In a distribution network, a distributor, or a reseller, is a business that brings goods or services to market. In general, a distribution network vendor produces first inventory/stock items to be sold to the following point in the distribution chain and then sells them to their customers. Today, those terms generally refer to a distributor of any good or service. However, distributors can also be sales reps, logistics managers, executives, or marketing managers.
The relationship between a distributor and a wholesaler is a key component in any supply chain. Without a distributor to sell to, a company would be immediately handicapped in most instances. The same holds true for a wholesaler, who is responsible for providing the basic raw materials to vendors in order for those products to be purchased and marketed. Without wholesalers, many companies would not be able to exist, because they would need to purchase items from suppliers, load them into their plant, process them into finished goods, and then provide packaging and delivery services to clients.
In today’s economy, because distributors and wholesalers are so vital to business survival, there are many questions surrounding their roles and responsibilities. Some vendors are outright resellers, supplying other vendors with their products, including smaller vendors, to fill their own inventory. Other distributors, while not formally resellers, frequently do business as brokers or middlemen between two or more producers and retailers. In this role, they typically mediate the process of transferring raw materials, goods, and services among various entities. This has made them major players in the distribution networks, since they act as the go-between for raw materials and other goods and services and also act as the administrators and caretakers for the products and services produced by each individual vendor.
The roles of the middlemen become particularly important when one wants to buy goods at wholesale prices. Since most wholesalers usually sell something on credit, they will often negotiate better deals with vendors than they would if the transaction was completed through credit only. When the credit is arranged through a wholesaler, both parties benefit, since the wholesaler can obtain higher volume discounts and pass those savings along to customers. Retailers, too, save money since they no longer have to cover the cost of procuring raw materials and paying retailers for their products, since the wholesaler typically does those responsibilities. This is why wholesalers remain so important to the market for wholesalers to sell something on credit, and why retailers find it so important to do wholesaling themselves.
Even with today’s economy forcing many vendors to downsize and go mostly or completely self-employed, the market for wholesalers and distributors remains strong. Even with warehouses full of supplies waiting to be shipped to customers around the world, the demand for such products still far outstrips supply. As such, the small business owner is advised to not only find a wholesaler who will provide the best price for the items being purchased, but one who will also perform quality services and ship to different parts of the country and across different states.
The other services that vendors offer are a significant reason why they are so important to wholesalers. Vendors offer storage and packing services, as well as facilities to warehouse the goods and handle returns and exchanges. This level of service means that merchants can save both time and money in putting together a complete supply chain process. Because they can offer all of this to wholesalers, both sides can profit from a multi-way relationship with vendors, and the small business owner can avoid spending valuable time on sales and marketing when more valuable resources are available.