Distributor, Sales Agency & Sales Rep – Here’s The Difference



So, we’ve identified and defined the main intermediary parties designed to help you move your product more efficiently. Take a look!


Distributor

by definition:

A distributor is an independent agent which enters into an agreement with a manufacturer/brand/company in order to sell their goods for them to other wholesalers or retailers.

Manufacturers/brands are typically unable to directly serve markets, whether it be locally or across the world world. So, they need the help of distributors, which serve as an intermediary between them and their final customers. The potential benefits of working with a distributor are usually well known to manufacturers/brands, while choosing the right partnership is of utmost importance for all parties involved. Always keep in mind that the distributor is like the gateway to its surrounding market, so choose wisely, because knowing that your brand can go as far as a distributor can take it allows for a pretty grand view of your potential success.


Distributor’s

roles and responsibilities:

  1. Buy and hold stock: in the majority of cases, the distributor will actually purchase goods from the manufacturer (good for the manufacturer, since this allows (you) to free up some working capital).

  2. Combine manufacturers’ outputs: retailers or buyers almost always buy from several manufacturers, which means that even though they currently work with a certain product, they are still exposed to comparable products by competitors.

  3. Share credit risk: a manufacturer will offer a distributor credit in the form of payment terms for purchasing goods for example. Although nothing in business is truly without risk, mitigating credit risk by offering it to distributors rather than the hundreds of customers that the distributor deals with themselves is interesting. As a manufacturer, it is your responsibility to be aware of the credit-worthiness of the distributors that you choose to work with, while knowing that of the end-user customers (wholesalers or retailers) of your product is impossible.

  4. Share selling risk: distributors will have a stake in selling a manufacturer’s product, as they’ve made a monetary and contractual commitment by buying product to sell.

  5. Forecast market needs: this is one of the most important functions of a distributor. As distributors are definitely closer to the market than manufacturers are, they are in a better position to forecast what their customers will need. By relaying this precious information back to the manufacturer, the distributor contributes greatly to providing superior value to consumers.

  6. Provide market information: a distributor is well positioned to gather and share information about the market, competitive activity, etc. This information is not only valuable to a manufacturer in the present time, but is also a vital tool for a brand’s future competitive strength in the market and its prosperity.


Sales Agency

by definition:

A sales agency is a middleman that sells products they’ve acquired from a distributor or a manufacturer to retailers. Just as distributors do for retailers directly, a sales agency can also assemble goods into bulk orders for their customers. The difference is that a sales agency typically will not stock any product as they will solely order from distributors what retailers have ordered through the agency. (When working with a sales agency, one can expect to pay a percentage of commissions based on sales back to the agency for their services).


Sales Agency’s

roles and responsibilities:

  1. Sales: sales agencies will work directly with buyers, doing their best to negotiate the best contract for the highest price possible.

  2. Brand awareness: these agencies will work to encourage end-user customers (wholesalers or retailers) to actively promote and market products on multiple platforms such as trade shows, social media, billboards, mail, newsletters, etc.

  3. Communication and transparency: sales agents are responsible for communicating transparent information to manufacturers; the agreement being that manufacturers can request to hear from their sales agent/s as often as deemed necessary in order to track the performance of their product, having a sales agent on your side is like having eyes and ears all over your target market at either the wholesale or retail levels, or both.

  4. Sales and support service: the sales agency is responsible for addressing the greater majority of customer sales inquiries from retailers, warranties, guarantees, technical issues, trainings, repairs, and other support services involved with purchasing a product.


Sales Representative

by definition:

A sales representative or “sales rep” will work for a brand/company directly and will work in the interest and benefit of said brand/company. They build business by selling the brand’s product or service to other companies or to individuals. (When working with a sales rep, one can expect to pay a salary as well as a commission or incentive based on sales).


Sales Representative

A sales rep’s responsibilities will vary depending on their employer and the industry they operate in, though some roles and duties are rather universal in the world of sales reps:

  • Sell to target and key retail accounts

  • Contact potential, new and existing customers in order to not only meet, but exceed sales objectives

  • Organize, rotate and stock shelves during each store visit

  • Participate in sales meetings and on-site trainings

  • Negotiate and persuade to overcome objections from customers

  • Deliver presentations and host product knowledge/demonstration sessions for customers

  • Provide recaps to their management team of results, challenges and accomplishments


There are many resources available for a brand’s product to make its way into the hands of customers; while making sense of all possible avenues in order to choose the right one for your business is necessary and will undoubtedly help your business grow, we know that it’s easier said than done.

We’re here to help! You can click right here (sales strategy and partnerships) to see what services we can offer, should you wish to dive into this with us!




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