Top 10 differences between a wholesaler and distributors

Wholesale vs distribution is another thing but both are important and different components of a supply chain but they are often confused to be the same. Therefore, we will explain the slight differences between the two on the topic of wholesale vs distribution.

However, to understand the differences between a wholesaler and a distributor you need to know exactly what is wholesale? What is distribution? Who are wholesalers? who are the distributors (explained above) and wholesale vs distribution.

Top 10 points for wholesale vs distribution are as follows:

1. What is a wholesale?…..business of buying products in bulk from the manufacturer and selling in small quantities to distributors or retailers. whereas, What is distribution?…..the business of selling the products of the manufacturer to the wholesaler, retailer, or consumer.

1. Wholesalers purchase products at a low price and sell them at a higher price. Whereas, for the distributors the fees paid by the manufacturer are the source of income.

1. Wholesalers don’t have to advertise their products. However , the distributors need to know the skill of advertising their products.   

1. The wholesaler is present on the two-level and three levels of the distribution. Whereas, the distributor is only present at the third level of the distribution.

1. A wholesaler has a link with the manufacturer and retailer or distributor. Whereas, the distributor has a link with the manufacturer, retailer, wholesaler, as well as consumer.

1. The serving area of a wholesaler is less in comparison to the distributor. Whereas, a distributor acts as a middleman for the supply of sources. Therefore, it has a larger serving area.

1. The wholesalers have no responsibility for the fact that the products are being purchased or not. They are solely responsible for fulfilling the orders made by the retailers. Whereas, the distributors are responsible for the execution of the orders and the promotion of the products of the company.

1. A wholesaler is not in any contract with the manufacturer. Whereas, the distributor has to sign a contract with the manufacturer.

1. A wholesaler can sell and purchase from any manufacturer. Whereas, the distributor can only buy, sell, and advertise the products of the company he has a contract with.

1. Wholesalers may buy products from the manufacturer or the distributor. Whereas, the distributor is usually in a contract with the manufacturer. He is responsible for advertising and selling the product to the wholesaler, retailer, and consumer.

Types of wholesalers:

As of now, we have discussed who are wholesalers and wholesale vs distribution. Now, let us look at various types of wholesalers:-

Wholesalers are of six types :-

1. Manufacturers sell branches and offices.
2. Brokers, agents, and commission merchants. 
3. Merchant wholesalers.
4. Full-service wholesalers 
5. Limited service wholesalers
6. Specialized wholesalers

1) Manufacturers sales branches and offices:

These are the offices owned by the manufacturer itself although are separated from the manufacturing site. These offices or branches are used by the manufacturer for distributing its products at a wholesale level. Some merely are offices and some have warehouses.

2) Broker, agents and commission merchants:

These are the middlemen who are independent and do not take responsibility for the goods they are dealing with. However, they actively advertise the products for buying or selling on behalf of their clients. The brokers, agents, and commission merchants earn their revenue from the commission paid to them by their clients. But commission merchants are usually limited to the agricultural department. Whereas, brokers and agents are most common in the real estate industry.

3) Merchant wholesalers:

These are the most common types of wholesalers, they take responsibility to sell the products. Merchant wholesalers take the risk by buying products in large quantities in bulk from the manufacturer. If the products are somehow not sold then it is the merchant wholesaler who will bear the loss. They specialize within a limited area because they have connections within that specific area.

Myanmar golden hearts is a distribution company that has networks all over the market in Myanmar. Moreover, they take responsibility for the goods they trade with, to be of the best quality.

4) Full service wholesalers: 

The full-service wholesalers are also called “retail wholesalers” because they mainly deal and operate with retailers. They are responsible for sales of the product and not for the service. Moreover, the main responsibility of a full-service wholesaler includes sales of the product, delivery, financing, and advertising. Full-service wholesalers are the second most common type of wholesalers in the market.

5) Limited service wholesalers:

These are the people who sell the product in a specified area and stock the products of the company.

There are two types of limited service wholesalers:

1. Logistics wholesalers: This type of wholesaler is responsible only for the delivery of the product and not for bringing orders to the company.
2. Cash and carry wholesalers: Wholesalers deal with products in which immediate payment is done on the delivery of the product.

6) Specialized wholesalers: 

Specialized wholesalers are specialized in dealing with marketing of a specific product. Like used electronics or used cars. They have the skill of advertising specific products. Moreover, they know the ways to persuade the consumer to buy the product.

Types of distributors:

Firstly, discussing all “who are distributors”? Next, we’ll talk about several distributor subtypes.

There are 7 types of distributors:

1. Direct distributors
2. Indirect distributors 
3. Exclusive distributors
4. Intensive distributors
5. Selective distributors
6. Dual distributors
7. Reverse distributors

1) Direct distributors:

A deal made directly between a producer and consumer is called direct distribution. Furthermore, direct distribution is the shortest path possible for the business to take place.

It helps in building trust with the consumer and a connection between consumer and the producer.

This distribution is one level channel of distribution. Moreover, direct distribution works great for the automobile industry, technological industry, and agricultural businesses.

2) Indirect distributors:

These distributors use other channels other than directly transporting products from the producer to the consumer, by involving retailers and wholesalers.

Indirect distributors can use following paths:

• Producer → Retailer→ Consumer
• Manufacturer→ Wholesaler→ Consumer
• Producer→ Wholesaler→ Retailer→ Consumer
• Producer→ Agent→ Wholesaler→ Retailer→ Consumer

3) Exclusive distributors:

Most luxury brands practice exclusive distribution. Stores and products are made available only in major metropolitan cities. It is done to create exclusivity of a particular brand. Exclusive distributors have control over contract negotiations because of the rarity and exclusivity of the brand.

4) Intensive distributors:

In intensive distribution, the main aim is to increase sales of products. However, in this distribution the manufacturer doesn’t have to choose the retailer they are working with. Intensive distribution usually involves shopping malls, local markets, warehouses, supermarkets, etc.

Daily used products like toothpaste, bathing bars, soft drinks, and food items are usually products for intensive distribution.

5) Selective distributors:

These distributors stand in somewhat middle of exclusive and intensive distributors. The products in this distribution have a greater market presence than the exclusive distribution. However, it is less than the intensive distribution. As the companies who work with selective distributors do not work in a large number of places.

 The main aim of selective distributors is to provide high-quality customer service.

6) Dual distributors:

It is a combination of direct and selective distribution. In dual distribution, the product is sold directly from the manufacturer to a consumer as well as to a retailer or a distributor.

Like :

A manufacturer may have its stores. It may sell its products directly to consumers. But, he also may have hired some brokers or retailers for selling his products.

7) Reverse distributors:  

The reverse distribution follows back from the consumer to the company. Moreover, reverse distribution includes recycling, refurbishing, and disposing of products.

Furthermore, reverse distribution includes recycled items like plastic, glass, and paper. Disposable items like organic items. Construction and industrial items, some electronics are reusable. Refurbished products are computers, electronics, and clothing.