What is a distributor?
Distributors buy products or product lines, warehouse them, and resell them to retailers or directly to the end customers. As a channel partner, distributors essentially form a link in the supply chain between the manufacturer and the customer.
If you’re a manufacturer of computer components, for example, you might use a distributor to get your products into the hands of tech retailers. A distributor would purchase your components in large quantities, store them, and then sell them to various retailers who then sell to the end consumer.
As partners, distributors offer these benefits:
- Market expertise: Distributors possess in-depth knowledge of local markets, consumer preferences, and regulatory requirements, helping manufacturers tailor their products for specific regions.
- Inventory management: Distributors can reduce the manufacturer’s storage costs and ensure products are readily available for retailers based on demand.
- Risk sharing: Distributors can help mitigate risks for manufacturers by absorbing potential losses related to slow-moving or obsolete inventory.
- Scalability: Distributors offer the ability to scale distribution efforts quickly and efficiently, accommodating fluctuating demand and seasonal trends.
- Established relationships: Distributors have established relationships with local retailers, making it easier for manufacturers to enter new markets and expand their customer base.
- Marketing support: Distributors can support manufacturers’ marketing efforts, promoting products through their channels and leveraging their advertising and promotional resources.
- Export expertise: Distributors with international reach can facilitate exports and navigate complex international trade regulations, enabling manufacturers to enter new global markets.
- Customer service: Distributors often offer customer service support to retailers and sometimes to customers, relieving manufacturers of the burden of post-sale support.
- Cost-effectiveness: Distributors consolidate shipments and handle logistics efficiently, reducing shipping costs and optimizing the overall distribution process.
Distributors play a crucial role in bridging the gap between manufacturers and retailers, streamlining the supply chain, and facilitating the distribution of products to customers. By partnering with distributors, manufacturers can focus on their core competencies, such as product development and innovation, leaving distribution to the experts.