Distributors are a vital link between the company and retailers because while some companies afford to have their distribution channel but the majority of companies find it difficult as well as expensive to have their distribution channel and that is the reason why they appoint distributors for their products. Distributors refer to those persons who buy goods from manufacturers or companies stock those goods in their storehouse or warehouse and resell those goods to retailers. Given below are some of the important functions performed by the distributors –
Distributors Functions
Procurement of Goods from the Company
The first and foremost function of the distributor is the procurement of goods from the company in bulk quantity, distributor never purchases goods in small quantity rather they purchase it in bulk to supply to small retailers whenever they require.
Storage of Goods
Another important function of the distributor is the storage of goods since distributors purchases goods in bulk quantity they need big space to store the goods as there is a time lag between the distributor purchasing the goods from the company and reselling those goods to small retailers. Besides retailers are also dependent on the distributor because the retailer keeps goods only in small quantity and restock them once the current goods are sold to the retail customers.
Providing Credit Facility to Retailers
Retailers do not give cash immediately to the distributors and that is the reason why distributors have to give them 1 month or 2-month credit to the retailers, hence distributors purchase goods from the company in cash but they sell goods to retailers on credit. In simple words, if you are a distributor then you have to keep enough buffer capital as all your payment will be made in cash but when it comes to receipts it will come in tranches and not immediately.
Product Knowhow
A distributor needs to have thorough knowledge about the products of the company because if the distributor does not have any knowledge than he or she will not be able to convince the retailers to take the goods and sell to their customers. In simple words just like you cannot succeed in an exam without studying properly in the same way distributors cannot be successful without having proper knowledge about the company’s products.
Transportation
Retailers call the distributor about their requirement and it is the function of the distributor to transport those goods from the distributor’s warehouse to the retailer’s shops. In simple words, if distributors are prompt in the supply of goods to retailers than the company will not incur a loss due to the unavailability of products at retail outlets in the market.
Feedback
Another important function of the distributors is to give feedback of customers as well as retailers about the company’s product to the company or manufacture of the product which can go a long way in improving the product quality as well as knowing what customers want from the company and hence will lead to better products and better customer service on the part of the company.
As one can see from the above that distributors perform some important functions and that is the reason why companies should never forget the role of distributors as far as marketing and distribution of products are concerned.