MGH Distributors
Functions Of Distributors For Manufacturers and Consumers

Functions Of Distributors For Manufacturers and Consumers

Introduction

 

Wholesale agents that bind producers and retailers are the distributors. Distributors buy vast amounts of products from manufacturers and distribute them to individual customers. However, they remove the need for manufacturers to approach a large number of retailers one by one. Therefore, for all parties involved, such a partnership has many advantages. In this article, you will understand the functions of distributors for consumers and manufacturers and much more. 

Functions of Distributors for Consumers

 

Manufacturers face tremendous challenges in supplying markets directly in today’s globalized world, where markets across national borders. As a result, they rely on intermediaries to manage distribution, either in their home country or abroad. As a result, these distributors provide the following services to end-users (consumers).

  1. Fast delivery
  2. Segment based product assortment
  3. Local credit
  4. Product information
  5. Assist in buying decision
  6. Anticipate needs

Functions of Distributors for Manufacturers

 

Distributors perform a variety of activities in addition to those that customers do. However, manufacturers, as previously stated, were traditionally unable to serve markets directly, especially in today’s globalized world. As a result, they need distributors to assist them in getting the product to the final customers. Furthermore, since customers are generally aware of the potential benefits offered by distributors, they would choose a distributor that can meet their needs. This is why, in an overseas market, finding the right distributor is important, as the distributor serves as a gateway to the market.

  1. Buy and hold stocks
  2. Combine manufacturers outputs
  3. Share credit risk
  4. Share selling risk
  5. Forecast market needs
  6. Provide market information

How Product Distributors Work

 

When it comes to getting goods to end customers, a producer has two options: selling direct or using distribution. The benefit of distribution is that it helps the producer to concentrate on its core business of producing goods while the distributor manages the sales. Thus, understanding how distributor functions will help you decide whether the distribution is right for your business.

Retail Outlets

A distributor’s network of distribution outlets is what makes it important. The producer negotiates bulk purchase pricing with the dealer, and the distributor sells the goods to its retail customers. Wholesale is the price at which the dealer sells to its retail customers. This helps a retailer to sell its goods to a large number of retail outlets without having to pay for the upkeep of that network.

Customer Service

Customer service and assistance are an important part of becoming a sales company. A distributor is a distribution agency that is required to maintain a trained and efficient customer service department that handles retail customer accounting issues, delivery issues, and product issues. In addition, the dealer is responsible for repairing items that are either under warranty or arrive damaged to the retail customer. Also, the manufacturer only has to offer customer support to the dealer, which eliminates the manufacturer’s administrative burden.

Functions Of Distributors For Manufacturers and Consumers

Custom Configuration

 

Manufacturers often use distributors to create custom setups for retail outlets and end-users. The manufacturer would require the distributor to submit staff to train them in configurations, after which the distributor will be able to charge a fee to its retail outlets for custom work. The parts then ship to the dealer, and the distributor handles the integration. If a retail client has a corporate client that needs updated memory built in all of its machines, the retailer will order custom-designed computers from the manufacturer.

Shipping Regulations

 

Product distributors are in charge of getting products to retail stores, which requires customs paperwork for foreign shipment. Manufacturers can ship goods to a distributor’s domestic venue, and the distributor would take the required steps to get the product to international markets. This enables a company to grow its client base without having to set up foreign shipping or sales offices.

Advantages of Having a Distributor

 
Investment Requirements Become Less

Since distributors carry on some of the roles needed to make the commodity available at the final point of purchase, manufacturers working with distributors must use far fewer warehouses, vehicles, and staff. To supply these 50 locations, a manufacturer would use one exclusive distributor in each of the 50 states and only need three major warehouses on the East Coast, West Coast, and Midwest. It would have needed 50 warehouses instead of three if it had not used any distributors at all. The money saved by relying on distributors for vital functions can be put into research and growth, ads, and other projects.

Management of Risk

The more a company’s supply chain is spread out, the lower the risk each party in the chain faces. A fire, flood, or weather-related road collapse in just one area will cripple a significant portion of the distribution network if the company stores its entire stock at just three warehouses. It’s much less likely that a disaster would strike a dozen or 50 warehouses operated by individual distributors at the same time. If your delivery network is spread out, other local phenomena, such as utility price increase, would have less of an effect.

Understanding of Local Markets

Local distributors typically have a greater understanding of their local clientele than those located in corporate headquarters 1,000 miles away. If the vendor is closer to the customer, it is easier to determine which colors of a particular garment to hold in stock, or how many cases of chocolate versus ordering vanilla ice cream from a factory. Similarly, people who are familiar with the local circumstances are ideally suited to handle what payment terms to deliver to customers, how to entice new retailers with the right form of promotion, and other key pieces of the sales puzzle.

Structures that are Hybrid

Manufacturers and distributors may own distribution centers together in some cases. The manufacturer and a local investor can jointly own a local company that will distribute the product, particularly where no investor can be found to construct a warehouse, hire staff, and purchase trucks, forklifts, and other expensive products. The lower investment capital needed makes it easier to find qualified candidates and speeds up the setup process. The manufacturer may also use its buying power and brand identity to secure lower-cost products, resulting in even more savings.

Conclusion

 

Manufacturers have a lot of options available for reaching customers with their goods and services. One possibility is for the manufacturer to create its own end-user sales division and sell directly to consumers. Using distributors as an alternative to selling directly is a viable choice. However, using distributors as a business option has many tactical and logistical benefits over selling directly. We hope you have got a better idea about the functions of distributors.

Myanmar Golden Heart distributor plays a critical role in keeping the lines of communication open between suppliers and end-users. They shorten response times, broaden a company’s scope, and even provide value-added services.

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