A distributor is a form of intermediary that helps manufacturers provide products and services to the market for the purpose of reaching the end consumer. This is considered a bridge between the producer and the consumer. As a result, the supply chain of goods is operated continuously

In fact, the distributor in the distribution chain has the following components:

  • Retailer: Plays the role of moving goods from the distributor or wholesaler to the end users.
  • Wholesaler: Plays a role in moving the manufacturer’s goods to other intermediaries or selling directly to the end user (individuals or businesses).
  • Distributor: The party representing the manufacturer, not directly producing the product, but will be the largest source of supply for the remaining intermediary channels

Types of distribution channels

Currently, the distribution channel is one of the extremely effective product marketing tools for many businesses. So what are the most common types of distribution channels on the market today?

The direct distribution channel is also known as a level 0 distribution channel. This is the simplest type of distribution channel model today.

In the direct distribution channel, intermediaries will be eliminated, and instead the process of distributing goods directly from the producer to the consumer.

In this type, the seller/manufacturer usually chooses one of two platforms to sell through an e-commerce platform or sell directly at a brick-and-mortar store.

The two platforms above both bring high sales efficiency for manufacturers because goods are distributed directly to consumers. This approach also saves a lot of costs involved.

Indirect distribution channel

In contrast to direct distribution channels, indirect distribution channels will need the help of distributors to move goods from the producer to the consumer.

In the indirect distribution channel, it is divided into 2 smaller types which are:

  • Traditional distribution channel: Occurs in a traditional process from the manufacturer through one or more distributions and finally sold to customers.
  • Modern distribution channels: The participating components will be shortened when agents, manufacturers, and intermediaries merge together to directly provide products and services to customers.

The role of the distributor brings to the business

Reducing the cost of distribution of goods: In fact, almost no manufacturer can distribute their own products to the end users. To build a distribution system to end users, businesses need to have strong financial resources. Therefore, to make the most of the market, manufacturers have to rely on distributors/sales agents to reach all customers in all regions. 

At the same time, thanks to the distributor system, the manufacturer will focus all of its resources to improve product quality and value.

  • Market expansion: Thanks to distributors in provinces, products can reach all consumers in rural and urban areas. Customers just need to go to the retail points to quickly own the product. From there, the manufacturer only needs to work with a system of distributors and can still sell products everywhere.
  • The link between supply and customers: Many times, consumers do not know where to buy products, and manufacturers do not know which customers to distribute products to. Their distributor is the link between supply and customers. At this time, the distributor has the role of “salesman” for manufacturers and “supplier” for consumers
  • Market information research: Distributors and retailers are the ones who best understand the buying behavior and purchasing needs of consumers in each region. Therefore, the manufacturer will optimize the cost of researching customer information. From there, there will be appropriate adjustments to develop products to cover the entire market
  • Risk reduction: The distribution of products to distributors is done when the two parties sign a contract with each other. Therefore, the manufacturer minimizes costs in renting facilities and vehicles in the regions. In case that area is not suitable for business, manufacturers can easily withdraw from the market without having to deal with outstanding problems. Therefore, it is easy for distributors to quickly and conveniently expand or shrink their business models.

A seamless connection between manufacturers and distributors

Distributors are one of the important links to bringing products to the end consumers. In addition, distributors greatly assist manufacturers in reaching customers, minimizing risks, and optimizing costs. So how can the distributor operate effectively based on the cooperation and welfare policies that the manufacturer provides?

To effectively manage and track all activities of the distributor system, Manufacturers need to use a solution to manage the distribution system. Thanks to the distribution management software, the manufacturer

  • Easily segment sales and manage sales staff performance
  • Manage all distributors/agents/points of sale to avoid buying and selling outright.
  • Manage your distribution’s sales in real time
  • Easily track sales programs (promotions, displays, rewards, …)
  • Distributor and dealer inventory management

In addition, the eSales solution also provides a purchase feature, making it easy for distributors to place orders online for manufacturers. When there is a need, the distributor will actively order through the system. The manufacturer will then actively approve the order and ship the goods to the distributor. All orders will be strictly controlled and displayed according to the actual status. 

Distributors are one of the key elements in the supply chain to get products from the producer to the final consumer. If quality products are a necessary condition, the factor of exploiting consumers is a sufficient condition to develop sales.

With more than 15 years of experience in the field of providing distribution management solutions, HQSOFT is confident to bring customers the most comprehensive and optimal solutions to best meet customer needs. in optimizing the distribution management system.

If your business needs advice on distributor management solutions. Please contact the hotline: 0792342278 to receive the best support.

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