intermediary company, which purchases goods in bulk from manufacturers for their subsequent sale. They can also be an individual entrepreneur. The main function of a distributor is the official representation of a large manufacturing company and the distribution of its products among wholesalers and retailers. Products are sold to large retail chains, regional dealers or at retail. They act at their own expense. They can sell goods on their own behalf or on behalf of the manufacturer. It can provide marketing assistance, installation and commissioning services, and assistance in personnel training to its partners.

Often the distributor has a well-developed structure and employees for active sales, and experience in sales through various channels. Usually owns the rights of an exclusive representative of a group of goods in the territory that is assigned to it. It is distinguished from other intermediaries by its exclusive rights to offer goods produced by a specific company at the manufacturer’s price. By providing a discount to the distributor, his income is generated. The manufacturer usually carefully selects his intermediary in a certain territory. Its sales volumes and the level of work on distribution of goods are assessed.

At the same time, it is deeply analyzed:

• Availability and effectiveness of active sales structures.
• Distributor solvency.
• Ability to provide full service to the relevant territory.
• Staff capacity to plan and implement agreed upon regular procurement plans.
• Level of personnel representing the economic interests of the manufacturer.

In order for the product to reach the final buyer, the distributor uses different schemes. In one embodiment, he sells it to a dealer, who sells it to large retail chains that deal directly with customers. An easier way is to sell goods in bulk to retailers who sell them in their stores. Some categories, such as cars, require the distributor to sell the product directly to the end consumer.

To successfully work with the future, it is necessary to organize professional promotion of products purchased from the manufacturer and expand the network for its sales. Therefore the distributor must select reliable dealers and retailers, analyze sales prospects. On this basis, the volume of goods that he can purchase is agreed upon. The contract with the manufacturer stipulates the procedure for purchasing a batch of products at the price set by the manufacturer or purchasing it at a discount. The proceeds from the sale of the product are transferred to the manufacturer, who pays a commission to the distributor.

What is the difference

Both participants in the sale of goods are engaged in the same activities. However, there is a noticeable difference between a dealer and a distributor.

1. The dealer buys goods from a distributor, who purchases them directly in bulk from the manufacturer.
2. A dealer buys goods wholesale and sells them retail. The distributor purchases and sells it according to wholesale schemes.
3. The dealer works directly with end customers and quickly communicates to the distributor their reaction to the product. The distributor’s task is to organize and ensure the functioning of the sales network, which includes dealers.
4. The dealer is free to handle the purchased goods, the selling price of which he can set himself. The distributor operates within the strict rules established by the manufacturer.
5. The main goal of the dealer is to sell the product to the consumer. The main goal of the distributor is to create a reliably operating network for distributing goods and promoting its brand.