Difference Between Wholesaler vs. Distributor

Main Difference

The main difference between Wholesaler and Distributor is that Wholesaler is an entrepreneur, who buys goods in large quantities and sell it in smaller ones, and Distributor is the vendor of products, which cover a specific area or market.

Wholesaler vs. Distributor

Wholesalers are bulk buyers who business in competing products. On the other hand, a distributor is an exclusive supplier. Distributors tackle non-competing items. Wholesaler scope of function is narrow than that of the distributor. Wholesalers, therefore, depend on orders from bulk purchasers similar retailers; they rarely work with low volume buyers as long as they are many in the market. Diverse wholesalers, distributors supply wholesalers, retailers and continuously look for other changes in the market even from small entrepreneurs. They operate indiscriminately. A wholesaler earnings his profit margin from the price discounts on bulk purchases. They buy items in bulk from different origins at lower prices. They break the volume and sell smaller units to their customers at higher prices. Hence a high-profit margin, on the other hand, distributors’ main source of income comes from the service fee charges. Because they are salespersons for a manufacturer, they repaid a percentage of the net sales for offering their promotional services to a particular manufacturer’s products.

Wholesalers are independent traders. Given their freedom to deal with competing products; they can stock any items whenever they want. In contrast, a distributor is reliant on the manufacturer of that specific product deals in. A distributor, being a point of touch or contact for the manufacturer, gives promotional services, i.e., marketing, finding and selling the goods of a specific manufacturer to retailers. In contrast, wholesalers do not trouble themselves with this kind of services.

Comparison chart

WholesalerDistributor
A wholesaler asserts a trader, who purchase goods in large quantities and sell them in rather smaller units.A distributor is someone who is involved in supplying goods and services to various businesses and customers
Line of Distribution
Show or present in both two-level and three-level channel.Show in the three-level channel only.
Contract
Do not enter into a contract with manufacturers.Enter into a contract with manufacturers.
Serving Area
LimitedLarge
Promotion
Do not involve in promotional activities.Promotes product to increase sales.
Customers
RetailersWholesalers, retailers, and direct consumers.

What is Wholesaler?

A wholesaler is an individual or company that sells goods in large quantities at low prices, typically to retailers., allowing the retailer to take advantage of a lower price than if he were to buy single items. The wholesaler will typically buy goods directly from the manufacturer, but could also buy from a dealer. In either case, the wholesaler takes large discounts for buying large quantities of products. The wholesaler is little involved in the actual manufacture of a product, focusing instead on distribution. A wholesaler needs a license to sell his product to the retailer, and his product will normally not be available to the customer at the same price as to the retailer. This is because the retailer makes its profits by marking up the price they pay to the wholesaler. In the case that a customer desire to purchase a product from the wholesaler he charged for a drop shipment, this load being charged to the customer as well as the wholesaler by a dropshipping merchant. Usually, a wholesaler is a specialist in one specific product or a category of products. Further wholesalers will offer a wide variety of products.

What is a Distributor?

A distributor or dealer is a separate agent who’s entered into an agreement to offer and sell the product of other company but isn’t allowed to use the manufacturer’s name as part of its business name. Based on the agreement, the distributor may be limited to selling only that company’s goods, or it may have the freedom to market various product lines or services from various firms. It is impossible for the producer or manufacturer to reach customers directly for selling goods and services, and therefore, they have to depend on middle agents or distributors, who entirely store and sell the company’s products, in contrary locations.

Key Differences

  1. The name wholesaler is certain as a person or entity, who purchase goods in volume or bulk and sell them in rather smaller units. On the other side, the distributor is one of the major links that supply goods and services to the entire market.
  2. There are four kinds of distribution levels, in which wholesaler is present in two levels and three-level channel. On the contrary, the distributor is present only in the three-level channel of distribution.
  3. Retailers are the just customers of a wholesaler. On the other hand, a distributor provides goods to many parties in the supply chain, like wholesalers, retailers, and even direct consumers.
  4. On the whole, a wholesaler does not enter into the contract with the manufacturer, i.e., he has the freedom to offer products of competing for nature to the retailer, provided by various manufacturers. Conversely, distributors enter into the contract with the manufacturer to trade in non-competing goods or product lines.
  5. As a distributor deeds as a middleman to supply specific goods in the market, his area of operation is greater than the wholesaler, who serves a limited area.
  6. Wholesalers do not entail in marketing, pitching, selling products to prospective buyers or retailers. In contrast, the distributor sets handle the producer and engage in promotional activities, to enhance sales. Consequently, they act as a sales representative to the producer.

Conclusion

Wholesalers make their income from the discount charged on products. Therefore, the amount received from customers little amount paid to manufacturers is the source of income to the wholesaler. Whereas distributor charge service fees for rendition services as a percentage of net sales.

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