The Role Of Distributors

By Author: Kate DiGiacomo
Total Articles: 7
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Companies are usually classified according to the role that they play in the business world. Manufacturers are the businesses that make products. Distributors transport goods from manufacturers (or other suppliers in general) to the next link in the chain, which is usually the retailers or any other resellers, depending on the industry.

The role that each one performs is very different, so it is better for companies to focus on what they do best. But sometimes there are very fine lines separating the roles of these types of businesses, so a manufacturer may perform some of the functions of a distributor, or a distributor may perform some of the functions of a reseller, or a manufacturer may perform some of the functions of the reseller.

In this article, we focus specifically on the role of distributors. Most manufacturers that make products that need to be transported will need distributors. Distributors usually transport the goods of various different manufacturers or suppliers from one location to another. They may use trucks, trains, ships, planes, or other modes of transport in order to carry goods between ...
... different locations. They may either make money by charging the manufacturer a fixed fee for the service performed, or they may make a profit by buying the goods from the manufacturer and selling them to the reseller or end-user.

In order to make a profit, the distributor usually buys from the manufacturer at a low price and then sells portions of the goods to a number of buyers at a higher price. The difference between how much a distributor pays for goods and how much a distributor charges for goods is commonly referred to as the markup. As a result, when distributors are employed, it usually results in adding to the price that the consumer ends up paying.

The markup varies depending on industry, product, demand, competition, and quantity of goods. A distributor may offer different pricing to different customers. A distributor may offer lower pricing to a customer who buys in bulk. Sometimes, a distributor may also be referred to as a wholesale distributor.

Distributors are usually specialized by industry and by location. For example, a particular distributor may deal in distribution of surgical products throughout New York, New Jersey, and Pennsylvania. There may be distributors who cover various industries or a large territory. Depending on the industry covered, they may need specific types of transport facilities. For instance, a distributor of perishable food products may need refrigerated transport. Distributors vary in size from small businesses to large distribution companies.

Regardless of size and specialization, the distributor plays a very crucial role in the world of business.

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