Products purchased from your favorite stores often involve distribution from a variety of sources. Getting a product to the market largely requires an effective marketing channel for companies that manufacture durable goods and other products. A supply chain typically features various middlemen between the manufacturer and the consumer, such as distributors, wholesalers and retailers.
Distributors frequently have a business relationship with manufactures that they represent. Many distributors maintain exclusive buying agreements that limit the number of participants or enables distributors to cover a certain territory. The distributor becomes the manufacture’s direct point of contact for prospective buyers of certain products. However, distributors rarely sell a manufacture’s goods directly to consumers. Wholesale representatives and retailers generally find distributors to buy products for resale.
Wholesalers generally buy a large quantity of products directly from distributors. High-volume purchase orders typically improve a wholesaler’s buying power. Many distributors provide discounts for a certain number of items purchased or the total amount spent on merchandise. Wholesalers acquire merchandise, such as telephones, computers, bicycles, clothing, televisions and furniture. The goods are frequently destined for retailers.
Retailers consist of small and large for-profit businesses that sell products directly to consumers. To realize a profit, retailers search for products that coincide with their business objectives and find suppliers with the most competitive pricing. Generally, a retailer can buy small quantities of an item from a distributor or a wholesaler. For instance, a retail merchant who wanted to purchase a dozen lamps could contact lighting distributors to inquire about pricing.
Raw materials that become finished products are an important aspect of a manufacturer’s operation, but the selling process must stay on pace with the production schedule or the manufacturer could end up with too many items. Distributors often place large orders for some items, such as bicycles or infant car seats. The main differences among wholesalers, distributors and retailers are based on the entity’s business model and objectives toward merchandising. Some business operations may manufacture and sell products on a retail basis directly to consumers. Using market research, communications skills and established business relationships; wholesalers, distributors and retailers can create strategies for business success.