In supply chain management and distribution, wholesale and distributor are two of the frequently used terms. Not just regular consumers; even business professionals often mistake these two terms as the same. If you are one of them, your doubts will be cleared here. In this post, you will know the difference between a wholesaler and a distributor. Here, we highlight their definitions, roles, and contributions. Let’s get started!

Introduction to a Wholesaler

A wholesaler is an intermediary entity in the supply chain that purchases goods in bulk quantities from manufacturers. Later, they sell them to small retailers, online shops, supermarkets, and other organizations. Wholesalers are the middlemen between manufacturing companies and retailers. Their support helps small and large shop owners to get products in bulk quantities. They offer discounts on their products when you buy their products in bulk.

Introduction to a Distributor

A distributor is also an intermediary entity in the supply chain. They act as a middleman by distributing goods between manufacturers and wholesalers or retailers. Distributors simply purchase products from the manufacturers and distribute them to small and large wholesalers in bulk quantities. They facilitate the movement of goods from the manufacturer to the consumers. The important role of FMCG distributors is to help businesses manage their logistics, warehousing, and delivery processes.

Wholesaler vs. Distributor Example

To understand the difference between wholesaler and distributor with the help of an example, let us take a simple intuitive example:

Imagine there is an FMCG company that manufactures 1000 chocolates. Now talking about a wholesaler, it would directly buy these chocolates in bulk from the company and sell them to smaller retailers and shops. These retailers then sell the products to their ultimate consumers. With chocolate distributors, they would also buy the chocolates in bulk but supply them to different wholesalers or retailers. Overall, wholesalers sell their multiple brand chocolates like Twix, Milka, Mars to retailer store and shops. While chocolate distributors supply products to wholesalers and retailers.

Difference Between a Wholesaler and a Distributor

After talking about the basic essence of both these terms, distributor and wholesaler, it is time to compare their major functions to understand the difference between wholesaler and distributor:

Operations

Wholesalers mainly focus on buying and selling goods in bulk. They ensure maintaining stock for retailers to sustain market efficiency. FMCG wholesalers are involved in helping retailers get their range of products at more affordable prices.

Distributors aim to distribute your products through physical movement and delivery. They handle many operations, such as logistics, warehousing, and supply chain management. They ensure that wholesalers and retailers can order their wholesale products and receive them with the help of fast and efficient operations.

Agreements

Wholesalers may not have any agreement with the FMCG company. They can buy their products in bulk from FMCG distributors or other sources. Then, they sell their products to retailers, supermarkets, or smaller wholesalers. They do not have exclusive rights or territory restrictions. As a small or large retailer, you can connect with them to get flexibility in pricing and get stock from multiple brands.

Distributors have legal agreements with FMCG companies. You can find products of specific brands near them. They are also known for maintaining stock levels and following company guidelines. They have exclusive rights to distribute certain brands in specific areas, ensuring controlled pricing and brand representation.

Exclusivity

Wholesalers may not have exclusive deals with FMCG companies. Once they purchase their bulk products from the companies, they work independently. Even the companies may not track their process. Wholesalers don’t focus on the marketing of the brands. They decide the rates of products independently and resell them to small and large retailers.

Distributors may have exclusivity and may work closely with manufacturers. They can partner with more than one company from different sectors. Their support allows small and large wholesalers to receive fresh and premium quality products directly from manufacturers. They also focus on branding the companies and increasing the brand’s visibility.

Management

Wholesalers do not have management of manufacturing companies. They operate independently and provide their wholesale products to smaller retailers. Wholesalers have minimal supervision from the company because they work autonomously. They handle their own pricing and stock management. Their goal is to get more profits from consumers, so they sell their products to them.

Distributors have exclusive management with manufacturing companies. They can go through selection, training, reporting, targeting, and incentive processes. They may need to share their regular reporting and performance tracking with the manufacturing company. That provides reassurance that they are meeting company objectives.

Bottom Line

Wholesalers and distributors both sound similar. But these two are different, as we understand in this guide. Wholesalers mainly sell and distribute their products to small and large retailers. On the other hand, distributors also provide their products to wholesalers and other small and large retailers. Both wholesalers and distributors play an important role in distribution and supply chain management. Today, their role has an enormous impact on various industries. They ensure a continuous supply of these products in the market and allow small and large retailers to maintain their products on the front line.