Difference Between Wholesaler vs Distributor
Grocery shopping is an essential errand that none of us can do without, but do you know how those goods got to be directly available to you? Of course, it all started from the producer who sells off their product to merchants, but there are different levels that this commercial process has to go through before it gets to the final consumer.
In this post, we would take a look at two of the levels, specifically, the difference between wholesaler and distributor. These two entities play a significant role in the supply chain as we will see in the content of this post. But more important than that, we would be looking at how they differ from one another.
Definition of Wholesaler
A wholesaler is a person or a business establishment that buys goods in large quantities from suppliers or producers and resells them to retailers. They can buy varieties of goods at the same time, but in large quantities, which they end up reselling to their customers in smaller quantities and at a higher price with the goal of making profits. In other words, a wholesaler serves as an intermediary between the supplier and retailer.
A very feasible question that comes to mind at this point is, “Why do retailers not get the goods directly from the suppliers at a lower rate, or why do suppliers not sell their products directly to retailers and make more money since retailers buy at a higher rate?” To answer these questions, let us do a little bit of wholesaler vs distributor comparison.
- Quantity: Mr. A, who is the supplier, can only sell his goods in large quantities at a time to Mr. B, who is a wholesaler. For instance, A supplies milk to B in dozens of cartons.
- Time: Mr. A would save a lot of time selling in cartons to different wholesalers as opposed to selling in packs or dozens to retailers.
- Customer satisfaction: Mr. B, more often than not, has more than one type of product for sale, making it possible for his customers to have access to different products at his shop. This saves them the time they would have spent going from one seller to another if they were to buy from suppliers, who mostly sell just one type or brand of product and nothing else.
Definition of Distributor
A distributor is a person or business organization that distributes one particular type of product or service to retailers or end customers. By definition, he is more of a partner to the producer, and his responsibility is to distribute the products while the producer is focused on producing and packaging the products.
Aside from the obvious responsibility of distributing goods and services, a distributor may also be responsible for marketing the products to potential customers. This validates the difference between distributor and wholesaler – the latter can be considered as passive, but the former is expected to be quite active.
Main Differences Between Wholesaler vs Distributor
In the table below, we have reviewed the properties of these two entities and stated how they differ from one another.
|Basis of Comparison||Wholesaler||Distributor|
|Definition||A person or a business establishment that buys goods in large quantities from suppliers or producers and sells them to retailers.||A person or business organization that distributes one particular type of product or service to retailers or end customers|
|Promotion||Not required||May be required|
|Contract agreement||Not required||Required|
Difference Between Wholesaler and Distributor: Conclusion
These two entities work hand in hand to bring customer satisfaction to the end-user of a product. In the distributor vs wholesaler comparison, the latter sells to retailers at a higher rate to make some profit while the former sells to a number of wholesalers at a lower rate.
A wholesaler does not need a contract agreement, which gives him the freedom to make decisions that have to do with the products. The distributor, on the other hand, has to go into a contract agreement with the manufacturer as to how the goods would be distributed, who to sell to, and how much they are to be sold.