Distribution company. How is a dealer different from a distributor?

With coming market economy, active development 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.

Is it physical or entity, which is engaged in the sale of 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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The term “distributor”, which came to us relatively recently from the English language, has already become familiar. This is the name of an entrepreneur who buys large quantities of goods directly from their manufacturer, and then resells them wholesale or retail.

It would seem that everything is quite simple. But the concept of distribution also includes other types of activities that turn a simple seller into a distributor.

Distribution in trade and its types

IN English language The word "distribution" comes from Latin, where distributio meant distribution.

Distribution in trade is the entire complex of logistics processes accompanying the sale of goods. This is one of the main elements of the 4P strategy, or “marketing mix”. In a narrower sense - maximum efficient distribution goods through the distribution network.

There are two views on distribution: from the point of view of the manufacturer (supplier) and the distributor himself. For the first, the process consists of creating a system of sales channels and managing them. For the second, distribution consists of distributing the product on its territory and ultimately bringing it to the buyer. Both approaches are correct and complement each other.

Depending on which characteristic is taken as a basis, the following types of distribution can be distinguished:

Distribution channel length

short - one mediator;
long - a multi-level system of intermediary channels has been created.

Distributor interaction with customers

direct, that is, the goods are directly transferred to the buyer;
indirect, through resale to other intermediaries.

Distribution type

mass - all interested distributors can participate;
selective - the manufacturer supplies goods only to intermediaries who meet certain criteria;
exclusive - only one distributor in a certain territory or group of buyers.

Territory

local (regional);
national (one country);
transnational (a group of countries in one geographical region).

Distributor company

A distributor can be an individual entrepreneur, but most often this role is played by legal entities - distribution companies. Their main function is to satisfy the buyer's needs for the product produced by the supplier. In this case, such a company can act from own name, but most often this occurs on behalf of the manufacturer and supplier.

An agreement is concluded between the distribution company and the manufacturer, under which it becomes the supplier’s representative in the distribution of goods. In this case, the manufacturer determines the following parameters of cooperation:

price of the goods;
the amount of markups on the wholesale price or discounts;
market, that is, region or circle of buyers;
terms of sale of transferred goods;
settlement procedure.

The income of the distribution company consists mainly of markups, which, under an agreement with the manufacturer, are set at wholesale price goods. Their value is usually flexible, that is, it depends on the timing of sales, volumes of supplies, form of payment, etc. Distribution companies also cover their costs from the received markups and discounts.

How a distribution network is built

Each distribution company is independent of other intermediaries engaged by the manufacturer. However, to increase the efficiency of their own activities and, accordingly, profits, such companies can merge, creating a distribution network. As a rule, a distribution network is a multi-level organization that covers a large territory with its distribution channels.

The benefit of building a network is to increase the income of each participant. He receives funds not only for his own sales, but also for sales made by lower-level distributors attracted by him. It is on this principle that network marketing, which is so widespread today, is built.

To create an efficiently operating distribution network, it is necessary to consistently perform a number of tasks that can be divided into three levels:

Strategic. First, you need to decide on plans to increase sales volumes and build a new or modernize an existing network. The result strategic planning should be the development of a network model and control scheme.
Tactical. At this level, a system of document flow and other management procedures is created, models of subnetworks of lower levels are created, planning systems, logistics, etc. are defined.
Operating. Planned warehouses are built, contracts are concluded with distributors and dealers, developed management and document flow systems are introduced, etc.

To assess the efficiency of distribution networks, the relationship between the achievable (desired) level of customer service and the cost of achieving it is used. Obviously, the higher the first indicator and the lower the second, the more efficiently the network operates, the greater the profit will be received by distributors and the manufacturer of the product.

Who are distributors and what do they do?

At first glance, the distributor’s work scheme is quite simple:

enter into an agreement with a supplier who owns a well-known brand;
purchase a batch of goods from him at a reduced price;
realized through your own efforts, setting the maximum markup;
make a profit and invest it in expanding the distribution network.

But in reality, everything is far from so simple. A distributor is an active intermediary between the manufacturer and the buyer. His responsibilities include not only concluding contracts with the supplier of goods and customers, but also carrying out a whole range of marketing activities:

studying the market and its trends;
advertising of the product itself and its manufacturer;
ensuring the necessary stock of goods in warehouses and retail outlets;
pre-sales and post-sales service;
product maintenance;
setting the selling price, etc.

In addition, the distributor is responsible for creating and constantly expanding stable distribution channels and networks to cover the entire territory or segment of the consumer market. All this makes the distributor not only dependent on the manufacturer of the product, but also responsible for his profit.

In addition to liability, the distributor also bears the risks associated with damage or loss of the goods transferred to him.

Official

Purchase and resell goods famous manufacturer Any entrepreneur can. But he does not acquire the right to be called a distributor. Although it can perform all its inherent functions, in particular, promote a product in the existing market, develop new ones, etc. The official nature of the relationship between the supplier and the distributor is fixed by the agreement concluded between them.

There may be several official distributors, for example, large companies. In this case, each of them represents a certain product segment or operates in a certain region. There is no competition between them, except perhaps competition in sales volumes.

Obtaining the status of an official distributor is quite profitable. Depending on the terms of the agreement, such a company has the opportunity to use the manufacturer’s brand to increase sales, participate in joint advertising campaigns, and receive other support. The manufacturer, as an interested party, can help promote its distributors on the market.

How to become one

Become an official distributor famous company It's hard enough. To do this, you will need to have your own, albeit not so popular, name and reputation, confirming your reliability as a partner. Not to mention the established and stable sales channels through which the new product will be sold.

Before signing the desired distribution agreement, you will have to consistently perform a number of actions. All of them can be laid out in seven stages:

Choosing a field of activity. The distribution of each product has its own specifics. Sales of cosmetics differ significantly from the distribution of goods in the car market, alcohol market, IT market, etc. This must be kept in mind.
Market assessment in the selected region. Perhaps it has unoccupied niches or potential for promoting a new product that has not yet become widespread.
Company registration and initial investment. In order for product manufacturers to take a potential distributor seriously, it is necessary to have not only an office, but also warehouses, transport, and most importantly - personnel who will solve logistics issues, do accounting, etc.
Manufacturer search. The Internet greatly simplifies this work. Almost every company that wants to sell its products has a website from which you can get the necessary information.
Compilation commercial offer . This is the most important stage where failure most often occurs. To attract the attention of a well-known company, you need to very convincingly describe your own capabilities.
Receiving a positive response and a personal meeting. Here it is appropriate to show interest not only in the products to be distributed, but also in the conditions of future cooperation.
Conclusion of an agreement. From the moment it is signed, the distributor becomes official, with all the benefits of such status.

Exclusive

Even more attractive than the official one is the status of an exclusive distributor. This means that the right to import and sell goods in the selected region belongs to only one company. The lack of competition allows such an exclusive distributor to obtain maximum profit. In return, he undertakes not only to distribute the goods, but also to protect the represented brand from counterfeits.

The largest distributors in Russia

Since the distributor’s activity consists of selling goods of well-known brands, the names of such companies often appear “behind the scenes”.

As an example we can take Apple company. Everyone is familiar with its products, but few people know that three companies distribute them in Russia: Merlion, DiHous and OCS. A year ago, the fourth company, Marvel, refused to cooperate. Distributor offices are quite logically located in Moscow and St. Petersburg. Well, the delivery of equipment to shelves in the regions is carried out by a network of regional dealers.

The top ten of the Forbes list includes the Megapolis group of companies. This official distributor Baltika company, as well as a number of foreign companies, producers of tobacco, coffee and energy drink Red Bull.

The third top ten on the list is opened by another large distributor - Protek. His field of activity is pharmaceuticals.

The already mentioned company Merlion is ranked 35th. It is the largest distributor of digital equipment and electronics in Russia.

The nuances of such a business

It is not enough for a distributor to find a manufacturer willing to cooperate with him. It is also necessary to sell the goods, and for this we need buyers. The problem of finding them is perhaps the main one for beginning distributors. There are several ways to solve this:

direct contact with owners retail outlets in your region;
creating a group on social networks;
opening your own online store;
searching for partners at specialized exhibitions, conferences, etc.

The work of a distributor seems simple and easy only at first glance. In fact, you need to have certain qualities, among which the first place is the ability to build communications with people. Because this is, in fact, the main activity of the distributor.

The second important aspect of business success will be the willingness to invest in business development. It’s no secret that you can become a distributor of one of the network companies without initial capital. But initial financial investments will allow you to grow your business faster.

Video - who is a distributor:

Modern society is developing every day at a rapid pace, more and more new professions and terms are appearing. Thus, quite recently, the now famous dealers and intermediaries were called merchants. However, in current market relations, the differences between different types distributors of goods. Dealers and distributors – who is who, we will try to figure it out in this article.

Who is a dealer

The word "dealer" is of English origin and is translated as "agent, merchant." A dealer is a company or individual who purchases products wholesale and sells them in small quantities or at retail.

This group of traders also includes agents of the manufacturer or distributor participating in the transactions.

So the dealer takes last place in the commodity exchange chain and is in direct relations with the final buyer. This is the main answer to the frequently asked question - what is the difference between a dealer and a distributor.

Types of dealers

In the trading sphere, there are two types of dealers:

A retail dealer is a classic type of intermediary between trading company and legal and individuals those wishing to purchase the product.
An exclusive dealer is an intermediary in the sale of original rare goods in a certain region. He owns the right to represent premium products and has the opportunity to make unlimited profits.

To better understand how a dealer differs from a distributor, let’s consider their main functions, rights and responsibilities.

What is the job of dealers?

Dealer activity consists of performing intermediary operations:

purchase and sale of products produced by enterprises or sold by distributors and owners;
representing the interests of the product manufacturer and its brand on the market.

Cooperation between dealers and product owners involves the conclusion of an agreement that defines the rights and obligations of each party. But, in addition to the delivery and payment of goods, dealers are required to adhere to certain principles. Thus, the intermediary, in addition to its basic functions, has additional rights and certain obligations to the manufacturer.

In other words, the dealer is fully responsible for his activities and if the terms of the contract are not met, he may lose his job. So, if sales are not going well, the agent is not actively promoting the brand, and the owner of the product does not sell the required quantity of products, the company may refuse the services of such an intermediary. In this case, the dealership may be transferred to another dealer.

To ensure that the intermediary is interested in sales, all manufacturing firms and distributors offer agents a percentage of the actual volume of goods sold, in which a dealer differs from a distributor.

Dealer rights

Each dealer has the right:

Call yourself an official representative of the manufacturer or distributor.
Receive goods taking into account dealer discounts. He plays the role of a reseller, so he buys products at special prices.
Represent the trading interests of a manufacturing company in a certain region or among a specific circle of buyers.
Obtain a loan from the manufacturer in order to develop your trading activities. From this point it follows that the intermediary does not necessarily have to be financially secure. What is the difference between a dealer and a distributor? The fact that he can start his activity with a minimal contribution.

Dealer Responsibilities

There are many more professional characteristics, which illustrate how a dealer differs from a distributor. The difference can be determined by the requirements put forward by manufacturers. Thus, the responsibilities of the dealer include:

Planned procurement - the dealer must purchase goods in a certain quantity and at the frequency specified in the contract. If for some reason the intermediary was unable to sell the required volume of products, then the difference is carried over to the next period. The fact is that the subject of the contract is the purchase of goods by the dealer from the manufacturer, and not its sale to the final buyer. Therefore, the agent is obliged to buy products in a specific volume. When the intermediary is already the owner of the product, the manufacturer is not interested in the dealer's relationship with third parties.
Territoriality - the intermediary has his own implementation area and must adhere to it. As a rule, such a sales territory coincides with the geographical or administrative division of the country. This could be a village, a city, a region or an entire state. If the contract provides for the right to sell in a specific territory, the dealer can supply the market with his product as a single person. Although it is possible that other agents with similar products will operate in this area. Such saturation with intermediaries is typical for consumer goods (for example, food).
Promotion of goods - this responsibility applies to every trader - dealer or distributor, but it manifests itself in different ways. At this point there are features of each type of trade, which also answer the question - what is the difference. The dealer and distributor are almost equally obliged to facilitate the sale of goods. Only each of them uses their own marketing tools. So, the dealer must conduct various promotional events and promotions. Thus, the intermediary actively advertises the manufacturer. And if there are several intermediaries of such a company in the territory, advertising campaigns of one agent should stimulate sales of all dealers. Financing of promotion occurs only at the expense of the intermediary. In comparison, the distributor's marketing campaigns are paid for by the product manufacturer.
Trade only goods from one manufacturer. This is especially controlled when the enterprise is fighting with competitors for the sales market. As a general rule, dealers of the same brand must adhere to a certain style companies. For example, wear branded clothing, use special equipment with advertising pictures and slogans.
After-sales service - in addition to the sale of goods, the dealer must provide warranty and post-warranty repairs of the sold products. Warranty repair is carried out free of charge for the buyer, and the costs incurred by the dealer must be reimbursed by the manufacturer.

The intermediary is also obliged to serve buyers at high level, since he is the face of the manufacturer. During communication with the dealer, buyers develop an attitude towards trademark, which significantly affects the indicator of commodity demand.

Sometimes the contract may provide for additional responsibilities: supplying the manufacturer with materials and raw materials, lending to production as an advance payment.

Who is a distributor

A distributor is an individual or legal entity who is an official representative of the manufacturing company and performs the functions of distributing goods from the enterprise to retail or wholesale resellers - dealers. Such a distributor is an intermediary between producers and subsequent traders. This important feature how a distributor differs from a dealer. Although there are some cases when the distributor works with end customers.

A distributor can be either a large company or one person with certain skills and knowledge.

In addition, the distributor has the exclusive right to sell goods at a reduced price without trade markups. These are the most important differences between a distributor and a dealer.

Distributor functions

The functions of a distributor and a dealer are very similar. The distributor is also involved in selling goods, replenishing stocks of products and finding ways to sell them. But there is still a main feature that distinguishes a distributor from a dealer - the development and maintenance of a dealer network. That is, the distributor is constantly looking for new intermediaries. Thus, in order to increase large sales volumes, each distributor tries to create its own dealer network that would generate a stable regular income.

Requirements for distributors

To carry out its functions, the distributor must meet certain requirements. So, it should have:

dedicated storage space required quantity goods;
own dealer network;
funds for lending to intermediaries;
qualified personnel.

Such differences between a distributor and a dealer indicate some complexity of the profession, since the distributor must have a certain financial basis.

Who is more important - the distributor or the dealer?

Every manufacturer at the very beginning of their activity wants to create a developed sales network for their products. To do this, it uses both distributors and dealers. Both perform the same role - selling goods. But who brings in more income?

Based on quantitative indicators of sales and profits, the distributor can be considered the most significant link in the trade chain.

As a rule, an experienced distributor has a large sales network, which ensures stable sales volumes.

But if dealers are removed from this process, distributors will be forced to look for buyers on their own. And this will slow down trading and significantly affect the manufacturer’s profits. After all, the ability to work with customers is what distinguishes a dealer from a distributor. Therefore, both distributors and intermediaries are equally important in the trading process.

Currently, many of the largest corporations for the convenience of organizing sales and optimizing delivery own products sales networks are organized to end consumers, which include several additional links in addition to the standard “seller-buyer”. In particular, distributors are direct representatives of the company who make shipments directly from the supplier’s warehouses.

If we consider the entire chain through which the movement of goods produced by large holdings occurs, we can identify several of its main participants. These include, in addition to the enterprise that produces the product, dealers and distributors. This provides a high degree of convenience for customers and allows you to maximize the geography of the company’s clients. There are a few key differences between the two dealerships here. The dealer, in particular, deals with the product directly to its consumer. Products are supplied to him by an official distributor, who, in turn, purchases them directly from the manufacturing company. Thus, the dealer has the opportunity to communicate with the end buyer directly, carrying out both wholesale and retail trade. Its capabilities allow it to study the consumer market in detail, identifying both positive and negative opinions about the proposed product. And distributors are companies engaged exclusively in wholesale sales, shipping products only to dealers. The task of a representative with this status is to globally expand the sales geography of the manufacturing company and search for organizations to which finished products can be shipped in bulk.

In order to become a distributor, you will need to enter into a contract directly with the manufacturer of the product. Typically, this type of agreement contains certain conditions, the fulfillment of which allows you to obtain the coveted status from the manufacturer. These usually include such things as the minimum volume that the representative will have to ship monthly, as well as payment options for the goods received. Often the manufacturer provides a deferment on payments, but it can be minimal and not exceed 3-5 days. In addition, a company that produces its own products officially gives its representative the right to use the registered brand of the product, ready-made and any other privileges that ensure the distribution of the product in various regions.

Thus, distributors are official representatives of the supplier company who have the ability to make shipments directly from the manufacturer and have certain privileges to use the company’s goodwill in relation to the goods sold. Its main task is to expand the geography of products shipped under a distribution agreement and search for new dealers and sales points.

Distributor is individual entrepreneur or a separate company purchasing large quantities of goods from a manufacturer for subsequent trading through agents or a regional market. The main task is to distribute products throughout the world and announce the partner as reliable manufacturer quality product. This profession is not an easy one, and in fact, to understand what a distributor is, you need to work at least a little as a salesman. This activity is very interesting, connected with communication, the ability to find mutual language with the most different people. A distributor has many different roles and responsibilities that are just as interesting as what they sell.

Distribution activities

The distributor begins to perform its direct functions from the moment when it purchases goods from a manufacturer, most often a foreign one. Cooperation with foreign companies brings more profit and is of significant interest to new consumers, for example Russian ones. Previously, many did not know what distributor great importance he has in the field of economic development and sales in general.

The distributor’s work scheme is quite simple:

purchasing goods at prices from the manufacturer;
sale of products through dealers and agents of other companies or the regional market as a whole;
opening an importing company in other countries.

Some examples from history

Back in the early 1990s, the unknown Invite powder reached Russian consumers due to the fact that the producers of this instant juice ingredient knew what a distributor was. It was thanks to this system that the company's leaders managed to make a fortune and distribute their products throughout the world.

If, after long and hard work, a company eventually has an official distributor in Russia, then sales will be successful, because the Russian market is vast. The owners of large cellular companies, the Apple corporation, many cosmetic companies, etc. can boast of such examples.

Documenting

The distributor enters into an agreement with the manufacturing company, which clearly stipulates the sales rules, the territory covered, prices and much more. This is a wonderful opportunity to create trade and economic relations with foreign companies that are especially popular in the West. An importing company that independently sells products in other countries is a general distributor. When the supplier does not have the right to sell his goods to third parties, and the distributor must buy goods only from this supplier, then this is already an exclusive distributor. And the territory for is strictly discussed in the contract.

All rights and obligations of the parties are secured by the distribution agreement. The distributor then receives from general director the manufacturing company has a corresponding certificate indicating Now, we hope, everyone understands what a distributor is, what his responsibilities are and his main purpose.