Retailers represent wholesale customers, both physical and e-commerce. Distributors partner with manufacturers to sell products to numerous customer entities. They often sell to wholesalers or directly to retailers. A distributor works closely with a manufacturer to sell more products and gain better visibility of these products.
Distributors find wholesalers who will resell their products. A wholesaler works more closely with retailers to meet their needs by purchasing products in bulk at a discount. Other wholesalers are not limited to a single product, but have a wide range of products for retailers in different industries. Because they are more localized, distributors tend to respond more quickly to meet customer needs.
Therefore, it is very important for a retailer to find the right wholesaler and distributor to create good deals and ensure affordable and cost-effective pricing for the retailer. Where the waters get muddy is when people try to discern the difference between wholesaler and distributor. The wholesaler may specialize in selling a wide range of different products to other companies, government agencies, or hospitals. For example, a retailer looking to purchase a dozen lamps could contact lighting distributors to ask about pricing.
In addition to their role in spreading products, they also need to invest in storage, as they buy a lot of products from distributors. Distributors must also allocate a budget for transporting products to wholesalers or retailers. The main differences between wholesalers, distributors and retailers are based on the entity's business model and marketing objectives. To track the variety of wholesalers and distributors a company uses, many of them have implemented a supplier management system that can help eliminate the confusion of who is who and who does what by tracking and managing the onboarding of new suppliers.
The distributor performs some of the same functions as a wholesaler, but generally plays a more active role. What really helps define the difference between wholesaler and distributor is that the primary purpose of wholesalers is to meet the needs of retailers. The difference between them involves several factors, but it can simply be described as a difference in the number of a product they have on hand. The distributor is the manufacturer's direct point of contact for potential buyers of certain products.
Meanwhile, a retailer, also called a merchant, is a person or entity that buys and sells products directly to end consumers through the use of different types of distribution channels.