A business and industry that acts as a third-party local representative and distribution point for a manufacturing firm. These firms may perform some light assembly or kitting of goods but generally provide a buffer for finished goods. Distributors typically purchase the goods in quantity from the manufacturer and ship them to customers in smaller quantities. Synonym: Wholesaler.
What is Distributor?
A distributor, also known as a wholesaler, plays a crucial role in the logistics industry as a third-party local representative and distribution point for manufacturing firms. Their primary function is to act as a buffer for finished goods, ensuring that products are readily available to customers when needed.
One of the key responsibilities of a distributor is to purchase goods in large quantities from the manufacturer. By buying in bulk, distributors can take advantage of economies of scale, obtaining products at a lower cost. This allows them to offer competitive prices to their customers, making them an attractive option for businesses looking to source products.
Once the goods are purchased, distributors take on the task of shipping them to customers in smaller quantities. This is particularly beneficial for businesses that do not require large quantities of a product at once or lack the storage space to accommodate a large inventory. Distributors act as intermediaries, breaking down the bulk shipments received from manufacturers and distributing them to various customers as per their requirements.
In addition to their role as a distribution point, distributors may also perform light assembly or kitting of goods. This involves combining different components or products to create a customized package or product. By offering these value-added services, distributors can cater to the specific needs of their customers and provide them with ready-to-use products.
The presence of distributors in the supply chain offers several advantages. Firstly, they help manufacturers reach a wider customer base by acting as local representatives. Distributors have an established network and knowledge of the local market, making it easier for manufacturers to expand their reach without having to establish a physical presence in every location.
Furthermore, distributors provide logistical support to manufacturers by managing inventory and handling the complexities of order fulfillment. This allows manufacturers to focus on their core competencies, such as production and product development, while leaving the distribution aspect to the experts.
Overall, distributors play a vital role in the logistics industry by bridging the gap between manufacturers and customers. Their ability to purchase goods in bulk, break them down into smaller quantities, and provide value-added services makes them an essential component of the supply chain. Whether it is ensuring timely delivery, offering competitive pricing, or providing localized support, distributors contribute significantly to the efficient movement of goods from manufacturers to end-users.