Translated from English, distributor means distribution, distribution. The meaning of this concept has been fully revealed and gained wide popularity due to network marketing, which is carried out thanks to the rational movement of goods and services from manufacturers to end users.
Who is a distributor?
A distributor is a legal entity or an individual entrepreneur (intermediary), which engages in small and large wholesale purchases of goods from manufacturing companies or provides a specialized type of service on behalf of these companies. Distributors do not interact with end consumers, they sell all goods and services to resellers or dealers, i.e. resellers in regional markets.
Distributors are whole companies as well as entrepreneurs who can purchase goods and services from foreign and domestic manufacturers.
A distributor is a representative of a particular brand that promotes and sells it on the market due to its organizational structure and customer base. This is an intermediary first level executing sales transactions.
What are distributors for?
Manufacturers need distributors to better cover the markets for their products, increase their sales and, as a result, increase profits. Manufacturers lay on the shoulders of distributors that part of the work that they themselves cannot do, for example, entering a new segment of consumers, the geographic market. Distributors (intermediaries) perform this task well, because they possess voluminous information about various market participants.
Working conditions between the distributor and the manufacturer
Having drawn up a distribution agreement (contract) between the manufacturer and the distributor, the latter is transferred the rights to distribute and sell goods and services. After signing the contract, the manufacturer issues a distributor certificate, which is often signed by the CEO. This certificate indicates the type of distributor (intermediary company):
- The general distributor is an importer company (the sole representative of the manufacturer), independently engaged in the sale of goods in any country or several at a time, using only its own strength or through a dealer network.
- Exclusive distributor - in this case, the manufacturer company agrees to sell the goods to only one distributor (intermediary) in the agreed territory under the agreement, and the intermediary has the right to buy goods from the manufacturer company and sell it exclusively in the territory specified in the contract.
- Official distributors are all those who have entered into a distribution agreement with a manufacturing company. They have preferential service, exclusive rights to sell, and also undertake to purchase a certain amount of goods and sell it at a contract price.
Distributors sell goods to retail outlets at their own expense and at the price set by manufacturers, without any additional margins. One manufacturer may have several representatives, distributors (distributors) of their products, and a distributor may immediately present the goods of several companies.
Based on the stages of market development, the manufacturer gives the distributor either all or a certain stage of the sale, for example, customer search.
As an income, official distributors receive a discount provided by the manufacturer, i.e. the goods are purchased or taken for sale at a discount, and distributing companies sell them at the price set by the manufacturer. As a result, the difference in the form of discounts remains with distributors on the balance sheet.
Large official distributors in Russia
- Merlio company - distribution of software, digital, household, computer equipment, office furniture, office.
- Goodwill Holding is a distributor of international trucks.
- NEC - a distributor of Schneider Electric - sales of electrical equipment.
- diHouse, Marvel Distribution - official distributors of Russia to Apple Corporation.
- "Treolan" - HP distributor - sales of printing devices, personal systems, consumables, software, network equipment, the provision of services and corporate solutions.
How to become a distributor?
In order to become a distributor of any manufacturer, it is necessary to determine the market niche, choose the most popular goods and services that are in demand and popularity among consumers. Then proceed with the search for manufacturers using directories, the Internet, and newspapers. The next step will be the conclusion of a distribution agreement. After that, the purchase or acceptance for sale of goods from the manufacturer is carried out.
A distributor is also one who, in addition to the above, must independently rent storage facilities, conduct a competent advertising project to increase sales of products and their promotion, hire employees, rent or purchase vehicles.
The distributor is often not responsible for the obligations of the manufacturer, and the manufacturer is not responsible for the obligations of the distributor, therefore, to start the distributor needs capital, which, as an option, you can try to get from the bank.
