7 Types of Distributors in the Supply Chain

Types of Distributors in the Supply Chain

Direct Distributors

Direct distributors are entities that handle both the manufacturing and the distribution process. No third parties are involved between distributors and end-customers. In other words, they sell their products directly to end customers.

Direct distributors take care of production as well as transportation of goods, hence they have complete control over the supply chain process. Direct distributors don’t have to deal with intermediaries for selling their products. They have their own sales and marketing channels in the form of eCommerce websites, physical stores, social media, email, etc.

Indirect Distributors

Also referred to as wholesalers, indirect distributors are found in different industries including IT and automobile. Unlike direct distributors, they do not handle production, but instead act as intermediaries between manufacturers and resellers/customers.

In this type of distribution model, the distributors buy in bulk from the manufacturers and then resell them at higher prices to different entities like value-added resellers, retailers, and even end-customers, etc. IT and office supplies distributors like TD Synnex, D&H Distributing, Arrow Electronics, etc. commonly follow this distribution model.

Indirect distributors purchase large quantities of products in bulk and hence get discounted prices per unit from their manufacturers. They have huge storage facilities like warehouses to keep the inventory safe and secure. Indirect distributors help manufacturers expand their business reach as they have the resources to handle their sales channel efficiently.

Dual Distribution

The dual distribution approach involves implementing both direct and indirect strategy to sell products. The manufacturer will sell directly to consumers as well as partner with intermediaries or middlemen to bring its products to the market.

Exclusive Distributors

As the name suggests, these distributors have the exclusive rights to distribute and sell products of a specific brand in a defined territory. They are the sole authorized distributor for that manufacturer. For instance, the HP products are often distributed through exclusive distributorship. Exclusive distribution has many advantages for the manufacturers. For instance, it allows them to have full control over the look and feel of the product. Manufacturers can also decide at what price to sell the products and how to present them to the consumers.

Intensive Distributors

The main goal of intensive distributors is to promote the widespread availability of specific products. They distribute in bulk which means the products will be available in many outlets. This type of distribution model is usually implemented for products that have high demand and repeat purchase rates. Intensive distributors ensure that the products are readily accessible to end-customers which helps to increase their sales.

Products that fall in this category include IT products, stationery items, school supplies, and even consumer goods. The best examples of intensive distributors are convenience stores, online portals, and supermarkets. This distribution model calls for effective logistics management to fulfill the increasing customer demands

Value-added Resellers

This is another distribution channel for manufacturers that provides enhanced value to the end customers. VARs add their own services or features to the manufactured product and then resell it at a higher price as an integrated custom solution. In simple words, they add value to the existing product before reselling it.

The added value can come in the form of installation services, after-sales support, bundled products or even a custom configuration. Products sold by VARs are tailored to the specific needs of the customers. VARs are synonymous with the IT industry and are an important sales channel for the original equipment manufacturers. They have their own full-fledged eCommerce websites to deal with B2B and B2C customers.

Selective Distributors

Specialized companies known as selective distributors decide to collaborate with a select group of resellers or retailers in order to market their goods. Manufacturers of niche market products as well as high-end or luxury goods frequently use this distribution model to keep control over their brand image, prices, and standards for customer service.

Manufacturers make sure that the environment in which their products are distributed is consistent with their brand values and marketing strategy by imposing restrictions on the number of distributors. Tight selection criteria are usually applied, including the distributor’s experience in the market, ability to offer excellent customer service, and dedication to upholding the manufacturer’s quality standards.

By using this distribution strategy, manufacturers can steer clear of the problems associated with mass distribution, like price erosion, oversaturation of the market, and inconsistent consumer experiences.

Additionally, it makes it possible for selective distributors to provide better after-sales care, more individualized service, and in-depth product expertise, all of which improve the entire client experience. This tactic works especially well in industries where consumer loyalty and brand prestige are essential for success.