How does a reseller compare with a distributor, wholesaler, or dealer?
When it comes to commerce, specific terms come up a lot. These include “reseller,” “distributor,” “wholesaler,” and “dealer.” Now, some of these terms are mistaken and erroneously used interchangeably.
Here, we’ll look closely at these words and try to provide a clearer understanding of their meanings.
These terms will be explained as much as possible to enable you to make a clear distinction. As you go through this article, you will know exactly what each term represents and how it compares with the other.
So, without further delay, let’s get to business.
Reseller, Distributor, Wholesaler, Dealer: Differences and Similarities
Is there a difference between a product reseller and a distributor or a wholesaler vs. a dealer?
There is. However slight such differences are, you’d find that these roles are crucial for goods to move quickly from a product manufacturer to the end-user or customer.
We will provide as much information as needed to fully grasp the concepts of such comparisons.
In providing answers, it will be necessary first to state the roles of a reseller, a distributor, a wholesaler, and a dealer. By going through such parts, you should be able to distinguish or understand the differences, however slight they may be.
Who is a reseller?
A reseller can be an individual or a business that purchases a good or service not for consumption but to sell to retailers. Such goods are bought and resold for profit.
Now, a reseller can sell the same product or add value to such a product. Value addition could be achieved through repackaging or the combination of related products.
Each resulting transaction made by a reseller creates an uptick in price. This is the primary aim or purpose for which the reseller takes such a role.
When a manufacturer produces products, there’s usually a suggested price placed by such a manufacturer. The selling price for a reseller won’t be far off this mark.
However, the selling price would be a bit more if a value were added to such a product.
A reseller can be a retailer or a wholesaler. The only difference here is that a retailer supplies or sells such goods to end-users at a higher price than that supplied by the wholesaler. This takes us to our next point.
Wholesale businesses also play a crucial role in commerce’s supply and distribution chain. This is an individual or a business entity whose role is to sell products in bulk. Now, who does a wholesaler sell to?
Not to the end-user but to the retailer. This is another reselling that only involves the movement of bulk stock of goods for further distribution down the supply chain.
A clear difference between a wholesaler and a reseller is that a product manufacturer may be a wholesaler.
However, product manufacturers, most times, aren’t resellers. They need their products to be moved in bulk. Also, a wholesaler can be said to be a reseller because they sell to retailers. Wholesale is essentially about B2B transactions.
In other words, it has no direct dealing with end-users.
The number of market participants here is significantly lower than in retail. Yet, it is a vital part of the supply chain which is essential for goods to move from manufacturing consumers.
A distributor has an established relationship with a product manufacturer. Such distributors sell to wholesalers.
As a distributor, you serve as the manufacturer’s point of contact with the market. A distributor usually enters into an exclusive buying agreement with the manufacturer. In most cases, this covers a particular territory or region.
Here, distributors have exclusive rights to distribute products from the manufacturer within such territory. Apart from wholesalers, product distributors can sometimes sell to retailers.
One of the requirements for being a product distributor is adequate warehousing. This is where you keep inventory until wholesalers clear it.
The manufacturer sets a profit margin for the distributor. This allows the distributor, and those down the distribution chain, to make profits. Distributors can also be categorized into super or mega distributors and lower categories. Super or mega distributors will cover a much wider territory.
As you go up the supply chain, you’ll find that the top is less crowded.
In other words, more retailers and the turf will be more competitive than distributors. The same applies to retailers compared to resellers, wholesalers, or distributors.
Like the distributor, a dealer has the right to use a manufacturer’s logos and trademarks though not as their own.
These are sometimes referred to as retail distributors due to several reasons. One of these reasons is a dealer’s ability to order a specific number of goods from a distributor and sell the same to end-users or retail markets.
Acting as a middleman between distributors and consumers, a dealer can also be said to be a reseller. Dealers get to operate on a much smaller scale and localize their coverage.
This is an integral part of the distribution chain that enables products to reach the end consumer.
Which Role Is More Important?
A likely question may arise after the above explanation, which concerns knowing what role is most important.
Looking at these roles, none can be said to be more important than the other. Each is critical to smooth and seamless commercial activities.
For manufacturing to be successful, products must move hitch-free from the factory to end-users. And how does this happen?
With the help of resellers, wholesalers, distributors, and dealers.
GUIDE: Distinguish Between Wholesalers Vs. Retailers
These are roles and relationships within the commerce industry. Such functions have existed for as long as the commercial production of goods began.
The information here should be sufficient enough to enable you to get a better understanding of these concepts.