What Is the difference between wholesaler and distributor?
The supply chain of the company rely on wholesalers and distributors or sometimes on both. Many people use these two terms interchangeably but they are quite different.
The main difference between wholesalers and distributors is that wholesaler is a person who buys products in large quantities and resells to retailers whereas a distributor is a person who enters into a contract with a company to supply their products.
The article provides detailed insight into the difference between wholesalers and distributors with examples for easier understanding.
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Who Is a Wholesaler?
A wholesaler is an individual or a company that buys products in large quantities and resells them to retailers with the main aim of earning a profit.
Generally, wholesalers act as middlemen between the suppliers and the retailers. They are able to get products at lower prices due to direct contact with suppliers.
The main role of wholesalers is to break bulk, hold inventories in warehouse, quick delivery to buyers and take the risks associated with products.
Who is a Distributor?
A distributor is an individual or an entity that supplies goods and services of a company to various business organizations and customers.
They are allowed to use the company name while distributing their products. It is the reason why they are also known as channel partners.
The main role of distributors is to the storage, transportation of products, promotion and resell of these products to various parties
Comparison Chart: Wholesaler Vs Distributor
| Basic Terms | Wholesaler | Distributor |
| Meaning | Refers to an individual or entity that purchase goods in large quantities and resell them in smaller units | Refers to an entity that enters into a contract with a company to supply their goods and services to various businesses and customers |
| Agreement | No contract | There is a contract |
| Channel of Distribution | Has both two-level and three-level channels | Has three-level channel only |
| Scope of Area | Limited | Large |
| Customers | Mainly retailers | Wholesalers, retailers, and direct customers |
| Promotion | Not involved | Promote to increase sales |
| Storage Services | Do not store products | Tend to store products |
| Line of Products | Different types of products | Similar types of products |
| Delivery Services | Do not offer after-sale services | Offer after-sale services |
Core Difference Difference between Wholesaler and Distributor
- Wholesalers are individuals or entities that buy goods in large quantities from the supplier for reselling purposes whereas distributors are individuals or companies that supply goods to other businesses and customers.
- Wholesalers do not enter into a contract with suppliers whereas distributors tend to enter into a contract agreement with suppliers
- Distributors have only three levels of distributions while wholesaler has both three and two levels of distribution channel
- Wholesaler cover a limited area whereas distributors cover a large area
- Wholesalers do not engage in promotion activities whereas distributors engage in promotional activities to increase sales
- Wholesalers supply products to retailers alone whereas distributors supply goods to wholesalers, customers, and retailers.
- Wholesalers deal with a huge variety of products whereas distributors deal in one line of product.
- Wholesalers do not store goods on behalf of manufacturers whereas distributors store goods in the warehouse on behalf of manufacturers
- Distributors offer door to door services unlike wholesalers
Read More: Difference between Vendor and Supplier
Comparison Video
Summary
The core difference between wholesaler and distributor is that wholesaler is an individual who buys goods in large quantities for reselling to retailers with the aim of earning profit while the distributor is an individual who supplies goods of the supplier to various businesses and direct customers.
More Sources and References
- Marketing Terminologies. Marketing91
- Trading and Marketing Techniques. Account Learning