There are many intermediaries involved in the distribution channel, which help the product to reach the ultimate consumer. Dealers and Distributors are two such middlemen that are a part of the supply chain. Dealers are in direct contact with the final consumers. Now if we talk about distributors they have a direct connection with the manufacturers as they buy goods from them.
A little bit of confusion takes birth in the mind of every person whenever we discuss the two terms. After having a deep research on the two, we are now compiling the significant differences between dealers and distributors. Have a look at it.
Content: Dealers Vs Distributors
|Basis for Comparison||Dealer||Distributor|
|Meaning||A person or a business organization who is engaged in buying and selling of a particular kind of goods is known Dealer.||A person or business organization who is involved in supplying goods to dealers and other businesses is known as Distributor.|
|Function||Dealer purchases products for their own account and trades them to the customer from his own stock.||Distributor purchase products directly from the company and distributes it in the market to several vendors.|
|Who are they?||Principal||Agent|
|Creates links between||Distributor and Consumer||Manufacturer and Dealer|
|Deals in||Products which fall under a particular category.||Variety of products|
Definition of Dealer
An individual or a business concern, who is involved in the activities of buying goods for their account and then selling it off from their stock is known as Dealer. In simple words, a dealer is someone who deals in the trading of a particular product. He operates an account, on which he does commercial trading for own self, as a part of regular business.
The dealer is the middleman between the distributor of goods and the consumer. They are the authorized seller of those commodities in the particular area. However, a dealer can attract the customers of another dealer or a different area. In this way, there is a fierce competition between various dealers and they have to behave nicely to the customers to retain them for a long time.
The dealer sells goods of competing brands, out of which one will have a strong customer base while other brands will be serving only a few number of people. He realizes a profit, by selling the goods at a price higher than what he paid for the commodity when he purchased it.
Definition of Distributor
The distributor is an intermediary between the producer of the products and its dealers. They are the one who is responsible for supplying the goods in the whole market. He acts as an agent, in a way that they have a direct contact with the manufacturing entities. He purchases goods from those entities and sells the commodities on their behalf to various other parties etc.
In general, they are appointed and authorized by the companies to sell their products in a particular area. Except the distributor, no other person has the right to sell that product in the specified area, so he is the only source for retailers and dealers to purchase that product. Distributors buy the merchandise from the company in bulk and sell them in small lots to other businesses and stores. They offer some services to the customers like after sales services, replacement service, technical support, etc.
When a distributor sells goods to the end consumer, then this process is known as direct distribution while if there are multiple middlemen’s for selling a particular product to the end user, it is known as indirect distribution.
Key Differences Between Dealer and Distributor
The following are the major differences between dealer and distributor
- The person who deals in specific kind of products is known as Dealer. The distributor is an individual who supplies the products in the market is known as Distributor.
- Dealer creates a link between distributor and consumer while distributor connects the manufacturer to dealer.
- Dealer purchases goods for their account then trades them to the end user with his own stock. On the other hand, Distributor purchases goods directly from the company and sell them to some dealers.
- As the dealer trades on their own behalf, their work is like of principal. Conversely, a distributor supplies goods in the name of the company; that is why they act as an agent of the company.
- The dealer deals in the product which falls under a particular category. In contrast to distributors, they deal in a variety of products.
- The dealer faces extreme competition, which is just opposite in the case of distributors.
- The serving area of dealers is limited to a particular region, but distributors offer their services in a comparatively larger area, in essence, their area of operation is extended to different towns, cities, and states
Manufacturers-Distributors-Dealers-Consumers, this is the typical supply chain, through which a product reaches the hands of consumers. Distributors and Dealers are many times used interchangeably, but they are different terms. Distributors serve a larger area and that is why there can be many dealers to whom a single distributor sells its products. Dealers are also known by the name retail distributor.