What is the Difference Between a Wholesale Distributor and Dealer?

Dealers and distributors are middlemen in the distribution process who facilitate customers with the goods. Though both are part of the same process, a wholesale distributor and dealer have defined roles. With many differences, they are somehow connected to each other but not the area of functionality.

Before discussing the differences, let’s define both.

Who is a Wholesale Distributor?

Distributors are agents authorized by manufacturers and suppliers to sell their products in the market.  They act as intermediaries between manufacturers and dealers.  Also, they sell products as wholesalers in bulk. In simple words, they are the only mean of purchasing goods for dealers and retailers.

Who is a Dealer?

Dealers buy and sell goods independently. They are the intermediary between distributors and customers. Simply put, dealers connect distributors with potential customers.

Distribution Process

Distribution refers to the process by which goods and services provided by manufacturers reach the end-user for purchase. Manufacturers use distributors to sell their products in the market, and distributors sell these products to numerous dealers.  They in turn sell these goods to consumers, either in units or in bulk. This whole process is known as the distribution channel.

What Separates Distributors from Dealers?

We can summarize the differences between dealers and distributors through the following points.

Definition

A distributor is an agent who sells products from a manufacturer to retailers and dealers.

Whereas, a dealer is an individual who buys products from a distributor and sells them in the market.

Purpose

A distributor sells the goods for the manufacturer. Whereas, a dealer sells the goods for his business purposes.

Functionality

A distributor gets the products directly from the manufacturer. They sell these goods to the dealers for the benefit of the manufacturers.  They are agents bound under a contract to sell products.

Whereas, dealers buy products through distributors.  They sell products for their business with no other obligation.

Link

A distributor is a link or middleman between the manufacturers and dealers. Whereas, a dealer is an intermediary between the customers and distributors.

Product Range

Distributors deal in the same product line.  They are connected to only one or more manufacturers.

Whereas, dealers trade many products. These products usually compete with each other require more effort to maintain sales.

Area of Work

Distributors have access to the global market. They supply products beyond local boundaries.

Whereas, dealers trade in the local market and compete with local businesses. They don’t have access to the global market.

Target Market

Distributors do wholesale business with dealers. Their primary audience is a dealer, not the end consumer. Whereas, dealers focus on the customer market. Their major purpose is to reach customers to sell their products.

Purchase Quantity

Distributors buy and sell in bulk. They deal in large quantities. Whereas, dealers buy and sell either in bulk or units. They are not forced by any contract or condition to get bulk products.

Incentives and Offers

Distributors get incentives and commissions from manufacturers for each sale. These incentives are usually in the share of the commission determined by both parties under the contract.

Whereas, dealers get incentives from distributors on their buying products. These incentives are in the shape of special offers and discounts. These are optional and not bound by any contract or condition.

Warehouses

Distributors deal in bulk and keep stock in the warehouse. They deliver goods to dealers from their warehouse. Whereas, dealers have limited storage space.  They usually keep their goods on the shelves.

Final Thoughts

The differences between dealers and the distributors do make one better than the other. They both are a major part of the distribution chain.

If either one is cut out, manufacturers will find it hard to get customers and customers won’t be able to get products easily.