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What is the difference between distributors and dealers of products such as electric toothbrushes?

Date:2021-07-12 17:56

What is the difference between distributors and dealers of products such as electric toothbrushes?
Often, manufacturers of paintwork, plumbing, electrical goods, heating equipment, control and measuring devices, goods for repair and construction, water filters, etc. determine the difference between a distributor or a dealer according to the criterion - the volume of purchases of goods. In fact, it is necessary to introduce a difference between a distributor and a dealer in terms of their functionality.

To understand this, let's look at a diagram of a distribution and dealer sales system.

What is the difference between distributors and dealers of products such as electric toothbrushes?

The distributor's sales system is focused on working with retail through sales representatives who regularly visit outlets to place an order. Distribution (distribution) is a qualitative distribution of goods for each retail segment. The main task of distribution is to ensure that at each outlet there is a product in stock in the required assortment, the required stock and in the right place. Without a personal visit of a sales representative to a sales outlet, this cannot be done efficiently.

Looking for a distributor? Learn about 2 key differences

The dealer's sales system is focused on working with enterprises to conclude contracts for the supply of goods for a specific project. Dealer (the root word "deal" is a deal) is the conclusion of deals. The main task of the dealer is to meet with the customer and conclude a deal for the supply of goods in a certain quantity and within a clearly defined time frame. These are mostly one-time deals or with a long repetition period.

In the era of the development of the Internet, the sales system through online stores can be built by both a dealer and a distributor, or a manufacturer directly.

What I would like to draw special attention to is that the system of working with retail through telephone calls is neither a distributor nor a dealer sales system - it is a wholesale sales system, which, in principle, started the business of many wholesalers. At the dawn of the founding of the business, at first they sat and waited for customers to come or call them, and a little later they began to make active calls to order goods. But the essence remained the same - telephone sales, which are inherent in the wholesale sales system.

ANSWERS ON QUESTIONS:

IS THE DEALER AN ORGANIZATION THAT ONLY HAS A CHAIN OF STORES?

No, this is not a dealer - this is a retail business, and it should be viewed as a distribution channel - retail

DOES THE PRICING POLICY OF WORKING WITH A DISTRIBUTOR, DEALER AND WHOLESALER DIFFER?

Of course it should be different. Distribution costs are much higher than those of a dealer and even less of a wholesaler. There are several price models in the distribution sales system. Here's how the pricing model should look for different sales systems. The marginality is conditional and depends on the product group. Here the emphasis is on what the margin difference should look like.

 

SALES SYSTEM MARGIN
Passive opt 5%
Wholesale active (telephone sales) 10%
Dealer 15%
Distributor general price 20%
Distributor focus team 25%
Distributor exclusive team 30%
Own team at the distributor (distributor financial logistician) 5%
 

WHY IS IT SO IMPORTANT TO DIFFERENTIATE BETWEEN DISTRIBUTOR AND DEALER?

In order to understand which sales channel should be developed and, most importantly, through which business partner to do it - "direct contact" or "retail". Is it possible to do this through existing partners or is it worth introducing additional partners who will work with a different distribution channel.

CAN ONE ORGANIZATION, BUSINESS PARTNER OPERATE IN THE REGION AS A DISTRIBUTOR, DEALER AND RETAIL NETWORK?

Of course, it can, if he has separate structures for each sales system. But to be honest, I have not met such universal companies, each has its own pronounced specialization. In practice, only 30-40% of companies with a dealer sales system agree to develop a distribution sales system and half of them will manage to do this.

IS IT WORTH INVESTING MONEY IN ANNUAL “GATHERINGS” OF DEALERS (DISTRIBUTORS)?

Definitely worth it, but it will be better if the "meeting" is not common for everyone, but differentiated for each business format. It is important that your investment is directed towards information that will help improve your partners' business.



As a electric toothbrush manufacturer, factory and supplier in China, Shenzhen Relish provides various types of electric toothbrush wholesale, dropshipping, and OEM services. At the same time, we are also a water flosser manufacturer, providing wholesale, direct sales and OEM/ODM services for water flosser. We look forward to working with you.