The term market is widely and closely associated with our day-to-day lives. When it comes to market, the two most important elements are vendor and distributor. Although these two words are commonly used, they vary in their features and functioning. Both vendor and distributor are interdependent on each other but cannot be used interchangeably.
Vendor vs Distributor
The main difference between vendor and distributor is that a vendor is a person who buys goods in bulk quantities and sells them to the customers according to their requirements whereas a distributor just forms the supply chain between manufacturer and vendor. The distributor collects goods from the place of the manufacturer and supplies them to a vendor who in turn supplies them to customers.
A vendor is a person who buys goods from the manufacturer and sells them to customers as per their requirements. A vendor forms a supply chain between the distributors and customers and also provides personalized services to customers. They also collect information regarding the demand of the market and provide them to manufacturers so that there is a balance between demand and supply.
A distributor is a person who collects goods from the place of manufacturer and deliveries to the place of a vendor who sells them to customers. In short, they perform the role of intermediary for manufacturer and vendor. The objective of the distributor is to avail all the goods to the other vendors so that they can be consumed by the ultimate customers.
Comparison Table Between Vendor and Distributor
| Parameters of Comparison | Vendor | Distributor |
| Definition | Purchases goods from manufacturers and sells them to customers. | The distributor is an intermediary between vendor and manufacturer. |
| Goal | Give customers their required goods. | Avail goods to the vendors to resell. |
| Business relationship | Business to customers (B2C) | Business to business (B2B) |
| Relationship with market | Collects information about market demand and provides them to manufacturers. | Product transportation, advertisements, etc. |
| Relationship with manufacturers | Distinct relationship as compared to distributors. | Close relationship as compared to vendor. |
What is Vendor?
A vendor is a person who purchases goods from manufacturers in bulk quantities and sells them to the customers as per their required needs. They also provide personalized services to the customers such as free home delivery, discounts, etc, and also provide credit sales to regular customers.
Since they are in a close relationship with customers, they recognize what they need and analyze market demand, and supply information with the manufacturers so that the demand and supply will be balanced and the economy will be in equilibrium.
The objective of the vendor is to provide goods and services to the final customers and has a B2C business relationship. In the supply chain link, the vendor occupies the last and final position.
In the terms of relationships with manufacturers, vendors have a distinct relationship as they have an intermediary between them and do not have a direct relationship. When it comes to risk, vendors have less risk as they only perform the function of selling goods to ultimate customers.
The purpose of sales made by the vendor is the consumption by the customers and not for production or for resell. The amount of products they deal with is relatively small than the distributors.
What is Distributor?
A distributor is an intermediary between a manufacturer and a vendor. Usually, goods are manufactured in one place but have been used all over the world. Hence, distributor bridges the gap between the place of manufacturing and the market or the place where they are consumed.
They provide many services to manufacturers like transportation, warehousing, storage, advertisements, and demos for the usage of products, etc. Henceforth, distributors play an important role and are of great help to manufacturers.
Being freed from these functions, manufacturers can focus or concentrate only on the quality and types of the goods they produce. A distributor has a closer relationship with the manufacturer and shares a distinct relationship with the market or the customers.
They provide B2B business services. In terms of risk, distributors have higher levels of risk as they have to bear all the damages caused to the goods while transportation or storage. The objective of the distributor is to avail the goods to different vendors to resell.
They sell goods either for further production or resell but not for consumption. They generally make purchases in bulk quantities. It occupies the middle position in the supply chain.
An important feature of distributors is they don’t add value or make products; they make products available to vendors.
Main Differences Between Vendor and Distributor
- The vendor deals with a small number of goods in comparison with the distributor.
- In terms of risk, distributors have greater risk than vendors since goods are prone to damages in transportation.
- Distributors make sales only for further production of capital goods or resell whereas vendors make sales for consumption.
- Distributors have a close relationship with the manufacturers than the vendors as they are in direct contact with each other.
- Vendors know the market conditions and demands whereas distributors know about the product information and usage.
- The difference between vendor and distributor is their business relationship. The vendor provides B2C services whereas the distributor provides B2B services.
Conclusion
Markets play a vital role in everyday life on a day-to-day basis. It is important to know the terms distributors and vendors when it comes to market as they both play an essential role. Vendors and distributors are important elements in the supply chain and both are interdependent on each other. Hence, their absence in the supply chain can adversely affect the market conditions and every individual’s life.
Both are useful in analyzing the market demand, supply and ensuring that economy is in equilibrium. Distributors assist the vendors in knowing about the features and usage of the products while vendors assist the customers in the consumption of the product.
References
- https://journals.sagepub.com/doi/abs/10.1177/0092070398262004
- https://www.emerald.com/insight/content/doi/10.1108/13598540810894942/full/html