Supply Chain

Dealer vs. Distributor: All About Vendors

Both dealers and distributors sell off inventory

When you’re selecting vendors to buy inventory from, you’ll likely need to choose between dealers and distributors. But when it comes to dealers vs. distributors, what’s the difference? This article will focus on the similarities and differences between buying from a dealer, distributor, and wholesale distributor. Then, we’ll help you determine whether working with a dealer or a distributor makes more sense for your company. 

 

What is a distributor?

A distributor works with manufacturers to distribute products along the supply chain, sometimes to dealers, sometimes to retailers, and sometimes, directly to the consumer. 

What does a distributor do?

Distributors act as representatives of manufacturers when selling inventory. But they also offer a lot of value to their customers, including:

  • Maintaining an open line of communication with manufacturers
  • Helping their own customers communicate with manufacturers about special needs, requests, concerns, or customizations
  • Offer support to both manufacturers and customers regarding logistics, storage, and shipping

Over the past decade, there’s been a rapid rise in “direct to consumer” (D2C) brands. These companies secure their own relationships with manufacturers and sell directly to consumers, passing some of the savings onto shoppers. 

What is a wholesale distributor?

A wholesale distributor purchases vast quantities of inventory from manufacturers then sells them to customers at wholesale price. Often, the wholesaler will divide products into much smaller amounts before selling them to customers. Usually, these customers are businesses, not consumers. 

Wholesaler vs. distributor 

Although the terms might be incorrectly used interchangeably, a wholesaler is not the same as a distributor. A wholesaler only buys goods wholesale, then sells them in smaller quantities. Wholesalers don’t have contracts with manufacturers and usually serve retailers in a limited area. 

On the other hand, a distributor sells both inventory and sometimes services to both businesses and consumers. This is called a value-added distributor—a distributor that offers extra services beyond pick, pack, and ship. This could include installing equipment, then servicing and repairing it. 

For example, a hospital might buy heart rate monitors from a wholesale medical distributor and sign a service contract to maintain that equipment. 

That being said, a wholesale distributor can still do many of the things a regular distributor does. And a distributor can also buy wholesale directly from a manufacturer. 

 

What is a dealer?

A dealer is often referred to as a retail distributor. That’s because a dealer usually purchases inventory from a distributor, then sells it directly to the consumer. 

One of the best examples of this is a car dealer, who purchases inventory from the car manufacturer (or a regional distributor for the manufacturer), then sells those cars to the public. 

Often, dealers will be “official” or “certified” by the manufacturer to sell their products. That’s why, for example, an independently owned and operated dermatology clinic might be “certified” to sell certain skincare products. 

Or a dealer can just be any shop that sells to consumers. Your local auto supply shop and favorite gift boutique are both examples of dealers—businesses that buy from a distributor or wholesale distributor, then charge you retail prices for the products. 

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Choosing a vendor

If you’re a business, choosing a vendor isn’t always straightforward. After all, selecting suppliers isn’t just about finding the best price, but about what suppliers can offer you shorter lead times, lower minimum order quantities, and reliable access to products during a tumultuous time for the supply chain. 

Your business might choose to work with value-added distributors to purchase both long-term assets (like machinery and equipment) and high-turnover inventory. Or, if you just want the best price around—even if it means ordering in larger quantities—you might work directly with a wholesaler. 

Dealer vs. Distributor 

So, what’s the difference between a dealer and a distributor? A dealer buys from a distributor or wholesaler, then sells to a consumer. There’s often no compelling reason to plan to purchase inventory from a dealer if you run a business. After all, you’d be paying retail prices for a product you could buy for far less from a distributor or wholesaler.

Still, there’s sometimes no way to get around paying retail prices for a product you need. Perhaps a particular dealer is the only way you can get a product soon enough to make a sale to your own customer. Or possibly, supply chain disruptions are preventing your company from purchasing certain products wholesale at the moment.

Or maybe you’ve simply run out of inventory, and your regular vendor has a week-long lead time to replenish your stock. On the other hand, a local dealer could get you more products today. In that case, it makes sense to purchase a small amount from a local dealer to keep your operations running smoothly. 

 

Organize your inventory with inventory management software

Whether you buy from a wholesaler, distributor, or even a dealer, getting your inventory organized is key to helping your business run smoothly. In fact, the right inventory app can help you stay on top of dwindling stock and keep track of what supplier sold you which inventory. Here’s how.

Low stock alerts

If you pay more to buy inventory from local dealers because you don’t realize you’re running out of certain products until it’s too late, inventory software can help. Solutions like Sortly can notify you when your inventory falls below a custom-set threshold. That way, you’ll always have time to order from your preferred vendor at a better price. 

Custom tags, categories, and fields

Customizable inventory management systems offer multiple ways to label and organize your inventory. For example, Sortly lets users set custom fields for every inventoried item. You can track anything from “vendor” to “lead time” by creating a custom field to track. 

Then, you can generate a report about your inventory and sort by vendor when it’s time to reorder products. 

Or you can create custom categories or tags to track vendors, too. No matter how you track vendors, having this information readily available can help make reordering inventory that much easier.

With Sortly, you can use your phone to scan a barcode or QR code, instantly accessing tons of information about the product, including the minimum inventory level and information about the supplier. 

 

About Sortly

Sortly is a top-rated inventory app that helps businesses big and small get their inventory organized–for good. So if you’re looking for a way to streamline your inventory management system, Sortly’s the perfect way to get your whole team in on the process. 

Ready to get started? A free, two-week trial of Sortly is waiting for you.