Modern society is developing every day at a rapid pace, there are more and more new professions and terms. So, most recently known dealers and intermediaries were called traders. However, in current market relations, differences between different types of distributors of goods are clearly defined. Dealers and distributors - who is who, we will try to understand this article.
Who is the dealer
The word "dealer" is of English origin and translates as "agent, merchant." A dealer is a company or an individual who purchases products in bulk and trades in small batches or retail.
Also, this group of merchants includes agents of the manufacturer or distributor participating in transactions.
Thus, the dealer takes the last place in the commodity exchange chain and is in direct relationship with the end customer. This is the main answer to the frequently asked question - what is the difference between a dealer and a distributor.
Dealer Types
In the trading sector, there are two types of dealers:
- A retail dealer is a classic type of intermediary between a trading company and legal entities and individuals wishing to purchase goods.
- An exclusive dealer - an intermediary in the sale of original rare goods in a certain region. He owns the right to represent premium products and has the ability to receive unlimited profits.
To better understand the difference between a dealer and a distributor, consider their main functions, rights and responsibilities.
What is the work of dealers
Dealer activity is to carry out intermediary operations:
- purchase and sale of products manufactured by enterprises or sold by distributors and owners;
- Representation of the interests of the manufacturer of the product and its brand in 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. So, the intermediary, in addition to the 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 conditions of the contract are not fulfilled, he may lose his job. So, if sales go poorly, the agent does not actively promote the brand, and the owner of the goods does not sell the required amount of products, the company may refuse the services of such an intermediary. In this case, the dealership may be transferred to another merchant.
In order for the intermediary to be interested in sales, all manufacturing companies and distributors offer agents a percentage of the actual volume of goods sold, in which the dealer differs from the distributor.
Dealer Rights
Each dealer has the right:
- Call yourself the official representative of the manufacturer or distributor.
- Receive goods with 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 specific region or among a specific circle of customers.
- Get a loan from the manufacturer in order to develop their trading activities. It follows from this paragraph that the intermediary does not have to be financially secure. What is the difference between a dealer and a distributor? By the fact that he can start his activity with a minimal contribution.
Dealer Responsibilities
There are many more professional features that illustrate how the dealer differs from the distributor. What is the difference can be determined by the requirements put forward by manufacturers. So, the responsibilities of the dealer include:
- Procurement plan - the dealer must buy the goods in a certain quantity and with the frequency specified in the contract. If for some reason the intermediary could not sell the desired volume of production, then the difference is carried forward to the next period. The fact is that the subject of the contract is the purchase by the dealer of the goods from the manufacturer, and not its sale to the final buyer. Therefore, the agent must buy products in a specific amount. When the intermediary is already the owner of the goods, the manufacturer is not interested in the relationship of the dealer with third parties.
- Territoriality - the intermediary has its own zone of implementation and must adhere to it. As a rule, such a sales territory coincides with the geographical or administrative-territorial division of the country. It can be a village, city, region or the whole state. If the contract provides for the right to sell in a specific territory, the dealer may supply the market with his goods in a single person. Although it is possible that other agents with similar products will work in this area. This saturation of intermediaries is characteristic of consumer goods (for example, food).
- Promotion of goods - this obligation applies to every dealer - dealer or distributor, but it manifests itself in different ways. At this point there are features of each type of trade, which also give an answer to the question - what is the difference. The dealer and distributor are almost equally obliged to promote the sale of goods. Only each of them uses their marketing tools. So, the dealer must conduct various promotions and promotions. Thus, the intermediary actively advertises the producer. And if several intermediaries of such a company work in the territory, advertising campaigns of one agent should stimulate sales of all dealers. Promotion financing is only at the expense of the intermediary. In comparison, the marketing campaigns of the distributor are paid by the manufacturer of the goods.
- Trade only goods from one manufacturer. This is especially controlled when the company fights with competitors for sales market. As a rule, dealers of one brand must adhere to a certain style of the company. For example, wear branded clothing, use special equipment with advertising drawings and slogans.
- After-sales service - in addition to the sale of goods, the dealer must provide warranty and post-warranty repair of the products sold. Warranty repairs are free of charge for the buyer, and the manufacturer must cover the costs incurred by the dealer.
Also, the intermediary is obliged to serve customers at a high level, since he is the face of the manufacturer. During communication with the dealer, customers form their attitude to the brand, which significantly affects the indicator of product demand.
Sometimes the contract may provide for additional obligations: supplying the manufacturer with materials and raw materials, lending to production as an advance payment.
Who is the distributor
A distributor is an individual or legal entity that is the official representative of the manufacturer and performs the functions of distributing goods from the enterprise to retail or wholesale resellers - dealers. Such a distributor is an intermediary between manufacturers and subsequent traders. This is an important feature of 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 trading margins. These are the most important differences between a distributor and a dealer.
Distributor Functions
The functions of the distributor and dealer are very similar. The distributor is also engaged in the sale of goods, replenishment of stocks of products and the search for ways to market it. But still there is a main feature of how the distributor differs from the dealer - this is the development and maintenance of the dealer network. That is, the distributor is constantly looking for new intermediaries. Thus, to build up large sales volumes, each distributor tries to create his own dealer network, which would bring stable regular income.
Distributor Requirements
To fulfill its functions, the distributor must meet certain requirements. So, he must have:
- a specially designated place to store the necessary quantity of goods;
- own dealer network;
- funds for lending to intermediaries;
- qualified staff.
Such differences of the distributor from the dealer indicate a certain complexity of the profession, since the distributor must have a certain material basis.
Who is more important - a distributor or dealer?
Every manufacturer at the very beginning of his activity wants to create a developed sales network for his products. For this, he uses both distributors and dealers. And they both fulfill the same role - the sale of goods. But who brings more income?
In terms of quantitative indicators of sales and profit, a distributor can be considered the most significant link in the trading chain.
As a rule, an experienced distributor has a large distribution 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 the bidding and noticeably affect the profit of the manufacturer. After all, the ability to work with customers is what distinguishes a dealer from a distributor. Therefore, in the trading process, both distributors and intermediaries are equally important.
