Differences between a Distributor, Wholesaler and Retailer.

"Difference between a Distributor, Wholesaler and Retailer" 

In sales trade each member of distribution chain be it distributor or wholesaler or a retailer plays a very important role in taking the product from company to end customer.

Today we are going to share with you the role of these important links in distribution chain. 

Without beating around the bush let us understand what role these members of distribution chain play in the overall success of any product/service in the market.

Wholesaler=

Wholesaler is a person or group of persons or a business entity which purchases products from distributors in bulk, stores them and re sells these products to other retailers on profit.

After understanding who a wholesaler is in FMCG industry let us move ahead to discuss wholesaler role in the FMCG distribution chain.

A wholesaler shop Image 👇👇

                      (Image: Self clicked on my smart phone.)

Role of Wholesaler in distribution chain:

Wholesalers act as de facto unpaid warehouses of companies. 

When the products are sold to wholesalers, the products are shifted from distributor warehouse to wholesaler warehouse , thus creating space at distributor warehouse which can be used by company to sell products to distributors.

Wholesalers play a very important role in distribution of products as they are the media thru which any company can make its products available to a no of retailers whom the company can not reach on its own.

The wholesalers help companies fill gaps in their distribution as it is not possible for companies to reach all the shops or shops in the area being serviced by the companies.

As wholesalers Purchase in bulk quantity from companies, direct suppliers or vendors, so they demand heavy discounts from them. 

Wholesalers sell these products to retailers after keeping their margin which is normally low as they have to compete against other fellow wholesalers operating in market.

A wholesaler keeps products of same variety of many companies in his/her shop to meet demands of his different customers. 

Wholesaler keeps different varieties of same product category to meet needs of his/her varied customers.

For example in toothpaste category a wholesaler may be stocking 

Colgate,Pepsodent, Dabur Lal Dant Manjan, Meswalk,Anchor Toothpaste etc . This is also true for other categories of products in his shop.

In nutshell wholesalers act as indirect distributors of FMCG products. It is because of wholesalers that companies are able to more customers through network of wholesalers.

Distributor:

A distributor purchases stocks of company directly from company or through super stockist or CFA of company.

He sells stocks to wholesalers and Retailers.

He has to company product stocks as per company norms.

Maintaining sufficient stocks will ensure that stock outs of company’s different SKUs are minimum and it will also enable him to supply full orders of his customers.

He must keep and maintain stocks of company’s products in safe and hygienic conditions.

For continuous business growth in today's competitive market place he should maintain cordial relations in the market.

Distributor must visit his market on regular basis. These market visits will help him know about the competitors practices in market. 

These visits will also make him aware of problems of retailers and wholesalers in market relating to pending schemes of company or damage or unsalable stocks of company's products lying with them and this knowledge will help Stockists solve problems of his customers.

These visits will also help him develop good relations with retailers and wholesalers in market.

He should ensure timely and full order supplies to the customers i.e. retailers and wholesalers in his area of operation to avoid sales losses due to late or insufficient supplies.

He should extend credit to his customers as per market norms. In today's competitive market with more and more companies entering market every day, extension of credit has become a must for survival in market and to fuel growth. Retailers and wholesalers prefer buying on credit, so they will prefer buying from a Stockist who gives credit to them.

He should have full contact details of all of his customers and provide the same to company.

He should help in execution of Below The Line (BTL) activities in the market with or without help or support from company staff. 

He should take all steps to increase the width and depth of distribution of company’s products in his area. Increasing Width of distribution means to sell company’s products to more no of retailers and wholesalers in his area and increasing depth of distribution means to sell more of company’s products to his existing customers.

On ethical and good market practice grounds he must pass on schemes, as being run and operated by company from time to time, to his customers.

He should provide timely information to company on competitor practices and activities to help company plan its sales strategy to safeguard and/or increase the sale of its products.

He must abstain from selling company’s products to his customers on prices which are more than the company price list.

It is his moral responsibility to Not to sell or trade company’s products in the area of other Stockist of company.

Again on ethical grounds he should not be a Stockist of competitor’s products.

Now let us proceed to discuss what a retailer does:

Retailer:

A retailer is a person or a couple of persons or a business entity which purchases products directly from distributors or wholesaler and sells these products directly to their customers who come to their business premises to buy products from them.

A retailer is also referred to as Shop or outlet.

A retailer keeps products of many companies in his shop/shop to keep adequate variety of different products in his shop to meet demands and requirements of his customers. For example in tea category the retailer may be keeping stocks of Tata Tea, Tazza Tea,Marvel Tea,Brooke Bond tea,Taj Tea, keeping in mind purchasing capacity or taste of his customers.

Similarly he stocks products of different companies in other product categories to meet the different tastes of his/her customer profiles.

Some of the more service oriented retailers provide supplies to the homes/offices of their customers.

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Happy Living !

Mritunjaya Malhan

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