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Top 9 differences between dealer and distributor? – WISE & RISE

dealer and distributor

Are you curious to know about the main difference between dealer and distributor? However, there is confusion among people.

In this article, we will talk about dealers and distributors and their roles in the traditional product supply chain. 

What is a Product Supply chain?

Typically, the items you buy at your local supermarket or online shopping portals have a long distributorship chain from several suppliers. Supplying items to their ultimate destination, a physical store or online store, necessitates the use of several intermediaries, including dealers and distributors. This extended network is known as a product supply chain.

Manufacturer, distributor, dealer, and buyer are the most common members of this traditional supply chain. There is a particular sequence in this supply chain according to the selling of products. Even though distributor or dealer is not the same, both serve as middlemen in the distribution process.

Dealers have direct communication with the end-users. At the same time, distributors have a direct relationship with the manufacturing companies since they purchase items from them.

Difference between dealer and distributor: –

 

There are some similarities between dealership and distributorship, but there are also some significant differences.

Both parties may use the product manufacturers’ logos but cannot provide the manufacturer’s name independently. Both parties purchase goods to sell, and both parties may benefit from several incentives. However, there are significant differences between the markets to which each party tries to appeal, provides services, and which manufacturer’s products, the dealer and distributor, are permitted to sell.

Let’s take a close look at the differences between dealer and distributor in the following:

Who is a Dealer in a traditional supply chain?

A Dealer could be an entity or a business corporation that engages in purchasing products from the manufacturers for their account and then selling them to the customers from their stock.

In basic terms, a dealer is someone responsible for trading a particular product and earning a profit from its customers. They purchase products at a specific cost and then sell to the public with a profit on the original price.

A dealer carries a wide variety of items, sometimes from different distributors. He maintains an account through which he does commercial trading for himself as part of his normal business.

For instance, if you go to your local appliance store to look at recent smartphones, you’re sure to speak with a dealer.

The dealer acts as a middleman between the distributor of products and the customer. They are the authorized vendor for selling those items in that specific location. By selling a wide range of products or items, a dealer can draw more customers from other dealers located at different places or the same place.

As a result, there is intense competition among various dealers, and they must conduct a good relationship with clients to keep them for an extended period. Poor customer service or commodities let your users may purchase from a rival dealer.

franchise business
dealership

Who is a Distributor in a traditional supply chain?

 The distributor acts as a middleman between the product’s manufacturer and its dealers. They are the ones in charge of supplying items to the entire market. It means they serve as an intermediator in the supply chain process and provide direct contact with the manufacturer. He buys items from such Product Manufacturing companies and sells them on their behalf to other parties.

In simple words, they are selected and allowed by firms to market their products in a specific geographic region. Besides that particular distributor, no one else has the authority to sell that product in the designated region. Thus, he is the sole source for retailers and dealers to buy products.

Take a look at the below table for the top 9 Differences: –          

Difference

Characteristics

                 Dealer

                  Distributor

1

   Definition

A Dealer is someone responsible for trading a variety of products to the customers to earn a profit.

The distributor is an entity that supplies items to the dealer in the market.

2

   Connects

The dealer deals with the distributor and the customer.

The distributor connects the product manufacturer to the dealer.

3

Functional Area

Restricted in localized Market

Large Market without Geographical limitations

4

Competition

Deals with utmost competition

Average competition

5

Selling

Sells products to end-users

Sells products to dealers

6

Purchasing

From a distributor or many

From a manufacturer

7

Storage

Stocks are preserved in large warehouses

Stocks are preserved in the retail environment

8

Bulk

Single units or smaller bulk amounts

Bulk amounts

9

Earning

From the end-users

From the distributors

 

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