Types of Distributors
There are 3 main types of distributors which are intensive distributors, selective distributors and exclusive distributors. The types of distributor can also be classified as direct distributors and indirect distributors.
Intensive Distributors
This type of distributor is normally used when the manufacturer / vendor wants to sell their products as quickly as possible through the widest possible channel. Intensive distributors will work with many vendors and usually sell high volumes of goods at lower prices and earn lower margins.
For mass market products, this type of intensive distributor can be a very effective route to market enabling goods to be distributed through the channel to the end consumer quickly. While profit margins are generally lower, manufacturers / vendors can benefit from improved cash flow.
Selective Distributors
This type of distribution is where manufacturers / vendors select specialised distributors who are experienced at distributing their products. Manufacturers / vendors may restrict the number of retailers that a distributor can supply to in order to effectively reach the target market, maintain a high level of service and retain high retail pricing maximising profit margins for the whole distribution channel.
Exclusive Distributors
This type of distributor is used when the manufacturer / vendor has a niche market and product with targeted consumers. There will usually be only one exclusive distributor for each territory.
This type of distributor is used where channel control is important to maintain brand integrity, brand image and often higher pricing points. Exclusive distributors are usually more common than exclusive retailers. This allows exclusive distributors to sell to all their suitable retailers.
Direct Distributors
With this type of distributor the manufacturer / vendor to sells and delivers products directly to the consumer. Direct distributors usually choose this route in order to reduce costs by negating the need for a middle man as they would require a share of the profit margin in return for distributing the products. However, direct distributors face several drawbacks. Firstly they are limited to their own physical storage capacity dictated solely by their sales volumes. Secondly they are likely to have much less marketing exposure and significantly higher marketing costs which may in actual fact offset any saving made by not using other types of distributors.
Indirect Distributors
This type of distributor uses a network of wholesalers, retailers and resellers to distribute their products to consumers, and is the most common type of distributor. Indirect distribution enables manufacturers / vendors to concentrate on production while the distributors focus on generating sales. The distributors sell to their existing customer base of resellers / retailers with whom they have good relationships enabling speedy sales and distribution of products. With this type of distribution there may also be more than one distributor per territory.
The type of distribution channel selected will largely depend on product type, size of business and volume of sales. To find distributors to supply your business, or to find new products to distribute yourself simply Browse Merchants and search our global network of manufactures, vendors and distributors.
Benefits of using distributors
There are many benefits of using distributors but ultimately the main benefit of using a distributor is that they can sell your products and generate significant income quickly.
Established customer base
Possibly the single most important benefit of using a distributor is that all established distributors already have good relationships with an existing customer base of resellers and retailers. This means that once a distributor gets hold of new products they can very quickly promote them to their customers and start generating sales.
Sales & Marketing Expertise
Another benefit of using distributors is that they are experienced at both sales and marketing and understand very well how best to sell to their customers. Distributors are therefore able to take new products and promote them in the most effective way to their resellers to achieve the best sales results. It after all, it is as much in their interest to sell your products as it is in yours because once they have purchased products they only make a profit when they sell them.
Storage & Logistics
Using distributors also means that you benefit from a significant amount of storage space without the need to invest in physical premises to store your products. To add to the benefit of extended storage space distributors also have established and reliable logistics which means they can move products quickly and cost effectively.
Wider distribution channel
By using distributors your business can benefit from a much greater distribution channel without the need to have a physical presence in each territory. This means not only can your products reach a much wider consumer audience increasing sales but you can also make significant financial savings through not requiring additional premises and staff.
Quick route to market
Another major benefit of using a distribution channel to take your product to market is the speed at which your products can reach consumers globally. By using distributors for each territory you can quickly ensure your products have national or global coverage helping your business maximise sales potential and profitability.