What Is A Distributor, A Beginner Businessman Need To Know
In the trading business, especially, there is the term distributor, then what is the meaning, function and type of distributor and its importance in trading. I think beginner business people need to know this. Therefore, I will share information about the understanding of distributors, their functions, types and the importance of distributors in the trading business that I read on the website www.maxmanroe.com, here is the info:
Definition of Distributor
What is meant by a distributor? In general, the definition of a distributor is a party who buys a product directly from the producer and resells it to the retailer / retailer, or it can also sell directly to the end user.
Another opinion states that the definition of distributor is a business entity or individual that is responsible for distributing or distributing trade products, both goods and services, to retailers or end consumers.
In this case, the distributor only picks up the finished product and is ready for use without the need to modify it. In trade, distributors are the first chain after producers.
Distributors can be in the form of individuals or companies that buy products directly from producers in very large quantities. Distributors benefit from discounts on product purchases from manufacturers. The more products purchased from the manufacturer, the greater the discount on the product.
Distributor Functions and Tasks
The main function of a distributor is to act as an intermediary between producers and retailers or consumers. Referring to the definition of distributor above, some of the distributor's functions are as follows:
1. Buying products,
distributors are tasked with buying products (goods or services) from larger producers or traders
2. Storing Products,
after purchasing products from producers, distributors must also store these products in the warehouse for a certain time and distributed to retailers or end consumers.
3. Selling Products,
distributors sell products to retailers or to end consumers at a higher price for a profit.
4. Transporting products,
the process of moving or transporting products from producers to retailers or consumers is also the task of the distributor. However, the transportation costs will later be included in the price of the product being sold.
5. Product Classification,
distributors are also responsible for classifying or sorting products based on their type, size and quality.
6. Product Information,
the distributor is responsible for providing information regarding the estimated price and marketing of goods at a certain time which will be carried out by the executor in the field.
7. Product Promotion,
promotional activities aim to introduce products to consumers. This promotional activity includes an explanation of product benefits, product quality, product price, which is carried out through advertising media.
Types of Distributors
In general, distributors can be grouped based on their distribution process. In accordance with the definition of a distributor, the several types of distributors are as follows:
1. Goods Distributor Company
In this case the products distributed are in the form of physical goods. In the distribution process, manufacturers entrust their distributors to distribute products to retailers. Furthermore, retailers who will distribute to the final consumer.
Manufacturers -> Distributors -> Retailers -> End consumers
2. Service Distributor Companies
Products that are distributed are in the form of services. In the distribution process, distributors can directly distribute service products to end consumers without going through other retailers. For example, we can see the flow of financial services distribution from multi-finance companies to their customers.
Producers (Owners of Capital) -> Distributors / Service Distributors -> End consumers
3. Individual Distributors
Basically, individual distributors are in a different scope but there are similarities in the distribution process with service distribution companies. Individual distributors are widely known in the MLM business, where the distribution process from producers to private distributors is then distributed to the final consumer.
Producers -> Personal Distributors -> End Customers
Producers -> Private Distributors -> Other Private Distributors -> End Customers
Importance of Distribution Chains
Product The key to the success of a business is in terms of marketing. No matter how good a product is, if you are not actively looking for ways to do the best marketing, it is impossible to sell quickly.
The key to spinning money quickly is to carry out a marketing strategy as quickly as possible. The following steps are often taken to be able to market a product quickly:
1. Creating a Distributor Chain
Make a chain of distributors as much as possible so that the product marketing reach is wider. This can be done by creating a business opportunity advertisement by offering other people as distributors.
2. Competitive Prices Open Repeat Order Opportunities
Manufacturers or distributors should not raise product prices too high. The products being sold might be defeated by competitors whose prices are cheaper. Also keep in mind that the price of the distributor will still increase after being sold to the next chain. In providing a price benchmark, make sure everything is well analyzed, such as inflation and the risk of product damage.
3. Striving for Fast Spinning Products
The main obstacle for manufacturers is how to make the product spin fast. Manufacturers can open various kinds of offers ranging from working with distributors, opening a dropshipper system, opening affiliates, and so on so that products quickly reach consumers.