How to Differentiate Between Distributors and Original Manufacturers?
In business activities, distributors and original manufacturers are two common roles. Although both are related to the production and sale of goods, their roles and functions are different. Here are several aspects to help distinguish between distributors and original manufacturers.
1. Supply Chain
Distributors are a part of the supply chain that typically purchase goods from manufacturers and resell them. Original manufacturers, on the other hand, are the starting point of the supply chain, responsible for the entire process from raw material procurement to product manufacturing.
2. Source of Funds
Distributors use their own funds to buy products, which they then sell at a higher price to earn a profit. Original manufacturers rely on their own funds for production activities, including raw material procurement, equipment investment, and personnel training.
3. Role Positioning
Distributors act as part of the sales channel, handling market promotion, sales, and after-sales service. Original manufacturers are the producers, primarily responsible for product research and development, manufacturing, and quality control.
4. Profit Distribution
The profit distribution between distributors and original manufacturers during the sales process is different. Distributors earn profits through the resale margin, which is the difference between the selling price and the purchase price. Original manufacturers gain profit from direct product sales, where the profit comes from the difference between the selling price and the production cost.
5. Service Quality
The service quality provided by distributors and original manufacturers also varies. Distributors often provide more pre-sale, in-sale, and after-sale services to meet customer needs. Original manufacturers focus mainly on product quality and production efficiency and may not offer as detailed and considerate customer service.
In summary, distributors and original manufacturers play different roles and have different functions in the production and sale of goods. Distributors focus on sales channels, market promotion, and after-sales service, while original manufacturers concentrate on product design, manufacturing, and quality control. Therefore, when engaging in business activities, it is essential to choose the appropriate partner based on the actual situation to achieve mutually beneficial and win-win outcomes.
