Normally, in every business process, there is an exchange of products and money between producers and consumers through distributors. The distributor is a bridge between producers and consumers.
However, to be a good liaison, the distributor must perform some special tasks to realize its main goal. In addition, to assist and simplify your tasks, you can use the full-featured supply chain management (SCM) system.
Distributors should have successful strategies and tips; moreover, you can use the help of an integrated supply chain management system to distribute well. When implementing distribution, the market is very influential for distributors because it affects sales.
To keep up with the rapid changes in the market, you can use a complete SCM (Supply Chain Management) System to predict sales. Check out this article so that you know the success strategy of becoming a distributor. By understanding the success strategy, you will also make marketing products to the public easier to do.
Key Takeaways
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Table of Content:
Table of Content
The Definition of a Distributor
In general, dealers or distributors buy products directly from producers, distribute them to retailers, or sell them directly to final consumers.
Another opinion says that a distributor is a business entity or individual responsible for distributing trade products, be it goods or services, to retailers or final consumers. In this case, the distributor only takes the product ready for the manufacturer to sell without modifying it.
It is the role of distributors to meet the needs of the goods that retail companies want. Distributors are companies that act as intermediaries for manufacturers. Dealers benefit from discounts on product purchases from manufacturers. The more you purchase products from the manufacturer, the lower the price of the product.
The average retail company does not buy products directly from the manufacturer. Only large companies or companies that deal with specialty products, such as vehicles or other luxury goods. Luxury goods transactions usually deal directly with the related producer company.
The Roles of Distributor
When carrying out distribution activities, distributors have roles and functions. The main role and function of the distributor are, of course, as an intermediary between producers and retailers or consumers. Check out a further description of its roles as follows:
1. Buying products from manufacturers
The job of a dealer is to buy products (goods or services) from larger producers or traders.
2. Store products properly
After the dealer buys goods from the manufacturer, the distributor is responsible for storing and maintaining the product to remain of high quality. For example, when you become a distributor of computer equipment, you should have a clean storage warehouse and goods stored in packaging that keeps the products inside.
The warehouse management system will assist you in optimizing the usage of your warehouse space by automatically calculating and tracking the capacity.
3. Selling products at competitive prices
Indeed, distributors benefit from margins on product purchases from manufacturers. Even so, this stage is your competition with other distributors. You as much as possible to keep a profit but must maintain a competitive selling price.
That way, you can get maximum profit and remain the choice for your prospective buyers, whether retail businesses or end consumers.
4. Transporting products
Distributors also have a role in moving or transporting products from producers to retail companies or consumers. After the goods stored in the warehouse have to go out and the buyer schedules delivery, you, as the distributor, are responsible for the products sold to make delivery.
Even so, there is a certain agreement concept when making deliveries—usually related to the costs required to later enter into accounting records. Through the agreement, the seller or the buyer can bear the transportation costs.
Also Read: How to Optimize the Transport Management in Your Logistics Business
5. Doing product classification or sorting
The dealer is responsible for sorting the product. Doing sorting is important because, usually, a product has its classification. Sorting products depends on the size, type, and quality of the product so that the product is not mixed.
6. Provide product information
This means that the distributor provides information related to the estimated price and marketing of goods at a certain time that the field implementer will carry out.
7. Promote products attractively
This promotional activity includes explaining product benefits, product quality, and price. Your product can be promoted through marketing channels. The promotion aims to introduce the product to consumers.
In developing a retail business, you can use the Hash Retail Innovation software to maintain stock availability, increase employee productivity and customer management, and automate your company’s financial transactions.
The Function of a Distributor in Business Success
In today’s competitive market, distributors play a crucial role in bridging the gap between manufacturers and end-users. Acting as intermediaries, they ensure that products are efficiently transported from production facilities to retailers, wholesalers, or even directly to customers. This function not only streamlines supply chains but also adds value to businesses by ensuring timely delivery and market reach.
- Inventory Management: Distributors maintain stock levels to meet market demand, ensuring product availability while reducing delays.
- Logistics and Delivery: They handle transportation, warehousing, and delivery to ensure smooth product flow from manufacturers to retailers or consumers.
- Market Expansion: By promoting products and building relationships with retailers, distributors help manufacturers penetrate new markets and grow their reach.
- Credit and Financing: Distributors often provide credit to retailers, helping smaller businesses maintain cash flow while purchasing inventory.
- After-Sales Support: Some distributors offer customer service, technical assistance, and warranty management, enhancing customer satisfaction and loyalty.
- Market Intelligence: Distributors gather insights about customer preferences, market trends, and competition, which manufacturers can use to refine strategies.
In essence, distributors are crucial intermediaries who ensure that products are delivered efficiently, market demands are met, and manufacturers can focus on production while distributors handle the complexities of distribution.
The Benefits of Being a Distributor
Being a distributor offers significant benefits, especially when it comes to managing and distributing products on a large scale. Wholesale distribution software can help distributors optimize their operations, from inventory management to product delivery.
Here are some of the potential benefits that can be derived from being a distributor:
1. No need for many diversified customers
Being a distributor means you don’t have to worry about most of the companies you supply. The focus for distributors is the quality of contracts with your clients, namely retail companies.
In contrast to retail companies, without many diversified customers, retail companies cannot grow or survive. Competitors in retail companies will certainly try to attract the same consumers as your retail company segment. So, you have to work harder to compete with your competitors.
2. No need to worry about some of the companies that supplied
The main focus for distributors is the quality of contracts with your clients, namely retail companies. This still alludes to the first point. You don’t need to put in much more effort to get many different/diversified customers.
If the supplier successfully secures a contract to supply to a large retail company, the distributor may not need another contract to keep the business growing and survive.
3. It’s easier to build relationships with clients
Manufacturers and retailers tend to choose distributors they already know and have good working relationships with before looking for new distributors.
Your focus as a distributor is to build good relationships with your clients. The result is that your income as a supplier will be more consistent, and you won’t have to market your distribution business to attract new clients aggressively.
BONUS TIP: Using a loyalty program will help build good relationships with your clients. Use Sales Management Software from HashMicro for smarter, faster, and more effective sales solutions.
Wholesale vs. Distribution
Wholesale vs. DistributionWholesale and distribution are critical components of the supply chain, yet they serve distinct purposes. Wholesalers focus on purchasing goods in bulk directly from manufacturers and reselling them to retailers or smaller distributors. Their operations emphasize economies of scale, offering competitive pricing and streamlining the supply chain. Wholesalers typically operate in large warehouses, with limited emphasis on customer service or added value beyond supplying products. They are ideal for businesses prioritizing high-volume, low-margin operations.
Distributors, however, go beyond simply supplying goods by offering value-added services like logistics, marketing, and after-sales support. They act as intermediaries between manufacturers and end-users, such as retailers or consumers, building long-term relationships and customizing solutions to meet client needs. Distributors play a more active role in ensuring market penetration and product accessibility.
Key Strategy to Become a Successful Distributor
A successful distributor ensures seamless operations, optimized resources, and a customer-centric approach to stay ahead in the game. To achieve this, distributors must focus on understanding market trends, adopting efficient inventory management practices, and building a dependable supply chain.
Embracing technology and maintaining financial discipline are equally important to thrive in this fast-paced industry. With the right strategies, you can improve operations, enhance profitability, and secure long-term growth. Here are some of the key strategies that can help you excel as a distributor.
1. Expanding the distributor chain
It is undeniable that the role of distributors in the business world is very important. Therefore, what you need to do is build as many distributor chains as possible with the aim of reaching a wider market. The benefit is that you help rotate goods and market products quickly.
2. Creating repeat orders through competitive prices
Most people will certainly choose a product with a relatively affordable price and provide benefits & value. The price factor of a product is one of the keys to repeat orders.
Big profits are tempting, but the key for your business to survive is to keep customers from transacting with you over the long term.
3. Speed up product turnover
The usual obstacle that companies experience is product turnover. Usually, the product is difficult to get out and causes the goods in the warehouse to pile up.
You can use certain strategies to speed products in and out. Offer cooperation offers with other parties, for example, opening a dropship system or an affiliate system.
4. Have good negotiation skills
As a distributor, having good soft skills in negotiating with manufacturers is very important. Because your ability to negotiate will be directly related to business profits, the more you manage to lower the price in the contract, the more you can profit.
Negotiation certainly has many strategies of its own. While negotiation theory is easy to find, you need experience and a good intuition in practice.
5. Optimize logistics management
In a distributor’s role, one is transporting and delivering the product to the client. The role of delivering the product to this client is to run the distribution.
You can use the Best Transportation Software from HashMicro for product transportation to run smoothly. This system allows you to manage distribution by simplifying transportation, delivery of goods, and revenue analysis quickly and accurately. Switch to HashMicro, now.
6. Good key account management skills
Key Account Management is an effort to build good and sustainable relationships with clients. These skills that you should use are very useful for maintaining and enhancing your reputation with clients.
According to the Pareto Principles, about 80% of its revenue comes from 20% of its customers. So it is important to segment clients to find Key Account Management.
7. Carry out effective and efficient marketing strategies
Are you familiar with the concept of FOMO? FOMO stands for Fear of Missing Out. The FOMO strategy creates an urgency for the client to buy the product at a certain time and is being used by many companies as an effective marketing strategy.
There are many marketing strategies that you can apply, and you can apply them if they suit your business needs.
The FOMO strategy can be applied by putting up promos for a certain period. For example, when you are distributing wooden tables, by implementing the FOMO strategy, you tell the client that if you buy a total of 12 tables, then you are entitled to free logistics delivery for the next two days.
Manage Your Distribution Business Using ERP Software from HashMicro
Enhance your distribution business with HashMicro’s Logistics Software, designed to optimize operations and improve efficiency across your supply chain. From real-time inventory management to seamless order tracking, our solution empowers you to stay competitive in a dynamic market.
HashMicro’s software also includes advanced analytics and reporting features, enabling you to make data-driven decisions that enhance profitability. From optimizing stock levels to ensuring timely deliveries, HashMicro’s system helps you meet customer demands effectively while controlling costs. Moreover, the system is fully customizable, ensuring it adapts to the unique needs of your distribution business.
Conclusion
Distributors play a pivotal role in connecting manufacturers and consumers by ensuring efficient product flow, market reach, and customer satisfaction. As intermediaries, they manage key processes such as inventory management, logistics, and market expansion while offering value-added services like after-sales support and market intelligence. By mastering these functions, distributors can position themselves as indispensable partners in the supply chain.
To thrive in the competitive distribution industry, adopting effective strategies is essential. Expanding distribution networks, maintaining competitive pricing, and optimizing logistics are crucial steps toward achieving success. Leveraging technology, such as ERP and logistics management software, can further enhance operational efficiency, ensuring seamless distribution, real-time tracking, and accurate reporting. These tools empower distributors to adapt quickly to market changes, streamline workflows, and maintain strong client relationships.
With HashMicro’s logistics software, distributors can elevate their operations, optimize resources, and stay ahead in a dynamic market. From inventory management to transportation solutions, our software simplifies distribution processes and boosts competitiveness. Take the next step in transforming your distribution business—request a free demo today to experience the benefits firsthand.
FAQ about Distributor
What is the definition of a distributor?
A distributor buys products in bulk from manufacturers and sells them to retailers or businesses. They manage storage, logistics, and transportation to ensure products reach various markets efficiently, acting as a vital link in the supply chain.
What is a distributor vs retailer?
A distributor buys goods in bulk from manufacturers and sells them to retailers or businesses (B2B). A retailer sells products directly to consumers (B2C), typically in smaller quantities, often focusing on marketing, customer service, and sales.
What do you mean by distribution?
Distribution is the process of getting products from manufacturers to consumers. It involves intermediaries like distributors and retailers, alongside logistics, storage, and transportation, ensuring that products are available at the right place and time for the end user.
