Today’s realities are such that the market economy is developing at a frantic pace. In this regard, an increasing number of new terms and definitions, often borrowed from foreign languages, appear in everyday life. The trading market is operated by two such players as a distributor and a dealer. Many have heard similar definitions, but, as a rule, they have no idea what the difference between them is. In this article, we will try to answer this question.
The essence of the dealer
If we translate the term “dealer” from English, then it means the word “agent”. This role can be played by both an individual and a large legal entity. In the relationship between “manufacturer and buyer”, where there are a lot of intermediate links, it is this participant in the trading process that has the final link in front of the end consumer.
Thus, a dealer in the trade chain is an individual or a company that makes wholesale purchases of products and sells them in a retail network.
He can purchase products in bulk both from a company engaged in its production and from a distributor, which will be discussed later. In this situation, the source of profit for the designated participant is a discount from the manufacturer for bulk purchases. And the greater the volume of turnover, the higher the income of the agent.
In this situation, the essence of the work of this agent is to find and attract a buyer. In order to attract, discounts are applied to regular and wholesale customers.
Due to the fact that this agent does not work on his own behalf, buyers will not be able to make claims about the quality of the purchased products.
How does a distributor work?
This term is also borrowed from English and translated as “distributor”. Just as in the previous case, both individuals and entire companies can act as such a connecting element.
A distributor is an official person and represents a manufacturing company in a certain market segment. In other words, we can say that he is a link between manufacturers and retailers.
In practice, there are distribution companies that have achieved a huge turnover. As a rule, these market players receive the exclusive right to become the sole distributor of products to the retail chain at the production price.
The main task of this intermediary is to build up a sales network, as well as to promote products or services. To achieve this goal, this “distributor” is looking for dealers, and also analyzes the market and demand for a particular product. And already guided by the results obtained, it determines the volume of trade. Manufacturing companies transfer their goods to a distributor for sale or sell them to them.
The difference between these intermediaries
If you try to compare these two players in the trading market, you can find some differences between them:
- the distributor differs from the second player in that he acts on behalf of the manufacturer, and therefore is obliged to obey its rules of the game. This also applies to the issue of pricing;
- The dealer has some autonomy. Buying the goods at his own expense and working on his own behalf, he sets the resale price.
In some cases, the difference between these two participants is barely perceptible. This is due to the fact that the obligations of intermediaries are specified in great detail by the terms of the signed agreements. So, sometimes distributors buy goods for subsequent sale at their own expense, which is very similar to the conditions for dealers.
The key purpose of the distributor lies in the creation and development of a network for the sale of goods, as well as in the promotion and promotion of the brand. The concern of the dealer is to deliver the goods to the consumer.
It is also important to understand that a distributor is not committed to work exclusively for a single manufacturer. It may represent several manufacturers.
Conclusion
Thus, the designated players are an integral and necessary part of market relations. And the existence of each of them is justified by the goal pursued.